Studies In Entrepreneurship Final
private placement memorandum
a specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments
blue ocean strategy
a strategy based on creating a new product or service which has no competitors
differentiation strategy
a type of generic strategy aimed at clarifying how one product is unlike another in a mass market
boom
a type of life cycle growth stage marked by a very rapid increase in sales in a relatively short time
shake-out
a type of life cycle stage following a boom in which there is a rapid decrease in the number of firms in an industry
screening plan
also called a mini-plan; gives the basic overview of the firm and a detailed look at the financials
business format franchising
an agreement that provides a complete business format, including trade name, operational procedures, marketing, and products or services to sell
conversion franchising
an agreement that provides an organization through which independent businesses may combine resources
intangibles
assets, such as patents or trademarks, and liabilities, such as accounts payable, that have no physical existence
me-too products
products essentially similar to something already of the market
key employee/partner plan
provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees
takeover
seizing control of a business by purchasing its stock to be able to select the board of directors
degree of similarity
the extent to which a product or service is like another
external legitimacy
the extent to which a small business is taken for granted, or treated as viable by organizations or people outside the small business or owner's family
internal understanding
the extent to which employees, investors, and family members involved in the business know the business's purposes and operations
4 P's of Marketing
the four major components of a marketing effort - product, pricing, promotion, and placement. Sometimes called the marketing mix
industry
the general name for the line of product or service being sold, or the firms in that line of business
growth stage
the industry life cycle stage in which customer purchases increase at a dramatic rate
introduction stage
the life cycle stage in which the product or service is being invented or developed
competitive advantage
the particular customer benefits that a firm implements that keeps the firm ahead of other firms in the industry
risks
the parts of a business or business plan that expose the firm to any kind of loss - profits, sales, reputation, assets, customers, and so on
magic number
the post-tax income the entrepreneur personally seeks from the business
point of indifference
the price at which a buyer is indifferent about buying or not buying the business
pure innovation
the process of creating new products or services, which results in a previously unseen product or service
due diligence
the process of investigating a business to determine its value
buyout
the purchase of substantially all of an existing business
buy-in
the purchase of substantially less than 100 percent of a business
earnings multiple
the ratio of the value of a firm to its annual earnings
maturity stage
the third life cycle stage, market by a stabilization of demand, with firms in the industry moving to stabilize or improve profits through cost strategies
core product
the very basic description of what a product is - a bar of soap, a house-cleaning service
perceptual map
a graphical display which positions products, services, brands, or companies according to their scores on important strategic dimensions
Franchise
a legal agreement that allows a business to be operated using the name and business procedures of another firm
tagline
(also known as a slogan) memorable catchphrase that captures the key idea of a business, its service, product, or customer
start-up
a new business that is started from scratch
mission statement
a paragraph that describes the firm's goals and competitive advantages
goods
a physical product
markup pricing
a price-setting method where an amount is added to the cost of a product to set the retail price and provide a profit
perishability
a service exhibits perishability in that if it is not used when offered, it cannot be saved for later use
product distribution franchising
an agreement that provides specific brand name products which are resold by the franchisee in a specific territory
goal
an intended outcome for your business
tangibility
an items capability of being touched, seen, tasted, or felt
competitor
any other business in the same industry as yours
operational plan
business plans designed to be used internally for management purposes
niche market
a narrowly defined segment of the population that is likely to share interests or concerns
services
a nonphysical product
executive summary
a one- to two-page (250-500 words) overview of the business, its business model, market, expectations, and immediate goals. It is typically put at the start of a business plan and is the most popular summary form for a business plan
heterogeneity
a quality of a service in which each time it is provided it will be slightly different from the previous time
revolving credit
a credit agreement that allows the borrower to pay all or part of the balance at any time; as the loan is paid off, it becomes available to be borrowed again
mass market
a customer group that involves large portions of the population
business plan
a document designed to detail the major characteristics of a firm- its product or service, its industry, its market, its manner of operation (production, marketing, management), and its financial outcomes with an emphasis of the firms present and future
entry wage
an opportunity that makes it possible for a new business to gain a foothold in the market
net profit
the amount of money left over after operating expenses are deducted from the business
profit before taxes
the amount of profit earned by a business before calculating the amount of income tax owed
research and development
(often abbreviated R&D) - The part of a business (and a business plan) that is focused on creating new products or services and preparing new technologies, ideas, products, or services for the firm's market
test market
selling your product or service in a limited area, for a limited time
asset
something the business owns that is expected to have economic value in the future
cash flows
the actual receipt and spending of cash by a business
net realizable value
the amount for which an asset will sell, less the costs of selling
market
the business term for the population of customers for your product or service
replacement value
the cost to acquire an essentially identical asset
book value
the difference between the original acquisition cost and the amount of accumulated depreciation
total product
the entire bundle of products, services, and means of your offering; includes extras like service, warranty, or delivery, as well as what the product means to the consumer
target markets
the group of people on which a market focuses promotion its sales efforts
optimum price
the highest price that will product your desired level of sales in your intended market
spin-off
a business that is created by separating part of an operating business into a separate entitiy
augmented product
core product plus features that tend to differentiate it from the competition
ESOP
employee stock option plan: a method for employees to purchase the business for which they work
gross profit
funds left over after deducting the cost of goods sold
informational plans
gives potential customers or suppliers information about the company and its product or service
preselling
involves introducing your product to potential customers and taking orders for later deliveries
caveat emptor
latin: let the buyer beware
founder
people who create or start new businesses
industry dynamics
changes in competitors, sales and profits over time
elevator pitch
a 30-second (100 words or less) action-oriented description of a business designed to sell the idea of the business to another
invention plan
a business plan that involves information to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights
scope
a characteristic of a market that defines the geographic range covered by the market - from local to global
scale
a characteristic of a market that describes the size of the market- a mass market or niche market
synergy
a combination in which the whole is greater than the sum of its component parts
heuristic
a common-sense rule, a rule-of-thumb
new entrant business
a firm whose product or service is established elsewhere, but is new to this market
pioneering business
a firm whose product or service is new to the industry or itself is creating a new industry
cost strategy
a generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to customers
focus strategy
a generic strategy that targets a portion of the market, called a segment or niche
decline stage
a life cycle stage in which sales and profits of the firms in the industry begin a falling trend
cover letter
a one-page document on business stationary (also called letterhead) that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan
proprietary technology
a product or service or an aspect of one that is kept as a trade secret or is protected legally using patent, copyright, trademark, or service mark
inseperability
a quality of a service in which the service being done cannot be disconnected from the provider of the service
industry analysis (IA)
a research process that provides the entrepreneur with key information about the industry, such as its current situation and trends
vision statement
a very simple 5-10 word sentence or tagline that expresses the fundamental idea or goal of a firm
trade name franchising
an agreement that provides to the franchisee only the rights to use the franchisor's trade name and/ or trademarks
parallel competition
an imitative business that competes locally with others in the same industry
proof-of-concept website
an internet-based type of business plan providing information or demonstration of a product or service designed to solicit information on customer interest
retrenchment
an organizational life cycle stage in which established firms must find new approaches to improve business and its chances for survival
incremental innovation
an overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas
innovative strategy
an overall strategic approach in which a firm seeks to do something that is very different from what others in the industry are already doing
imitative strategy
an overall strategic approach in which the entrepreneur does more or less what others are already doing
discounted cash flows
cash flows that have been reduced in value because they are to be received in the future
strategic actions
competitive responses requiring a major commitment of resources
tactical actions
competitive responses with low resource requirements
generic strategies
three widely applicable classic strategies for businesses of all types- differentiation, cost, and focus