Entrepreneurship Exam 1

Does the product or service accomplish a task that has been problematic?

"Getting the job done" (Factor of Competitive Advantage)

The usual startup cost for microenterprise is approximately _______

$100

In fact, more than __________ of all U.S. firms have four or fewer employees, according to the U.S. Small Business Administration.

60 percent

Paid promotion through media outlets.

Advertising

Any item of value

Asset

Generated by outside circumstance

External opportunity

1. Calculating the unit of sale, 2. Determining the economics of one unit of sale, 3. Substituting someone else's labor, 4. Selling in volume, and 5. Creating jobs and operating at a profit.

Five breakthrough steps entrepreneurs can take to understand preliminary feasibility are:

_________ can be found within large organizations globally and are most successful when the organization supports their efforts and rewards entrepreneurial creativity and accepts failure as part of the process.

Intrapreneurs

How Do Entrepreneurs Create Business Ideas?

Listen, Observe, Analyze

Someone may become unemployed and be unable to find suitable work or their family may have health issues which preclude regular employment. This is an example of

Necessity-based entrepreneur

Enter entrepreneurship because circumstances make self-employment their best available option for income replacement

Necessity-based entrepreneurs

The difference between assets and liabilities

Net Worth

Free promotion

Publicity

The clear majority of businesses are:

Small businesses

WHICH segment of the market are you aiming to serve? As discussed in Chapter 2, this will be your target market. Defining your target market in a way that will help you identify qualified potential customers is critical to achieving success.

Target Market

Next, this analysis should describe your _________ segments

Target Market (opportunity analysis and research)

Debbi Fields, founder of Mrs. Fields Cookies, took resources; eggs, butter, flour, sugar, chocolate chips—and turned them into cookies. She added _________ to the resources she had.

Value

The reason customers select the products/services Examples: -Newness -Performance -"Getting the job done" -Design -Brand/status -Price -Cost reduction -Risk reduction -Accessibility -Convenience/usability

Value Proposition (VP)

Being able to __________ sell at a lower price because you have discovered a secret, less costly way to produce or deliver the product is a competitive advantage

permanently

As you consider an entrepreneurial path, consider these questions:

-Are you planning to be active in the business until retirement? At what age will you retire? Who will take over then? A family member? A new owner? -Do you plan to grow the business to a certain size or level of maturity and then sell it? If so, what is the target level? Are you looking at an initial public offering or a small private sale? Would you stay with the business after it was sold? -Would you want to stay active for a given number of years? Then what would you do?

The free-market system, which is also called capitalism, typifies the following attributes:

-Individuals and companies may compete for their own economic gains. -Private wealth and property ownership are permissible (allowed). -Free-market forces primarily determine prices.

Entrepreneurs have differing motivations for starting ventures. There are two main categories to differentiate between them according to motivation. What are they?

-Necessity-based entrepreneurs -Opportunity-based entrepreneurs

The two primary forms of franchising are:

-Product/trade name franchising -Business format franchising

1. Problems (your business can solve) 2. Changes (in laws, situations, or trends) 3. Inventions (of new products or services) 4. Competitive Advantage (in price, location, quality, reputation, reliability, speed, or other attributes of importance to customers) 5. Technological Advances (that entrepreneurs take from the laboratory to the marketplace)

5 Roots of Opportunity

The Association for Enterprise Opportunity (AEO) estimates that the more than 25.5 million microenterprises in the United States account for _________ of all businesses and _____________ of all private employment

91 percent of all businesses; 31 percent of all private employment

-The story of what the business is and hopes to become, -Costs projections and a marketing plan, -A description of how the business expects to be financed, and -An estimate of projected earnings.

A business plan should include:

1. The Offer 2. Target Market 3. Production and Delivery Capability

A solid business definition has three elements:

-In addition to the above, it is also necessary to -Understand the needs of your customers; -Have a sustainable competitive advantage or multiple, evolving advantages; and -Deliver a product or service that meets your customers' needs at the right price

According to Jeffry Timmons's New Venture Creation, a successful company needs to do one of the following:

-Sell to a market that is large and growing. -Sell to a market where the competition can make a profit. -Sell to a market where the competition is succeeding but is not so powerful as to make it impossible for a new entrepreneur to enter. -Sell a product or service that solves problems consumers may have with the competition. -Sell a product or service at a competitive price that will attract customers.

According to Jeffry Timmons's New Venture Creation, a successful company needs to do one of the following:

-Capital requirements -Cost advantages -Economies of scale -Access to distribution channels -Product differentiation -Government policy

According to Porter, sources of barriers to entry include

The purchase of a business can be a good way to jump-start entry into small business ownership.

