Test 3 small bus

Augmented product

Core product plus features that tend to differentiate it from the competition.

Cognitive dissonance

Doubt that occurs after a purchase has been made. An inconsistency between experience and belief

Distinctive competencies

Firm-specific strengths that allow a company to differentiate its products and/or achieve substantially lower costs to achieve a competitive advantage.

Primary goal for performing due diligence

First, you are attempting to find any wrongdoing: (1) fraud committed by the owners or managers; (2) misrepresentations of the sellers, such as improperly recognized revenues or expenses; and (3) missing information, including pending or threatened litigation, technological obsolescence of equipment, processes, product, or service, and unpaid taxes. S

Altruism

If your product helps the community, a group, the environment, or the world, it is a benefit a concern for others; generosity

Industry

Industry refers not only to your product or service, but also to all the firms selling that product or service; in other words, your competitors.

KPI (Key Performance Indicator)

Measures or metrics that identify the outcomes that are most important to the success of a business. While outcomes like sales or products produced are KPIs, events leading up to these are also usually considered key, like customers coming to your store or website for sales, or number of products started

Paid media-

TV, radio, newspapers, newsletters, and magazines

Takeovers

Takeovers are possible only of businesses that have stock that is freely transferable without the permission of management or other owners. In other words, only corporations and certain partnerships can, under any circumstance, be acquired in a takeover process. A takeover comprises purchasing enough of the target business's stock to gain control of the board of directors of the business.

Owned media-

a new category of promotional tactic based on brands becoming publishers of their own content in order to maximize the brands' value to customers Internet sites, such as websites, blogs, Facebook, and Twitter accounts, that are owned by an advertiser.

Blue ocean strategy

a strategy based on creating a new product or service that has no competitors.

Bricolage

a word derived from the French verb bricoler ("to tinker"). In entrepreneurial usage bricolage refers to the process of analyzing the resources available and creating a product or service from them

Co-marketing

efforts among a number of firms to jointly market their products and services

Strategy focus

focuses on the competition, with the key being the goods', services', or firm's competitive advantage over the other firms.

Keys to customer relationship management (CRM)

gathering and analyzing the data The key to CRM is the data on current or prospective customers. Given the power of repeat selling, the most valuable data come from your existing customers. For all existing customers you want two kinds of data—contact data and performance data. Contact data give you the particulars on your customers while performance data give you information on the date and type of contact, since in many sales situations it can take repeated contacts before a sale is made

Mass market

is a market that involves large portions of the population—all men, all women, all teens, all elderly, all families, all manufacturers, all restaurants

Niche market

is a narrowly defined segment of the population that is likely to share interests or concerns—25- to 34-year-old women, families with twins, Boy Scouts, Italian restaurants, manufacturers in your city

Trade name franchising

is an agreement that provides only the rights to use the franchisor's trade name and/or trademarks. Two examples of this are True Value Hardware and Associated Grocers, Inc

Replacement value

is an estimate of what an identical asset would cost to be acquired and readied for service

Business format franchising

is exemplified by the McDonald's Corporation. A McDonald's franchise includes the right to use McDonald's many trade names, specifications of the product to be sold, operating methods, marketing plan, and national advertising. Franchisees pay to the franchisor both an up-front fee to obtain the franchise rights and a percentage of gross sales

Earnings multiple

is simply firm value divided by actual or expected annual earnings. Multiplying forecast earnings by the earnings multiple provides a quick estimate of firm value

Strategy

is the idea and actions that explain how a firm will make its profit.

Competitive advantage

is the particular way you implement your customer benefits that keeps your firm ahead of other firms in your industry or market. Competitive advantage is your firm's edge in meeting and beating the competition.

Marketing focus

marketing focuses on the customers with the key being the goods' or services' value proposition

Shared media

media shared by consumers with other consumers, such as social media, blogs, mobile media, and viral channels as well as traditional word of mouth

spin-off business

new company that emerges from a larger enterprise spin-off business

Product distribution franchising

provides the franchisee with specific brand named products, which are resold by the franchisee in a specified territory. Two examples of this type of franchising are Snap-On Tools and auto dealerships.

Major aspects that come from securing outside investment

securing outside investment accomplishes two things: First, the process of obtaining investment funds means that your business will be critically examined by outsiders who have no vested interest in your idea, product, or service. Second, the fact that you were able to convince outsiders to invest in your business indicates a level of belief in the business and you that provides legitimacy.

