Entrepreneurship Final Revised Dr. Bell

scale

a characteristic of a market that describes the size of the market- a mass market or niche market

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

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

Franchise

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

decline stage

a life cycle stage in which sales and profits of the firms in the industry begin a falling trend

niche market

a narrowly defined segment of the population that is likely to share interests or concerns

start-up

a new business that is started from scratch

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

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

generic strategies

three widely applicable classic strategies for businesses of all types- differentiation, cost, and focus

Mentoring program

when successful business owners and corporate executives volunteer their time and energy to assist start up and struggling small businesses as a public service. One of the 12 actions to increase start up success

perceptual map

a graphical display which positions products, services, brands, or companies according to their scores on important strategic dimensions

mission statement

a paragraph that describes the firm's goals and competitive advantages

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

vision statement

a very simple 5-10 word sentence or tagline that expresses the fundamental idea or goal of a firm

product distribution franchising

an agreement that provides specific brand name products which are resold by the franchisee in a specific territory

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

goal

an intended outcome for your business

ESOP

employee stock option plan: a method for employees to purchase the business for which they work

Proven demand

ensuring your product or service has this, can reduce or eliminate the chance your product or service will be a failure. One of the 12 actions to increase start up success

Build trust in your story

essential to start up success, others take a risk on your business and it makes them feel better if you do THIS One of the 12 actions to increase start up success

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

Me too enterprises, or copycat business

the business idea is simply to create another occurrence of a common business, these make up the vast majority of start up businesses

point of indifference

the price at which a buyer is indifferent about buying or not buying the business

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

spin-off

a business that is created by separating part of an operating business into a separate entitiy

scope

a characteristic of a market that defines the geographic range covered by the market - from local to global

tagline

(also known as a slogan) memorable catchphrase that captures the key idea of a business, its service, product, or customer

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

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

Experience managing small firms

Those that have this are less likely to be overwhelmed and more likely to be able to meet the many simultaneous demands of guiding a start up. One of the 12 actions to increase start up success

gross profit

funds left over after deducting the cost of goods sold

caveat emptor

latin: let the buyer beware

Disadvantages of start ups

no initial brand recognition, require significant time to establish and provide positive cash flows, difficulty financing, usually cannot easily gain revolving credit, possible inexperience

founder

people who create or start new businesses

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

industry analysis (IA)

a research process that provides the entrepreneur with key information about the industry, such as its current situation and trends

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

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

entry wage

an opportunity that makes it possible for a new business to gain a foothold in the market

Business incubator

an organization that provides financial, technical, and managerial help to start up businesses. One of the 12 actions to increase start up success

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

competitor

any other business in the same industry as yours

intangibles

assets, such as patents or trademarks, and liabilities, such as accounts payable, that have no physical existence

discounted cash flows

cash flows that have been reduced in value because they are to be received in the future

industry dynamics

changes in competitors, sales and profits over time

Advantages of start ups

clean slate, use most up to date technologies, new or unique products or services, ability to deliberately keep small

strategic actions

competitive responses requiring a major commitment of resources

tactical actions

competitive responses with low resource requirements

Start with more than one founder

doing this can provides more experience, skill, forums, resources, and opportunity for synergy. One of the 12 actions to increase start up success

Start with established customers

doing this will let you start with immediate cash flows, the threes way to do so are: start as a spin off from your employer, go into competition with your employer, or subcontract services to your employer or other established businesses One of the 12 actions to increase start up success

turn key

every part of setting up the business is handled by professionals

Previous start up experience

on average a successful entrepreneur suffers 3 start up fails before achieving success. learning from these fails is important and give a person this One of the 12 actions to increase start up success

Industry Experience

only through this can you learn the methods, sources, and markets for your particular start up. Finding information for any simple task is better with this. One of the 12 actions to increase start up success

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

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

start new, buy existing, franchise, inherit, hired to manage

the 5 paths to business ownership

cash flows

the actual receipt and spending of cash by a business

High margins

the amount by which sales prices exceed product costs, provides a buffer for mistakes if you choose a business that produces BLANK. One of the 12 actions to increase start up success

net realizable value

the amount for which an asset will sell, less the costs of selling one of the three commonly used methods used to estimate the value of a firm's assets

market

the business term for the population of customers for your product or service

replacement value

the cost to acquire an essentially identical asset one of the three commonly used methods used to estimate the value of a firm's assets

book value

the difference between the original acquisition cost and the amount of accumulated depreciation one of the three commonly used methods used to estimate the value of a firm's assets

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

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

magic number

the post-tax income the entrepreneur personally seeks from the business

outside investments

the process of Securing these makes someone with no vested interest in your start up critically examine it and provides legitimacy by this individual's level of belief. One of the 12 actions to increase start up success

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

Cash

the single greatest hurdle to a successful start up is obtaining and maintaining sufficient BLANK to support both operations and growth

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

Detailed start up budget

this provides a road map for necessary spending during the beginning phase, when cash flows are likely to be small or nonexistent. One of the 12 actions to increase start up success