Acquisition

Which are measurements of the key drivers of the start-up business that guide informed decisions and actions

Actionable metrics

A savvy entrepreneur learns from the mistakes of others and appreciates the wisdom and experience of trusted:

Advisors and Mentors

The appendices will provide you with an opportunity to strengthen your business plan with examples and details that are not critical for inclusion in the main portions. This is the place to add management resumes, sample promotional materials, and illustrations or diagrams of products and packaging In some cases, the detailed financial projections will appear in the appendices. Each appendix should be numbered and placed in the plan according to the order of reference in the text. The appendices should be listed in your table of contents.

Appendices

However, the operations of a small business ______________ as those of a large one.

Are not the same

The core principles involved in running a large company—like Microsoft—and a corner deli:

Are the same

-Write for your audience -Show that you have skin in the game -Be clear and concise -Use current data and reports for your industry -Choose a voice and stick with it -Use a consistent, easy-to-read format -Number and label -Present it professionally

As you put together your business plan, a number of guidelines and suggestions can help you get the most value for your time and effort

A method that analyzes the underlying value of a business's assets as a basis for negotiating a price The four most common standards are: -Book Value -Adjusted Book Value -Liquidation Value -Replacement Value

Asset Valuation

Types of professional advisors:

Attorneys and Accountants

Average Sale per Customer minus Average Cost of Sale per Customer equals:

Average Gross Profit per Customer

___________ show the business's assets (what you own), liabilities (what you owe), and net worth, or owner's equity. These statements provide insights into your financing strategy and overall business health.

Balance Sheet

Your three years of projected balance sheets will provide snapshots of your business at specific points in time, such as the last day of a month, quarter, or year.

Balance Sheet Projections (Financial Analysis and Projections)

A financial statement summarizing the assets, liabilities, and net worth of a business.

Balance Sheet def

In an industry, the threat of new entrants is largely defined by the strength of the barriers erected to prevent them

Barriers to Entry

The factors that contribute to the ease or difficulty of a new competitor joining an established market, and they cannot be so high that market entry and success are not possible.

Barriers to entry

The wealth you will accrue and the knowledge, skills, self-esteem, and experience you will gain.

Benefits

Bill Gates did not invent computer software, but he did recognize that people were frustrated and intimidated by it He created a user-friendly software applications that consumers wanted, and packaged them attractively with easy-to-read manuals

Bill Gates competitive advantage

Will customers associate your product with a quality brand or with luxury and status?

Brand/status (Factor of Competitive Advantage)

This calculation will determine your organization's breakeven point—that is, when the volume of sales exactly covers the fixed costs

Breakeven Analysis (Financial Analysis and Projections)

When the volume sales exactly cover fixed costs

Breakeven Point

Fixed Costs divided by Gross Profit per Unit

Breakeven Units

Most Americans earn money by working in __________. They are somehow engaged in the buying and selling of products or services to earn money.

Business

Offer Target Market Production Capability Problem solving

Business Definition Questions

A company's plan to generate revenue and make a profit from operations.

Business Model

Visual representation of the critical components, and creating it well will compel you to think through many facets of the business.

Business Model Canvas

A document that thoroughly explains a business idea and how it will be carried out

Business Plan

1. Cover Page 2. Table of Contents 3. Executive Summary 4. Mission, Vision, and Culture 5. Company Description 6. Opportunity Analysis and Research 7. Marketing Strategy and Plan 8. Management and Operations 9. Financial Analysis and Projections 10. Funding Request and Exit Strategy 11. Appendices

Business Plan Outline

-A written business plan is only one component of the business- planning process. -Business plan presentations may be formal or informal, and you may have anywhere from a few minutes to a couple of hours for the complete presentation and discussion. -Presentations to venture capitalists may be limited to as little as 5 to 20 minutes

Business Plan presentation

Includes the offer, target market, and product and delivery capability—answering the questions of who, what, and how

Business definition

The ___________ is intended to be created on a large scale, so that ideas and information can be posted on it to create a clear representation.

Business model canvas

It is more an execution document than an exploratory one

Business plan

This force is like that of suppliers, but on the demand side. The larger and more diverse the customer base, the less dependent competitors in an industry will be on particular customers.

Buyer Power

Cash or goods invested to generate income and wealth is called ___________; in a free-enterprise system, anyone who possesses or can raise the necessary capital may start a business.

Capital

The free-market system, characterized by individuals and companies competing for economic gains, ownership of private property and wealth, and price determination through free-market forces.

Capitalism

cash flow statement - Shows cash receipts less cash disbursements over a period

Cash Flow Projections (Financial Analysis and Projections)

A way of thinking based on cause and effect, with managers planning and creating steps toward a specific goal in a linear fashion

Casual Logic

How the company reaches and communicates with customer segments

Channel (CN)

A ____________ is a percentage of the value of a sale. If you decide to pay yourself a 10 percent ___________, and sell an item for $120, your commission on the sale would be $12.

Commission

-If the company is already established, is a franchise, or is the reincarnation of a previous business, there will be a history to share with the reader of the plan. -If this is a start-up venture, this section should describe briefly the background story of the company, explaining what you have done thus far and why you have done it. -The legal form of the business (sole proprietorship, corporation, LLC, partnership) should also be noted

Company Description section

For your business to be successful and to fulfill your mission and vision, you will need a strategy for beating the:

Competition

Society in general benefits because free enterprise encourages __________ between entrepreneurs.

