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