Ch. 6 SB&F

Synergy

A combination in which the whole is greater than the sum of its component parts.

Disadvantages of start-ups

No initial name recognition Require significant time Very difficult to finance Cannot easily gain revolving credit May not have experienced managers and workers

Affordable loss

The minimum possible expenditure of capital and other resources in order to bring an entrepreneurial idea to market.

Leveraging contingencies

The practice of and ability to seize upon novel opportunities that become apparent during the conduct of business.

Lean business practices

get product out as quick and efficient as possible addresses the specifics of new business creation, particularly Internet-based businesses, where rapid experimentation and constant monitoring of viewers' choices are possible.

Effectual reasoning

A logical process in which one analyzes the resources available and restraints on the use of resources to create an attainable goal.

Asset

Something the business owns that is expected to have economic value in the future.

Disadvantages of purchasing an existing business

Finding a successful business for sale that is appropriate for you is difficult Existing employees may resist change Reputation may be a hindrance Facilities and equipment may be obsolete

Strategic partnerships

Formal or informal relationships with customers, vendors, or mentors to ensure the success of an entrepreneurial venture

Spin-off

A business that is created by separating part of an operating business into a separate entity.

Causal (predictive) reasoning

The process of setting a goal and then determining the strategy and resources required to attain the goal.

Buyout

The purchase of substantially all of an existing business.

Bootstrapping

Using low-cost or free techniques to minimize your cost of doing business.

Start-up

A new business that is started from scratch.

Bricolage

Refers to the process of analyzing the resources available and creating a product or service from them.

Revolving credit

A credit agreement that allows the borrower to pay all or part of the balance at any time As the loan balance is paid off, it becomes available to be borrowed again

Franchise

A legal agreement that allows a business to be operated using the name and business procedures of another firm.

Minimum viable product

A concept central to lean business practices where you make a minimum product, but one that can be sold. By selling to customers and collecting feedback, an entrepreneur can develop a product at minimum cost.

Advantages of start-ups

Begin with a clean slate Use the most up-to-date technologies Provide new, unique products or services Can be kept small deliberately to limit the magnitude of possible losses

Advantages of purchasing an existing business

Established customers Business processes are already in place Often requires less cash outlay

Both lean operations and bootstrapping are based on and share three underlying ideas:

Waste not, want not Create, standardize, repeat. Keep in touch.

The Five Paths to Business Ownership

You may start a new business You may buy an existing business You may franchise a business You may inherit a business You may be the manager of a business