Competition

The ________ must be sustainable to create long-term viability. Your competition is defined by your target market and can be direct (selling the same or similar products to the same market) or indirect (selling different products that compete for the same share of customer spending).

Competitive Advantage or Core Competency

research that compares an organization with several direct and indirect competitors by name in a manner that is meaningful to targeted customers.

Competitive Analysis (opportunity analysis and research)

Combines your business definition with your competitive advantage. A competitive advantage must be sustainable, meaning that you can keep it going.

Competitive strategy

Is it easy to use your product? Is your product accessible?

Convenience (Factor of Competitive Advantage)

The fundamental, ethical, and moral philosophy and beliefs that form the foundation of the organization and provide broad guidance for all decision making.

Core values

also called intrapreneurship, it occurs when an individual or team within an existing corporation creates or identifies new opportunities for increased profits and/or improved competitive position, secures the necessary resources, and creates value through a new organization or innovation within the firm

Corporate Entrepreneurship

All costs of operations

Cost Structure (C$)

The cost of producing a tangible item

Cost of Goods Sold

The cost of the direct labor used to produce the service plus the cost of the delivery of the service

Cost of Services Sold (COSS)

What is different about your business activities and the cost of doing business, compared to the competition? Overall, are you at a cost advantage or disadvantage?

Cost structure

A decision-making process in which the costs of taking an action are compared to the benefits

Cost/benefit analysis

Using a comparison of benefits and costs to make a decision is called a ____________. It is a helpful tool because people often evaluate pros and cons based on emotions, not intellect.

Cost/benefit analysis

The money, energy, and time you will have to invest, as well as the opportunities you will be giving up, to operate the business.

Costs

To turn an opportunity into a business, entrepreneurs invest both time and money. Before making this kind of investment, think carefully about:

Costs and Benefits

Entrepreneurs may have different reasons to start and continue their businesses, but they share the common focus of:

Creating Sustained Value

The ________ of an organization, whether intentionally or unintentionally created, is largely defined by its leadership.

Culture

The beliefs, values, and behavioral norms of an organization

Culture

Leaders of a company build a culture by making the beliefs, values, and behavioral norms explicit and intentional. Culture includes factors such as risk tolerance and innovation; orientation with respect to people, teams, and outcomes; attention to detail; and communications norms. Organizational culture is learned by members of the team in many ways, including through anecdotes, ceremonies and events, material symbols, and use of language

Culture is composed of the core values in action

A term for money when it is exchanged internationally

Currency

Types established through consumer segments reached Examples: -Personal assistance -Dedicated personal assistance -Self-service -Automated services -User communities -Co-creation

Customer Relationships (CR)

Where entrepreneurs are free to trade voluntarily to as large a market as possible, their ability to find customers to buy their goods or services increases, as well as their overall ability to meet _____________. Meanwhile, the Internet has made it much easier for businesses to sell to clients all over the world.

Customer needs

The customers for whom the company creates value

Customer segments (CS)

Can your product or service be tailored to the requirements of your customers?

Customization (Factor of Competitive Advantage)

Finding a committed business mentor with industry-specific knowledge and experience, broad general business experience, or both, is often __________, but can be a worthwhile endeavor.

Difficult

Employees that actively produce or deliver a product or service.

Direct Labor

Includes telemarketing, direct mail, in-person selling, and other personalized promotional efforts.

Direct Marketing

The public benefits from living in a free-enterprise system because it ___________ entrepreneurs who waste resources by driving them out of business. It ____________ entrepreneurs to use resources to satisfy consumer needs efficiently by rewarding them with profit and wealth.

Discourages; Encourages

Segments that aren't related and have very different needs

Diversified Market

Each stockholder's portion of the profit-per-share paid out by a corporation

Dividend

Take a share of the company's profit. As the owner, you can pay yourself a portion of the business's profits. In a corporation, this kind of payment is called a _________ and must be paid to all shareholders.

Dividend

If you are purchasing a company, you should perform ________, which is the process used to learn about its true financial condition (the current owners may have incentives to provide incomplete, misleading, or inaccurate information), its reputation, and its continuing viability

Due diligence

The exercise of reasonable care in the evaluation of a business opportunity.

Due diligence

a method that assesses the value of a business based on a stream of earning that is multiplied either by an agreed-upon factor (the capitalization factor) or by the price/earnings ratio (for a publicly traded company)

Earning Valuation

At first, an entrepreneur can be part of his own:

Economics of one unit

How much gross profit is being earned on each unit of the product or service that is sold

Economics of one unit of sale (EOU)

Who wrote in the preface of New Venture Creation: Entrepreneurship for the 21st Century, "A skillful entrepreneur can shape and create an opportunity where others see little or nothing—or see it too early or too late?

