MGMT350 Test 2

point of indifference

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

incremental strategy

taking an idea and offering a way to do something slightly better than it is done presently

business models

a way to identify and organize key information on a business and how it achieves its goals

pass off

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

termination

an endgame strategy in which the owners closes down a business

intangibles

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

imitative strategy

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

strategic partnerships

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

licensee

the person or firm which is obtaining the rights to use a particular piece of intellectual property

due diligence

the process of investigating a business to determine its value and potential for investment

conversion franchising

an agreement that provides an organization through which independent businesses may combine resources

gains

any sort of outcome (a 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

business format franchising

an agreement that provides a complete business format, including trade name, operational procedures, marketing, and products or services to sell

product distribution franchising

an agreement that provides specific brand name products which are resold by the franchisee in a specified territory

pain

any sort of problem, annoyance, source of aggravation, shortcoming, or suboptimal situation customers or potential customers face; one of two driving forces of creating new products or services, with the other driving force being gain

RBI screen

"Really Big Idea" -a fast technique for making initial assessments of prospective business ideas based on five questions

synergy

A combination in which the whole is more than the sum of its parts

minimum viable product

A concept central to lean business practices where you 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.

workout

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

employee stock ownership plan (ESOP)

A formalized legal method to transfer some or all of the ownership of a business to its employees

customer segment

A group or subgroup of potential purchasers that can be approached in a coherent manner.

effectual reasoning

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

pilot test

A preliminary run of a business, sales effort, program, or Web site with the goal of assessing how well the overall approach works and what problems it might have.

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.

sell off

A type of business transfer where the seller gets only a fraction of the value of the business.

A/B testing

A way to check customer reaction to websites describing your product or 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 revision gets consistently superior customer reactions.

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.

BASIC

Beginner's All-purpose Symbolic Instruction Code

walkaway

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

causal model of entrepreneurship

One of two approaches to thinking about entrepreneurship (the other is effectuation). This approach is one in which you 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. This can mean you will have to learn new skills, or find others to help you achieve your end.

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.

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.

affordable loss

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

licensor

The person or organization which is offering the rights to use a particular piece of intellectual property.

leveraging contingencies

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

spin-off

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

heuristic

a commonsense rule; a rule of thumb

revolving credit

a credit agreement that allows consumers to pay all or part of the outstanding balance on a loan or credit card. As credit is paid off, it becomes available again to use for another purchase or cash advance

license

a legal agreement granting you 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 serve who would be likely to be interested in your product, or those of competitors.

start-up

a new business that is started from scratch

royalty

a payment to a licensor based on the number or value of licensed items sold

franchise

a prepackaged business bought, rented, or leased from a company

creativity

a process producing an idea or opportunity that is novel and useful, frequently derived from making connections among distinct ideas or opportunities

trade name franchising

an agreement that provides to the franchisee only the rights to use the franchisor's trade name and/or trademarks

freemium

an approach to pricing, and a business model, that connects free and premium products or services

transfer

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

caveat emptor

let the buyer beware; puts the burden for consumer protection onto the consumer

founders

people who create or start new businesses

serial entrepreneur

person who opens multiple businesses throughout his or her career

bricolage

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

radical innovation strategy

rejecting existing ideas, and presenting a way to do things differently

takeover

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

causal (predictive) reasoning

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

buyout

the purchase of substantially all of an existing business

buy-in

the purchase of substantially less than 100 percent of a business

earnings multiple

the ratio of the value of a firm to its annual earnings

bootstrapping

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

discounted cash flows

cash flows that have been reduced in value because they are to be received in the future

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

asset

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

net realizable value

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

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

feasibility

the extent to which an idea is viable and realistic and the extent to which you are aware of internal and external forces that could affect your business

bankruptcy

the legal method for closing a business and paying off creditors under the direction of the court