ENTR 4113 Test 1

BRIE Model

-Boundary: Creating a place for your business, in location and in people's minds -Resources: The money, product, and knowledge etc. that makes up a business -Intention: The desire to start a business -Exchange: Moving resources/products/services in exchange for money.

High Growth Ventures

A firm started with the intent of eventually going public, following the pattern of growth and operations of a big business. Sales more than $1,000,000 and make up 5% of firms.

Efficiency Driven Economy

A nation where industrialization is becoming the major force providing jobs. revenues, and taxes, and where minimizing costs while maximizing priority is a major goal. Russia, Brazil, China. Mid Ranged entrepreneurship.

Factor Driven Economy

A nation where the major forces for jobs, revenues, and taxes come from farming or extractive industries like forestry, mining, or oil production. Pakistan, Jamaica, Venezuela. High entrepreneurship.

Innovation Driven Economies

A nation where the major forces for jobs, revenues, and taxes come from high value added production based on new ideas and technologies and from professional services based on higher education. Germany, Korea, USA. Low entrepreneurship levels.

Royalty

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

Serial Entrepreneur

A person who opens multiple businesses throughout his or her career

Entrepreneur

A person who owns or starts an organization, such as a business

Self Efficacy

A person's belief in his or her ability to achieve a goal

Pilot Test

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

A/B Testing

A way to check customer reaction to websites describing your product or service. Two versions (version "A" and version "B") 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

Freemium business model

An approach to pricing, and a business model, that connects free and premium products or services. Typically a free version is offered and users have the option to pay to move up to premium features. Popular examples include Dropbox (5 GB of space for free, with more space or services at a price) and Angry Birds (free ad-supported version; paid version removes ads).

Effectuation

An approach used to create alternatives in uncertain environments

Depreciation

Regular and systematic reduction in income that transfers asset value to expense over time

Issues in Family Businesses

Role Conflict Succession

Conversion Rate

The measure of how many visitors to your website are actually willing to make a commitment to the product or service promoted on the site

Pitch/Pitch Deck

The name given to a formal presentation of a slideshow summarizing your business plan, given to investors.

Due Diligence

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

Four Focuses of Entrepreneurship

-Creation -Customer -Efficiency -Innovation

Universal Rewards of Entrepreneurs Seeking Small Business

-Growth -Income -Flexibility

Imitative, Incremental, and Radical Innovation Strategies

-Imitative: doing what others are doing -Incremental: offering a slightly better version of what exists -Radical: rejecting what exists, and presenting a new way forward

Rare Rewards of Entrepreneurs Seeking Small Business

-Recognition -Admiration -Power -Family

Myths About Small Business

-There's not enough financing -You can't start a business during a recession -To make profits, you need to make something -If you fail, you can never try again -Students don't have the skills to start a business -Ninety percent of all new businesses fail within two years

Occasional Rewards of Entrepreneurs Seeking Small Business

-Wealth -Product

Elevator Pitch

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

Unicorn

A business with a valuation over $1 Billion

Expense

A decrease in owners' equity caused by consuming your product or service

Traditional Small Business

A firm intended to provide a living income to the owner, and operating in a manner and on a schedule consistent with other firms in the industry market. Makes between $25,000-$100,000 a year, and accounts for around 22% of small businesses.

High Performing Small Business

A firm intended to provide the owner with a high income through sales or profits superior to those of the traditional small business. Makes between $100,000-$1,000,000 a year and accounts for 20% of small businesses.

Franchise

A prepackaged business bought, rented, or leased from a company called a franchisor

Proprietary Technology

A product or service or an aspect of one that is kept as a trade secret or is protected legally using patent, copyright, trademark, or service mark

Lifestyle or Part-Time Firm

A small business primarily intended to provide partial or subsistence financial support for the existing lifestyle of the owner, most often through the operations that fit the owner's schedule and way of working. Makes $25,000 a year or less and makes up 53% of all small businesses.

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 opportunities

Entrepreneurial Ecosystem

A specific configuration of the environment that reflects the components that are most central to developing a strong and active community of start up businesses. The components are entrepreneurs, investors, service people, mentors, and large organizations.

Balance Sheet

A statement of what a business owns (assets), what it owes to others (liabilities), and how much values the owners have invested in it (owners' equity)

Feasibility Study

A study that evaluates the potential of a business opportunity by studying the fave primary areas in depth; the overall business idea, the product/service, the industry and market, financial projections, and the plan for future action

Corridor Principle

A theory in entrepreneurship and occupational theory that says that as you start pursuing one line work or opportunity you will encounter other opportunities

Current

An asset that will be turned into cash in less than one year or a liability that must be paid in less than one year

Long Term

An asset that will still have value to the business more than one year from now, or a liability that will still be owed more than one year from now

Promotion Focus

An entrepreneur's attention to maximizing gains and pursuing opportunities likely to lead to gains

Prevention Focus

An entrepreneur's attention to minimizing losses, with a bias toward inaction or protective action to prevent loss

Certification

An examination based acknowledgment that the firm is owned and operated as specified

Revenue

An increase on owners' equity caused by selling your product or service

Accounting Equation

Assets = Liabilities + Owners' Equity

Casual and Effective Models

Casual: Think of a business idea and then build if Effectual: Decide you want to make a business and then think of the idea

Social Capital

Characteristics of a business such as trust, consistency, and networks, that represent potential social obligations that are assets of the firm or entrepreneur

Set-asides

Government contracting funds that are earmarked for particular kinds of firms, such as small businesses, minority owned firms, women owned firms, and the like

Pre-selling

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

Liability

Legal obligations to give up things of value in the future

Organizational Identity

Part of the BRIE Model, composed of the name, description, and distinctive elements of a firm, such as trademarks, uniforms, logos, characters, and stories

Asset

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

Pivot

Starting your business one way, and look for better opportunities as you go

SCAMPER Model of Creativity

Substitute Combine Adapt Magnify/Modify Put to other uses Eliminate Rearrange

Going Concern Concept

The accounting concept that a business is expected to continue in existence for the foreseeable future

Legitimacy

The belief that a firm is worthy of consideration or doing business with because of the impressions or opinions of customers, suppliers, investors, or competitors

Business Entity Concept

The concept that a business has an existence separate from that of its owners

Mindshare

The degree of attention your target market pays to your idea or organization

Owners' Equity

The difference between assets and liabilities of a business

Social Entrepreneurship

The form of entrepreneurship involving the creation of self sustaining charitable and civic organizations, or for-profit organizations that invest significant profits in charitable activities

Corporate Entrepreneurship

The form of entrepreneurship that takes place in existing businesses around new products, services, or markets.

Liability of Newness

The set of risks faced by firms early in their life cycles that comes from a lack of knowledge by the owners about the business they are in and by customers about the new business

Creative Destruction

The way that newly created goods, services, or firms can hurt existing goods, services, or firms

Bootstrapping

Using low cost or free techniques to minimize costs of doing business