Economist Jeffry A. Timmons

An ____________ is the wealth and resources of a country or region, including its financial structure.

Economy

Also known as entrepreneurial thinking and is defined as a way of thinking employed by entrepreneurs that includes decision-making principles applied in situations of uncertainty

Effectual Logic

This analysis of __________ versus __________ is important to understanding how successful entrepreneurs can create businesses from opportunities.

Effectual Logic; Casual Logic

a 30-second to 2-minute presentation that conveys in an engaging way what a business is proposing and why the listener should be interested

Elevator Pitch

Someone who earns a living by working directly for someone else's business is an ____________ of that business.

Employee

Successful entrepreneurs know it is important to begin with the _______________, so that they can have an idea of where they want the organization to be at their personal exit point, even before they make the first sale.

End in mind

Entrepreneurship is often called the _________________. It drives economic creativity, giving rise to wealth and jobs and improving the standard of living.

Engine of an economy

A person who recognizes an opportunity and organizes and manages a business, assuming the risk for the sake of potential return

Entrepreneur

People who have their own businesses work for themselves and are called business owners or:

Entrepreneurs

Manufacturing. One order (any quantity; e.g., 100 watches). Wholesale. A dozen of an item (e.g., 12 watches). Retail. One item (e.g., one watch). Service. One hour of service time (e.g., one hour of lawn-mowing service) or a standard block of time devoted to a task (e.g., one mowed lawn).

Entrepreneurs usually define their unit of sale according to the type of business. For example:

a review that addresses the roles of the community, region, nation, or the rest of the world, as they relate to a business.

Environmental Analysis (opportunity analysis and research)

For example, José has a construction business, and his neighbors hire him to renovate their kitchen. He wants to earn money and is willing to use his skills and time to do so. The neighbors are willing to give him money to get the renovation done. They each have something the other wants, so they are willing to trade. A satisfactory exchange only takes place when both parties believe they will benefit

Example of Voluntary Exchange

Example of trade-off: buying margarine instead of butter because its cheaper even though you know the cookies won't taste the same.

Example of trade-off

"At Superior Printing, we engage in business practices that affect the environment as little as possible." "At Sheila's Restaurant, we believe in supporting local organic farmers."

Examples of Core Values

General Motors—General Motors is leading the transportation revolution by delivering safer, better and more sustainable ways for people to get around. Driven by 177,000 talented employees across the globe, General Motors' vision is to help create a world with zero crashes, zero emissions and zero congestion. Google—To provide access to the world's information in one click. Kiva—We envision a world where all people—even in the most remote areas of the globe—hold the power to create opportunities for themselves and others.

Examples of Vision Statements

DuPont Company—DuPont puts science to work by creating sustainable solutions essential to a better, safer, healthier life for people everywhere. Google—To organize the world's information and make it universally accessible and useful. Kiva Microfunds—To connect people through lending to alleviate poverty.

Examples of mission statement

The executive summary must be compelling and comprehensive. It may be the only part that many people will read This section should be written last and limited to one or two pages. It should answer the who, what, when, why, and how questions for the business.

Executive Summary section

The degree of rivalry among existing competitors is generally the strongest force in an industry and is influenced by all the other forces

Existing Competitive Rivalry

The exit strategy is the way in which you and/or your investors expect to leave the company in a planned and orderly way. For investors, this might mean a buyout plan for their equity, or an initial public offering (IPO) when the company goes public—that is, puts itself on a stock exchange

Exit Strategy

Competitive advantage comes from one (or a combination) of several factors: 1. Quality 2. Price 3. Location 4. Selection 5. Service 6. Speed/turnaround 7. Convenience 8. "Getting the job done" 9. Brand/Status 10. Newness 11. Customization

Factors of Competitive Advantage

Among these mainstream firms are many ______________, which are companies owned and operated primarily by related family members

Family enterprise

a study to assist in making the go/no go decision based on a close examination of product/service, market, industry, and financial data in a sufficient degree of detail to ensure confidence in the results.

Feasibility Analysis

The financial section is the numeric representation of the business plan. It should demonstrate organizational viability in financial terms.

Financial Analysis and Projections

the relative value of one currency to another.

Foreign Exchange Rate (FX)

A ____________ is a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group seeking to use that identification in a business.

Franchise

A business that markets a product or service developed by a franchisor, typically in the manner specified by that franchisor.

Franchise

Economic system in which businesses are privately owned and operate relatively free of government interference.

Free-enterprise system

The economy of the United States is a ____________ because it is characterized by private (rather than governmental) ownership of capital assets and goods, and prices are determined by markets; anyone is free to start a business.

Free-enterprise system

Your business plan should explicitly state the funds you will need. Whether the need is $5,000 or $50 million, the logic must be clear and compelling

Funding Request

a company that achieves an annual growth rate of 20 percent or greater, typically measures by the increase of sales revenue.

