Question

The business plan of a venture must show consistent, but manageable projected growth because :

• A. Many entrepreneurs fail after expanding too rapidly
• B. Investors want to see quick growth
• C. Banks are interested in profits, not expenses
• D. Bankers and investors prefer small companies

Answer 1

The Correct Option is A

In evaluating why a business plan must show consistent, but manageable projected growth, it is essential to delve into the challenges of rapid expansion. Here we approach this by analyzing each option provided:

1. Many entrepreneurs fail after expanding too rapidly: Rapid expansion can lead to stress on resources, inadequate infrastructure, insufficient workforce, and cash flow problems. When business scales too fast without a sturdy foundation, it may suffer from inefficiencies and operational issues. Therefore, consistent and manageable growth allows for strategic scaling and sustainability. This is the reason a business plan should propose manageable growth.
2. Investors want to see quick growth: Although investors are interested in growth, they are typically more concerned with sustainable and strategic growth rather than abrupt surges which may not be sustainable.
3. Banks are interested in profits, not expenses: Banks evaluate loans based on the ability of a business to repay, which hinges on stable growth rather than focusing solely on profits.
4. Bankers and investors prefer small companies: This is not necessarily true. Bankers and investors evaluate growth potential, stability, and strategic plans more than the size of the company.

Hence, the correct answer is Many entrepreneurs fail after expanding too rapidly, because manageable growth ensures that the business can sustainably handle expansion without overextending its resources and capabilities.