Entrepreneurship P2 Exam 1 (5-8)

Magic number

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

Leveraging contingencies

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

sell off

a sale of an investment, such as shares in a company, that causes its value to fall

Private Placement Memorandum

a specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments

invention plan

A business plan that provides information to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights.

competitor

all the firms also selling that product or service

tansfer

an endgame strategy in which ownership is moved from one person or group to another

strategic actions

competitive responses requiring a major commitment of resources

buy-in

the purchase of substantially less than 100 percent of a business

mass market

large portions of the population

Professional manager

one who has the experience and skills to use a systematic approach to analyzing and solving business problems

due diligence

process of investigating a business to determine its value

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

Business plan

a document designed to detail the major characteristics of a firm

mission statement

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

pass off

a type of business transfer where the owner gives the business to someone else without a payment.

niche market

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

lean business model

addresses the specifics of new business creation, particularly internet-based businesses, where rapid experimentation and constant monitoring of viewers' choices are possible

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

product distribution franchise

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

termination

an endgame strategy in which the owner closes down a business

Bankruptcy

an extreme form of business termination that uses a legal method for closing a business and paying off creditors when debts are substantially greater than assets

parallel competition

an imitative business that competes locally with others in the same industry

proof-pf-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

Data Room

an online repository for the documentation that back ups and details the specifics of your business and business plan

entry wedge

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

incremental innovation

an overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas

intangibles

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

operational plan

business plans designed to be used internally for management purposes

gross profit

funds left over after deducting the cost of goods sold

screening plan

gives the basic overview of the firm and a detailed look at the financials

preselling

involves introducing your product to potential customers and taking orders for later delivery

Minimum viable product

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

risks

the parts of a business or business plan that expose the firm to any kind of loss - profits, sales, reputation, assets, customers, and so on

point of indifference

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

Pure innovation (blue ocean strategy)

the process of creating new products or services, which results in a previously unseen product or service

Generic Strategies

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

Effectual reasoning

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

executive summary

a brief account of the key points contained in a business plan. two pages. (250-500 words)

affordable loss

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

Elevator Pitch

30 second/100 words or less action oriented description to create "hook"

vision statement

5-10 word sentence that expresses the fundamental idea or goal of the firm

perceptual map

A graphic display which positions products, services, brands, or companies according to their scores of important strategic dimensions.

retrenchment

An organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival.

Business Plan Components

Cover Letter Title Page Table of Contents Executive Summary The Company The Industry The Market The Organization The Financials The Appendixes

The Organization

Deals with the legal form of business and the organizational structure

net profit

The amount of money left after operating expenses are deducted from the business

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.

buyouts

employees are offered a severance package in order to leave their jobs

key employee/partner plan

provides information of the company to prospective business or marketing partners

Bricolage

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

takeover

seizing of control of a business by purchasing its stock to be able to select the board of directors

test marketing

selling your product or service in a limited area, for a limited time

scale

size of the market

focus strategy

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

workout

A form of business termination in which the firm's legal or financial obligations are not fully met at closing.

walkaway

Business termination in which the entrepreneur ends the business with its obligations met.

strategic partnerships

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

informational plans

Give potential customers or suppliers information about the company and its product or service.

Casual (predictive) reasoning

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

spin-off

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

synergy

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

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

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 is itself creating a new industry

pitch

a formal presentation of a slideshow summarizing your business plan given before judges or potential investors or partners

Cost Strategy

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

serial entrepreneur

a person who opens multiple businesses throughout his or her career

industry analysis (IA)

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

differentiation strategy

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

Discounted Cash Flow

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 in an industry over time

supra-strategies

classic benefit combinations which are designed to work where there are many small businesses in an industry, along with a few larger firms

Tactical Actions

competitive responses with low resource requirements

pitch deck

slideshow presentation that summarizes a business or more often a business plan

asset

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

net relizable value

the amount for which an asset will sell, less the costs of selling

profit before taxes

the amount of profit earned by a business before calculating the amount of income tax owed

replacement value

the cost to acquire an essentially identical asset

Book value

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

degree of similarity

the extent to which a product or service is like another

internal understanding

the extent to which employees, investors, and family members involved in the business know the business's purposes and operations

Industry Life Cycle

the five different stages introduction, growth, shakeout, maturity, and decline - that occur in the evolution of an industry over time

industry

the general name for the line of product or service being sold, or the firms in that line of business

scope

the geographical range covered by the market