Gazelle

Business activities that avoid harm to the environment or help to protect it in some way.

Green Entrepreneurship

According to the Corporation for Enterprise Development (CFED), ______________ can: -create jobs and offer entrepreneurship opportunities; -increase energy efficiency, thus conserving natural resources and saving money; -decrease harm to workers' health; -enable businesses to tap into new sources of local, state, and federal funding; -take advantage of consumer preference for environmentally friendly goods -preserve limited natural assets on which businesses and communities depend for business and quality of life.

Green entrepreneurship

Total sales revenue (price) minus cost of goods sold

Gross Profit

Develop a love for the business rather than being in love with the:

Idea of the business

a financial document that summarizes income and expense activity over a specified period and shows net profit or loss

Income Statement (profit and loss statement)

An income statement or profit and loss statement summarizes income and expense activity over a specified period, such as a month, quarter, or year, and shows net profit or net loss

Income Statement for 3 years (Financial Analysis and Projections)

a critical view of industry definition, industry size and growth (or decline), product and industry life cycle, and any current or anticipated legal or regulatory concerns.

Industry Analysis

The industry analysis will provide the broad context

Industry Analysis (opportunity analysis and research)

First offering of corporate stock to investors on the open (public) market.

Initial Public Offering (IPO) (Exit Strategy)

is one that comes from inside you—from a personal hobby, interest, or even a passion—or inside your organization

Internal opportunity

Opportunities fall into two categories:

Internal opportunity and External opportunity

Critical actions for success 1. Production 2. Problem-solving 3. Platform/network

Key Activities (KA)

The suppliers and partners needed in the network -Strategic alliances between noncompetitors -Cooperation (strategic alliances between competitors) -Joint ventures -Buyer-supplier relationships

Key Partners (KP)

That which is critical to making the model function 1. Physical 2. Financial 3. Intellectual 4. Human

Key Resources (KR)

A hypothesis-driven approach to business start-up using iterative development, introduced by Eric Ries in 2008

Lean Startup

The __________hypothesis-driven approach shortens product development cycles through experimentation, iterative product releases, and validated learning. It reduces waste and increases value.

Lean Startup

A business debt

Liability

One way to potentially shorten the product-development cycle and to access innovative technology is to identify and license that technology—that is, to enter into a contract to use it without purchasing the rights to own it.

Licensing Technology

__________________ are microenterprises that permit their owners to follow a desired pattern of living, such as supporting college costs or taking vacations.

Lifestyle businesses

Can you find a more convenient location for customers?

Location (Factor of Competitive Advantage)

Taking the ___________ also means considering your personal satisfaction and priorities, including conformance with individual values and ethics.

Long view

The people you hire and the processes you plan to implement will be an essential part of your business plan. This is where the rubber meets the road in the planning process The management team is often the deciding factor for a potential investor's decision to financially support a business The team must be composed of an effective balance of members with technical expertise (e.g., engineering, marketing, accounting, and operations), experience in the field, and life experience

Management and Operations

A group of people or organizations that may be interested in buying a given product or service, has the resources to purchase it, and is permitted by law and regulation to do so.

Market

The combination of the four factors: product, price, place, and promotion—that communicates a marketing vision. Also know as Core Competency

Marketing Mix (marketing strategy and plan)

a statement of the marketing goals and objectives for a business and the intended strategies and tactics to attain them.

Marketing Plan (marketing strategy and plan)

A large, broadly similar group of customers

Mass Market

A trusted advisor with whom a person forms a developmental partnership through which information, insight, skills, and knowledge are shared to promote personal and/or professional growth.

Mentor

Two of the best resources for getting and staying on track are:

Mentors and Business advisors.

a firm with five or fewer employees, initial capitalization requirements of under $35,000, and the regular operational involvement of the owner.

Microenterprise

Most businesses are founded as ___________, which are defined as businesses with five or fewer employees, initial capitalization requirements of less than $50,000, and the habitual operational involvement of the owner.

Microenterprises

Start-ups create __________, models or version of a new product that are designed to secure maximum customer feedback with minimal effort

Minimum Viable Products (MVP)

Expressed in a mission statement, is a concise communication of strategy, including your business definition and competitive advantage

Mission

A brief, written statement that informs customers and employees what an organization's goal is and describes the strategy and tactics to meet it.

Mission Statement

The presence of financial and operational goals and measures, as well as ____________, can feed a drive for success and motivate a team to excellence.

Mission and vision statements

Limited to 21 to 40 words to induce clarity in concept and expression

Mission statement should be:

Generally are composed of supplier and customer segments that are all served

Multi-sided Market

Is your product new and novel? Is it on the leading edge of technology?

Newness (Factor of Competitive Advantage)

A narrow, specialized, specific group of customers

Niche Market

WHAT will you sell to your customers? That is called your ______, and it includes the complete bundle of products and services you will be bringing to the marketplace.

