MNGT 310-exam 2

effectual reasoning

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

executive summary

A one to two-page (250-500 words) overview of the business, its business model, market, expectations, and immediate goals. It is typically put at the start of a business plan and is the most popular summary form for a business

conflict of interest

A situation in which a person in a position of responsibility or trust has competing professional or personal interests that make it difficult to fulfill his or her duties impartially.

Private Placement Memorandum (PPM)

a specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments

methods to determining the value of a business

discounted cash flows and asset valuation

SIC code

four digit code

virtual offices

gives you access to your files, as well as web based fax services, and most typically full business telephone services

4 steps of strategy in small business

goals, customers and benefits, industry dynamics and analysis, strategy selection

zoning laws

government specifications for acceptable use of land and buildings in particular areas

success factors for part time businesses

o Separating and Balancing Business and Home o Exchange: dealing with others o Pricing and Costing

inherit a business

o Sucession: businesses are not always passed from parent to child, often are to nieces and nephews or inlaws. