CHAPTER 2
DEVELOPING THE BUSINESS IDEA
True-False Questions
T. 1. For ventures that first get to market or create intellectual property rights, it’s
common to price new products or services at high markups or profit margins.
F. 2. Lifestyle firms are growth-driven in terms of revenues, profits, and cash
flows and also performance-oriented as reflected in rapid value creation over
time.
T. 3. “Salary-replacement” firms provide their owners with income levels
comparable to what they could have earned working for much larger firms.
T. 4. An entrepreneur may start a number of different types of businesses,
including salary-replacement firms, lifestyle firms, and entrepreneurial firms or
ventures.
F. 5. “Entrepreneurial ventures” are firms that allow owners to pursue specific
lifestyles while being paid for doing what they like to do.
F. 6. Entrepreneurial ventures emphasize survival and providing an acceptable
living for their owners with growth being a secondary goal.
F. 7. A sound business model is a plan to generate investor interest, make profits,
and grow asset investments.
T. 8. A sound business model should provide a plan to generate revenues, make
profits, and produce free cash flows.
F. 9. Mark Twain said: “Like I tell anybody, if you fail to plan, you’re planning
to fail.”
T. 10. Best practices of high-growth, high-performance firms applied in the
marketing practices area include “developing new products or services that are
considered to be the best.”
F. 11. Best practices of high-growth, high-performance firms applied in the
marketing practices area include “preparing detailed monthly financial plans
for the next year and annual financial plans for the next five years.
10
, Chapter 2: Developing the Business Idea 11
T. 12. Best practices of high-growth, high-performance firms applied in the
financial practices area include “preparing detailed monthly financial plans for
the next year and annual financial plans for the next five years.
T. 13. Best practices of high-growth, high-performance firms applied in the
management practices area include “assembling a management team that is
balanced in both functional area coverage and industry/market knowledge.”
T. 14. Business opportunities, because they exist in real time, have a relatively
narrow window of opportunity to become a successful business venture.
However being the first to market does not guarantee success.
T. 15. Ideas that are said to be “ahead of their time” are too early to become
viable business opportunities for the inventor or innovator.
T. 16. Once conceptualized, a new idea should be examined for its business
feasibility.
T. 17. A SWOT analysis is an examination of the strengths, weaknesses,
opportunities, and threats to determine the business opportunity viability of an
idea.
F. 18. A SWOT analysis focuses on strengths (S), worries (W), opportunities
(O), and treats (T).
F. 19. A “venture opportunity screening” is the same thing as preparing a
business plan.
T. 20. A SWOT analysis should consider as potential strengths or weaknesses
whether there are unfilled customer needs and the extent to which intellectual
property rights exist.
F. 21. A SWOT analysis should consider the extent of existing competition and
the likelihood of substitute products or services as potential strengths or
opportunities.
T. 22. Venture opportunity screening involves assessment of an idea’s
commercial potential to produce revenue growth, financial performance, and
value.
F. 23. A venture with a low score on the VOS Indicator should always be
abandoned.
T. 24. The VOS Indicator is useful in assessing the commercial potential of a
venture, but should not be used as the sole tool to determine a venture’s fate.
DEVELOPING THE BUSINESS IDEA
True-False Questions
T. 1. For ventures that first get to market or create intellectual property rights, it’s
common to price new products or services at high markups or profit margins.
F. 2. Lifestyle firms are growth-driven in terms of revenues, profits, and cash
flows and also performance-oriented as reflected in rapid value creation over
time.
T. 3. “Salary-replacement” firms provide their owners with income levels
comparable to what they could have earned working for much larger firms.
T. 4. An entrepreneur may start a number of different types of businesses,
including salary-replacement firms, lifestyle firms, and entrepreneurial firms or
ventures.
F. 5. “Entrepreneurial ventures” are firms that allow owners to pursue specific
lifestyles while being paid for doing what they like to do.
F. 6. Entrepreneurial ventures emphasize survival and providing an acceptable
living for their owners with growth being a secondary goal.
F. 7. A sound business model is a plan to generate investor interest, make profits,
and grow asset investments.
T. 8. A sound business model should provide a plan to generate revenues, make
profits, and produce free cash flows.
F. 9. Mark Twain said: “Like I tell anybody, if you fail to plan, you’re planning
to fail.”
T. 10. Best practices of high-growth, high-performance firms applied in the
marketing practices area include “developing new products or services that are
considered to be the best.”
F. 11. Best practices of high-growth, high-performance firms applied in the
marketing practices area include “preparing detailed monthly financial plans
for the next year and annual financial plans for the next five years.
10
, Chapter 2: Developing the Business Idea 11
T. 12. Best practices of high-growth, high-performance firms applied in the
financial practices area include “preparing detailed monthly financial plans for
the next year and annual financial plans for the next five years.
T. 13. Best practices of high-growth, high-performance firms applied in the
management practices area include “assembling a management team that is
balanced in both functional area coverage and industry/market knowledge.”
T. 14. Business opportunities, because they exist in real time, have a relatively
narrow window of opportunity to become a successful business venture.
However being the first to market does not guarantee success.
T. 15. Ideas that are said to be “ahead of their time” are too early to become
viable business opportunities for the inventor or innovator.
T. 16. Once conceptualized, a new idea should be examined for its business
feasibility.
T. 17. A SWOT analysis is an examination of the strengths, weaknesses,
opportunities, and threats to determine the business opportunity viability of an
idea.
F. 18. A SWOT analysis focuses on strengths (S), worries (W), opportunities
(O), and treats (T).
F. 19. A “venture opportunity screening” is the same thing as preparing a
business plan.
T. 20. A SWOT analysis should consider as potential strengths or weaknesses
whether there are unfilled customer needs and the extent to which intellectual
property rights exist.
F. 21. A SWOT analysis should consider the extent of existing competition and
the likelihood of substitute products or services as potential strengths or
opportunities.
T. 22. Venture opportunity screening involves assessment of an idea’s
commercial potential to produce revenue growth, financial performance, and
value.
F. 23. A venture with a low score on the VOS Indicator should always be
abandoned.
T. 24. The VOS Indicator is useful in assessing the commercial potential of a
venture, but should not be used as the sole tool to determine a venture’s fate.