Offer

An ____________ has a unique characteristic that distinguishes it from an ordinary idea

Opportunity

An idea that is based on what customers need or want and are willing to buy sufficiently often at a high enough price to sustain a business.

Opportunity

-Industry Analysis -Environmental Analysis -Proof of Market -Target Market

Opportunity Analysis and Research Components

Cost/benefit analysis is incomplete without considering ___________. This is the cost of your "next-best investment."

Opportunity cost

The value of what must be given up in order to obtain something else.

Opportunity costs

This person's motivation is not income replacement, but rather one of an envisioned future.

Opportunity-based entrepreneur

Start businesses to exploit a perceived opportunity or to pursue one that they created.

Opportunity-based entrepreneurs

But most employees have one thing in common—they do not __________ the business; they work for others who do

Own

the difference between assets and liabilities (Net Worth)

Owner's equity

Entrepreneurs are both __________ and ___________

Owners and employees

Americans do not have to get __________ from the government to go into business, although they are expected to obey laws and regulations and report their earnings.

Permission

This is the venue from which you will sell and distribute your product

Place (Marketing Mix)

Included in ___________ is your selection of a type of sales force (e.g., independent, company, single line, or multiline), any geographic definition of your market, and all channels of distribution.

Place marketing mix

The entrepreneur is working for the following potential rewards: 1. Control over Time 2. Fulfillment 3. Independence/ Autonomy (self-government) 4. Creation/Ownership 5. Financial reward/ Control over compensation 6. Control over working conditions 7. Self-esteem 8. Contribution to society

Potential Benefits of Entrepreneurship

While there are many potential benefits of entrepreneurship, entrepreneurs also face numerous possible costs: 1. Business failure 2. Obstacles 3. Loneliness/ Isolation 4. Financial Insecurity 5. Long hours/ hard work 6. Strain on personal relationships

Potential Costs of Entrepreneurship

Once you have chosen a business idea and determined your competitive advantage, you should make a _________ to determine whether the idea would be financially viable

Preliminary analysis

Can you offer a lower price on a sustained basis than your competition, or does your higher price reflect quality and/or uniqueness?

Price (Factor of Competitive Advantage)

The product or service has to be priced so that your target customers will buy it and the business will make a profit.

Pricing (Marketing Mix)

The free-enterprise system is also sometimes referred to as a _____________ because it is based on voluntary exchange

Private enterprise free-trade system

Is something that exists in nature or is made by human beings. It is TANGIBLE, meaning that it can be physically touched

Product

HOW will you provide your offer to your targeted customers? This includes how to perform the key activities required to produce the product or service, deliver it to your customers, and ensure they are satisfied.

Production and Delivery Capability

-Buying, developing, or manufacturing the product; -Identifying its potential qualified customers and selling the product to them; -Producing and delivering the product or service; and -Receiving payment.

Production and Delivery Capability includes primary activities of:

The product or service should meet or create a customer need

Products/Services (Marketing Mix)

Positive gain from operations after all expenses are subtracted

Profit

__________ is the sign that an entrepreneur has added value to the resources he or she is using.

Profit

The economics of one unit of sale is a method for seeing whether your business idea could be:

Profitable

Promotion consists of advertising, publicity, and other promotional methods, such as discount coupons or giveaways Examples: -Advertising -Public Relations -Publicity -Direct Marketing

Promotion (Marketing Mix)

An investigation that provides evidence of a market opportunity.

Proof of Market

In order to avoid such unwelcome surprises, you can create the production design for your product and create a working model, called a _____________, fabricated for testing by laboratories and prospective customers.

Prototype

Community activities that are designed to enhance an organization's image.

Public Relations

Can you provide higher quality than competing businesses?

Quality (Factor of Competitive Advantage)

Your business plan is the key to:

Raising Capital

A business plan should include standard ratios: gross profit, quick, current, debt, collection period, receivable turnover, inventory turnover, net profit on sales, net profit to assets, and net profit to equity

Ratio Analysis (Financial Analysis and Projections)

How funds are generated Examples: -Asset sales -Usage fee -Subscription fees -Lending/renting/leasing -Licensing -Brokerage fees -Advertising fees

Revenue Streams (R$)

All businesses take risks and make their projections based on assumptions: you need to state your financial assumptions and known risks explicitly.

Risks and Assumptions (Financial Analysis and Projections)

Strengths, Weaknesses, Opportunities, and Threats

SWOT Analysis

A fixed amount of money paid to an employee at regular intervals.

Salary

Entrepreneurs choose how and when they are paid. As owner of your company, when funds permit, you can decide to: Pay yourself a __________, a fixed payment made at regular intervals, such as every week or every month. Salaries are not applicable to sole proprietorships, where owners may take a "draw" on revenues, or partnerships, where they may "draw down" profits.

