Chapter 4 - Small Business Ideas: Creativity, Opportunity, and Feasibility

customer segment

a group or subgroup of potential purchasers that can be approached in a coherent manner

license

a legal agreement granting you rights to use a particular piece of intellectual property

business models

a way to identify and organize key information on business and how it achieves its goals; can be analytical tools or a way to do business

freemium

an approach to pricing, and a business model, that connects free and premium products or services; typically a free version is offered and users have the option to pay to move up to premium features

imitative strategy

an overall strategic approach in which the entrepreneur does more or less what others are already doing

gain

any sort of outcome (product, service, outcome, or situation) customers or potential customers would like to encounter or be able to depend on; it is one of two driving forces of creating new products or services, with the other driving force being pain

pain

any sort of problem, annoyance, source of aggravation, shortcoming, or suboptimal situation customers or potential customers face; it is one of two driving forces of creating new products or services, with the other driving force being gain

feasibility study

evaluates the potential of a business opportunity by studying five primary areas in depth: the overall business idea, the product/service, the industry and market, financial projections (profitability), and the plan for future action

casual model of entrepreneurship

one of two approaches to thinking about entrepreneurship (the other is effectuation); want to create a particular product or service that does not yet exist, and to achieve that end, you have to cause the product or service to exist; you will have to learn new skills or find others to help you achieve your end

radical innovation strategy

rejecting existing ideas, and presenting a way to do things differently

opportunity recognition

searching and capturing new ideas that lead to business opportunities; this process often involves creative thinking that leads to discovery of new and useful ideas

value proposition

small business owners' unique selling points (also known as benefits) that customers can expect from your goods or services, including benefits that differentiate your offering from those of the competition

RBI screen

stands for "really big idea" and is a fast technique for making initial assessments (Called screens) of prospective business ideas based on five questions; this approach comes from Alex Bruton

incremental strategy

taking an idea and offering a way to do something slightly better than it is done presently

feasibility

the extent to which an idea is viable and realistic and the extent to which you are aware of internal (to your business) and external (industry, market, and regulatory environment) forces that could affect your business

licensee

the person or firm that is obtaining the rights to use a particular piece of intellectual property

licensor

the person or organization that is offering the rights to use a particular piece of intellectual property

target market

a marketing term (also called serviceable obtainable market, or SOM) that refers to the group of customers in the area you plan to service who would be likely to be interested in your product, or those of competitors; can refer to individuals or market groups called segments

royalty

a payment to a licensor based on the number or value of licensed items sold

pilot test

a preliminary run of a business, sales effort, program, or website with the goal of assessing how well the overall approach works and what problems it might have

creativity

a process producing an idea of opportunity that is novel and useful, frequently derived from making connections among distinct ideas or opportunities

entrepreneurial alertness

a special set of observational and thinking skills that help entrepreneurs identify good opportunities; the ability to notice things that have been overlooked, without actually launching a formal search for opportunities, and the motivation to look for opportunities

A/B testing

a way to check customer reaction to websites describing your product of service; two versions of the site are posted and are served up randomly to prospective customers; the version of the website that gets the most commitments from customers is the one kept and the less attractive site is revised and the two versions tested until one revisions gets consistently superior customer reactions

conversion rate

the measure of how many visitors to your website (or people who click on you online advertisement) are actually willing to make a commitment to the product or service promoted on the site