292 EXAM 2

Growth stage

customer purchases increase at a dramatic rate

External legitimacy

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

Cost strat

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

Trade name franchising

only the rights to use the franchisor's trade name and/or trademarks

Start-up Advantages & Disadvantages

-Clean slate -Most up-to-date technologies ----- -No name recognition -require significant time

Buying an Existing Business Advantages & Disadvantages

-Established customers -Often requires less cash outlay ---- -Existing employees may resist change -Reputation may be bad

The Organization

-Legal & organization structures -Key personnel -Related service providers

The Market

-Market & target customer -Competition & competitive advantage -Marketing strategy

Business plan

cover letter title page table of contents executive summary company industry market organization financials appendixes

Retrenchment

established firms must find new approaches to improve the business and its chances for survival

Internal understanding

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

Shake-out

following a boom in which there is a rapid decrease in the number of firms in an industry

Volatility

frequency of business starts and stops

Boom

growth stage marked by a very rapid increase in sales in a relatively short time

Franchise

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

Aggrandizing

making your business or yourself seem more accomplished than it is

Maturity Stage

marked by a stabilization of demand, with firms in the industry moving to stabilize or improve profits through cost strategies

Start-up

new business that is started from scratch

Mission Statement

paragraph that describes the firm's goals and competitive advantages

Pure Innovation

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

Conversion franchising

provides an organization through which independent businesses may combine resources

Product distribution franchising

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

Scope of a small business

(geographic range covered by the market) locally

Elevator Pitch

30-second action-oriented description of a business designed to sell the idea of the business to another

difference in # of hours worked per week for part-time vs full-time

35 hrs or less 35 hrs or more

Vision

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

Revolving Credit

A credit agreement that allows the borrower to pay all or part of the balance at any time

B2B

Business-to-business transactions using e-commerce Most popular

B2C

Business-to-consumer transactions using e-commerce

Poisoning the Well

Creating a negative impression among your employers' customers

Asset

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

Cannibalizing

Taking business away from your employer

Focus Strat

targets a portion of the market, called a segment or niche

Introduction stage

the product or service is being invented and initially developed

Differentiation Strat

aimed at clarifying how one product is unlike another in a mass market

Good reason to start a part-time buis before a full-time buis

-major force of our economy -cost to start up -time to start up -reduces risk (slide 6) multiple questions

industry/ product lifestyle

1- Introduction 2- Growth 3- Boom 4- Shake-out 5- Maturity 6- Decline 7- Retrenchment

Executive Summary

1-2 page overview of the business, its model, market, expectations, and immediate goals

Cover page

1-page document on business stationery that introduces the business plan & the business owner to the recipient & indicates why the recipient is being asked to read the plan

Parallel competition

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

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 doing

Imitative Straregy

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

scale of a small business

Niche market- narrowly defined segment of the population that is likely to share interests or concerns

Degree of Similarity

The extent to which a product or service is like another

Buyout

The purchase of substantially all of an existing business

5 paths to a Business Plan

Vision Mission Elevator Pitch Executive Summary Business Plan

Stand Retail (advantages & disadvantages)

roadside, flea market, farmers' market, or craft fair business A: little investment, variety of locations, quickly established, easily ended D: variable income, legal requirements

Decline Stage

sales and profits of the firm begin a falling trend

conflic of interest

when a person faces two or more competing standards or goal

Moonlighting

working on your own part-time business after your regular job