Salary

Economists consider ___________ all resources that are worth money, regardless of their relative availability

Scarce

-Using a new technology to produce a new product -Using an existing technology to produce a new product -Using an existing technology to produce an old product in a new way -Finding a new supply of resources (that might enable the entrepreneur to produce a product more economically) -Developing a new market for an existing product

Schumpeter's definition describes five basic ways that entrepreneurs find opportunities to create new businesses:

Groups with slightly different needs and problems

Segmented Market

Can you provide a wider range of choices than your competitors can?

Selection (Factor of Competitive Advantage)

Is labor or expertise exchanged for money. It is INTANGIBLE. It cannot be physically touched

Service

Can you provide better, more personalized customer service?

Service (Factor of Competitive Advantage)

1. Recognize an opportunity 2. Evaluate it with critical thinking 3. Build a team 4. Write 5. Gather resources 6. Decide ownership 7. Create Wealth

Seven rules for building a successful business

The French word entrepreneur began to take on its present-day meaning in the _____________. It was used to describe someone who undertook any project that entailed risk—military, legal, or political, as well as economic.

Seventeenth Century

Written and oral communications, critical thinking and problem solving, teamwork and collaboration, creativity, leadership, ethical behavior, and information technology

Skills that an engaged learner will recieve

A small business is defined by the U.S. Small Business Administration's Office of Advocacy as having fewer than 500 employees and selling less than $5 million worth of products or services annually

Small Business

__________ has multiple definitions and forms, but it is commonly thought of as a for-profit enterprise with the dual goals of achieving profitability and attaining beneficial returns for society. Another view is that of taking an entrepreneurial perspective toward social problems.

Social Entrepreneurship

In addition to "social entrepreneurship," there is the more recent concept of the _____________, "a non-loss, non-dividend company designed to address a social objective within the highly regulated marketplace of today

Social business

a company created to achieve a social objective while generating a modest profit to expand its reach, improve the product or service, and subsidize the social mission.

Social business

____________ play the role of change agents in the social sector by: -adopting a mission to create and sustain social value (not just private value); -recognizing and relentlessly pursuing new opportunities to serve that mission; -engaging in a process of continuous innovation, adaptation, and learning; -acting boldly without being limited by resources currently in hand; and -exhibiting heightened accountability to the constituencies served and for the outcomes created.

Social entrepreneurs

It states where you expect to obtain your financial support and how you will use the funds

Sources and Uses of Capital (Financial Analysis and Projections)

Can you deliver your product/service more quickly than the competition?

Speed/turnaround (Factor of Competitive Advantage)

Apple cofounder Founder Steve Jobs

Stephen Wozniak

A plan for how an organization or individual intends to outdo competitors.

Strategy

Your strategy is the plan for outperforming the competition. Your tactics are the ways in which you will carry out your strategy

Strategy; Tactics

The less bargaining power and control the suppliers of raw materials, components, and labor have over competitors, the more attractive the industry.

Supplier Power

The specific ways in which a business carries out its strategy

Tactics

Groups defined by common factors such as demographics, psychographics, age, or geography that are of primary interest to a business.

Target Market

Starting a business is an opportunity, and like any opportunity, it should be evaluated by taking a careful look at all aspects of it. One thing is certain, though:

The desire to make money, alone, is not a good enough reason to start one's own business.

-product and/or service feasibility, -market and industry feasibility, and -financial feasibility.

The feasibility analysis essentially tests a business concept for viability in three areas:

1. existing competitive rivalry, 2. barriers to entry, 3. threat of substitutes, 4. supplier power, and 5. buyer power

The five industry forces identified by Michael Porter are essentially

Entrepreneurs must be able to tolerate more risk and uncertainty than is typical for people who work steady jobs at established employers. With higher risk, however, comes:

The potential for higher rewards.

-The entrepreneur looks for business opportunities through a process of identification and selection, beginning with self-developed (or group-developed) ideas. -The entrepreneur uses essentially the same process but starts with research on hot businesses, trends, or growth areas. -The entrepreneur has an idea for a product or service or has a problem to solve and searches for a market.

There are three primary routes in the deliberative search process to create and identify opportunities:

The level of threat posed by alternative products and services to industry customers matters. Some defining factors: -Convenience -Price competitiveness -Supply availability -Switching costs -Public policies

Threat of Substitutes

-It is attractive to customers because it creates or adds value for its customers. -It will work in the business environment. -It can be executed in a defined window of opportunity. -It can be implemented with the right team to make it durable.

Timmons's definition of a business opportunity includes these four characteristics:

-Competitive Offers -Unique Selling Proposition -Cost Structure

To determine whether you have a competitive advantage that will enable you to outperform your closest and strongest competitors, ask these questions:

-The cost of materials used to make the product (or deliver the service) and -The cost of labor directly used to make the product (or to deliver the service).

To get a closer look at one unit of sale, entrepreneurs analyze the cost of goods sold (COGS) of one unit. These are:

Who was the person that created an environmentally friendly company that would convert trash into fertilizer? There business was named TerraCycle Inc.

