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