MGNT 350 Chapter 6 Test 2

Sell off

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

Transfer

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

Leveraging contingencies

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

Causal (predictive) reasoning

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

Book value

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

Affordable loss

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

Lean Operations and Bootstrapping are based on

1. Waste not, want not 2. Create, standardize, repeat. 3. Keep in touch.

Minimum viable product (MVP)

A concept central to lean business practices where you make a minimum product, but one that can be sold.

Revolving credit

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

Net realizable value

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

Point of indifference

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

Bootstrapping

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

Lean business practices

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

Workout

business termination in which the firm's legal or financial obligations are not fully met at closing.More than ½ of all business closings

Spin-off

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

Pass off

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

Synergy

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

Bankruptcy

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.

Effectual reasoning

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

Takeover

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

The Five Paths to Business Ownership

1. You may start a new business 2. You may buy an existing business 3. You may franchise a business 4. You may inherit a business 5. You may be the manager of a business

Replacement value

The cost to acquire an essentially identical asset.