Tom Szaky

The act of giving up one thing for another

Trade-off

A product and/or service with a particular environmental, social, or ethical purpose. Grameen Danone does this by providing food for the poor in Bangladesh.

Type I

In his book Creating a World without Poverty—Social Business and the Future of Capitalism, Mohammad Yunus defines two kinds of social business:

Type I Type II

Profit-oriented business with ownership consisting of underprivileged people who can benefit directly or indirectly.

Type II

-Own channel versus partners -Direct (sales force, web sales, own stores) versus indirect (partner stores, wholesalers)

Types of Channels

1. Deliver WOW through service 2. Embrace and drive change 3. Create fun and a little weirdness 4. Be adventurous, creative, and open-minded 5. Pursue growth and learning 6. Build open and honest relationships with communications 7. Build a positive team and family spirit 8. Do more with less 9. Be passionate and determined 10. Be humble

Types of Core Values from Zappos.com

Start-up company valued at $1 billion

Unicorn

Some firms are high growth and highly uncommon

Unicorns

the distinctive features and benefits that set you apart from your competition

Unique Selling Proposition (USP)

Is the basic unit of the product or service sold by the business

Unit of Sale

A subset or segment of social entrepreneurship wherein financial and human capital is invested in not-for-profits by individuals and for-profit enterprises, with the intention of generating social rather than financial returns on their investments.

Venture Philanthropy

Will be broader and more comprehensive, painting the big picture of what you want your organization to become. It is built on the core values and belief system of the organization. It is typically shorter than the mission statement, with a loftier perspective.

Vision

The vision for your business is broader and more comprehensive than its mission, painting a picture of the overall view of what you want your organization to become in the future. It is built on the core values of the organization. It should energize your people, and they should embrace it with enthusiasm and passion.

Vision for Business

A market transaction between buyers and sellers who willingly agree to the trade.

Voluntary exchange

_______________ occurs when buyers and sellers willingly engage in a market transaction that benefits each party

Voluntary exchange

A fixed payment per hour for work performed. This is not a common choice, but it is available.

Wage

Find your competitive advantage by determining what consumer:

Want and Need

Entrepreneurs seek opportunities that they envision as generators of incremental income, or:

Wealth

If one unit of sale is profitable, the whole business may be. By contrast, if one unit of sale is not profitable, then no matter how many units you sell, the business:

Will never be successful

In addition, according to the late Jeffry Timmons, "An opportunity has the qualities of being ________________ in a product or service which creates or adds value for its buyer or end user."

attractive, durable, and timely, and is anchored

The organization's culture can be shaped according to the _____ and by the way employees, customers, and other stakeholders are treated—an example that is set by the founding entrepreneur (owner)

business environment

No serious professional investor will agree to meet unless you have put together a comprehensive, convincing:

business plan

Each organization has the opportunity to create a unique mission, vision, and culture that will be supported by its:

core values

As you work on plans for your enterprise, it is a good idea to work on an _________ that quickly conveys to the listener in an engaging way what you are proposing and why he or she should be interested.

elevator pitch

Conducting a product or service ___________ serves the dual purpose of determining whether realization of the product or delivery of the service is possible at a profit and whether customer demand will be sufficient.

feasibility analysis

A __________ presupposes the business's desirability and your interest in this segment of the industry.

feasibility study

Having completed the product or service feasibility analysis and conducted one for the market and industry, you can complete this process by assessing the ____________ of your business idea. This analysis does not need to be detailed. At this point, addressing capital requirements, revenues, costs, and earnings should suffice

financial viability

Remember, not every ____ is an opportunity

idea

The opportunity analysis and research section will provide the credible information to demonstrate the market viability of your proposed business before you launch It should be a clear description of why the business presents an excellent opportunity, based on sound research and logic, including hypothesis testing

opportunity analysis and research section

The description of the ___________ is similar to the discussion of place in the marketing mix but with the emphasis on logistics and workforce readiness.

physical location

An entrepreneur can better assess feasibility with a reasonable projection of revenues based on anticipated:

pricing and volume

Unlike an employee, an entrepreneur owns _________ that his or her business earns and may choose to reinvest profit in the business or take it as payment.

profits

The opportunity analysis should include a _________- investigation that will provide evidence of a market opportunity for your organization.

proof of market (opportunity analysis and research)

Opportunity is:

situational

A neighborhood restaurant, a mattress manufacturer, a technology research company, and a clothing boutique can all be examples of a ____________; even a leading local employer may be classified as "small" under this definition

small business

The amount of _________ required will be a function of the size and type of organization you are starting

start-up capital

Evaluating the ______________ and industry is essential to determining the viability of a business idea

targeted market

As you choose the elements of your marketing plan, always keep your ______ in mind

vision

It is important to perform a feasible study so that you don't:

waste valuable resources

In addition, by using the ________, you can save some time and money by presenting your business plan to several investors at a time, no matter where they are located. You can broadcast your presentation in real time over the web or send it electronically to interested parties.

web