Churn

the number of consumers who stop using a product or service, divided by the average number of consumers of that product or service

Competitive advantage

the particular way a firm implements customer benefits that keeps the firm ahead of other firms in the industry

Break-even

the point at which total costs equal gross revenue.

Synergy

the power that results from the combination of two or more forces Having more founders in the business also provides an opportunity for synergy, in which the business results are greater than the sum of the input. Multiple founders can also provide a forum for examining ideas, evaluating information, and making good business decisions

Buyouts

the purchase of substantially all of an existing business.

Business life cycle

the sequence or pattern of developmental stages any business goes through during its life span

Core competencies

those functions that the organization can do as well as or better than any other organization in the world

Bootstrapping

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

First step for performing due diligence

1. Conduct extensive interviews with the sellers of the business. 2. Study the financial reports and other records of the business. 3. Make a personal examination of the site (or sites) of the business. 4. Interview customers and suppliers of the business. 5. Develop a detailed business plan for the acquisition. 6. Negotiate an appropriate price for the business, based on the business plan projections. 7. Obtain sufficient capital to purchase and operate 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

Operational plans

A business plan designed to be used internally for management purpose are designed to be used as working documents within a business. So in addition to all the material typically included in a full business plan, an operational plan includes detailed specifications of the major techniques, methods, recipes, formula, and sources used by the firm to do its work.

Cost strategy

A generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer.

Focus strategy

A generic strategy that targets a portion of the market, called a segment or niche

Mission statement

A paragraph that describes the firm's goals and competitive advantages.

Brand ambassador

A real person who, under contract with the brand's marketing organization, acts as a spokesperson for the brand.

Industry analysis

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

Differentiation strategy

A type of generic strategy aimed at clarifying how one product is unlike another in a mass market

Vision statement

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

Primary research

An approach to researching based on the gathering of new information, using techniques such as interviewing, surveying, and observation

Secondary research

An approach to researching based on the use of existing information, often from government, commercial, or academic databases and research efforts

Tangibility

An item's capability of being touched, seen, tasted, or felt.

Retrenchment

An organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival. Some industries face death, while others find new life in a process called retrenchment

Intangibles

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

Earned media-

a category of promotional tactic based on a public relations or publicity model that gets customers talking about products or services

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 a niche market.

Entry wedge

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

Legitimacy

The belief that a firm is worthy of consideration or doing business with because of the impressions or opinions of customers, suppliers, investors, or competitors

Book value

The difference between the original acquisition cost and the amount of accumulated depreciation.

External legitimacy

The extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family

Conversion rate

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

Prototype

The name given to the first model of a product or service. Some prototypes may be functioning, but built in a way that no consumer would buy it (e.g., with exposed wires and sharp edges) but shows the product can do what is promised. Some prototypes look like the final product, but might not be functional. Prototypes are made to prove aspects of the idea and are seen as the first stop along the path of product/service creation

Due diligence

The process of investigating a business to determine its value

Me-too enterprises

The vast majority of start-up businesses are "me-too" enterprises. The business idea is simply to create another occurrence of a common business: a beauty shop, a restaurant, a bar or lounge, a rock band, a sign company, plumbing service, yard care, and so on. S

Pivot

Typically, a term describing a change of direction in the thinking of an entrepreneur or a firm, often based on new data or other findings.

Value proposition

Why do they care? Why will it be important to the buyers/users? Why will they be happier with your offering than their current substitutes or alternatives? What will make your solution the best available fit (i.e., the most valuable available alternative) to what the customer wants or needs?

Business incubators

a business incubator is an organization that provides financial, technical, and managerial help to start-up businesses. Incubators provide access to angel investors, public grants for seed money, and technology support

Incremental innovation

an overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas. an innovation that squarely builds on an established knowledge base and steadily improves an existing product or service

Heuristics

are simply rules of thumb that are commonly used to estimate firm value in relation to some easily observable characteristic of the business

Key resource acquisitions

also called bulk asset purchases, are the only way a sole proprietorship may be purchased. This technique may also be used with any other form of business.

Lean business practices

an application created by Eric Ries that addresses the specifics of new business creation, particularly Internet-based businesses, where rapid experimentation and constant monitoring of viewers' choices are possible.

Effectuation

an approach used to create alternatives in uncertain environments.

Value strategy

best price, best product, best service

Sole proprietorship

business owned by a single individual who is responsible for all debts and claims against the business

Comparable sales of other firms

comparable sales of other firms in the same industry are commonly used to estimate the value of a business. This method has two major problems. First, no two firms are exactly alike. Second, there are often no recent sales to use for comparison.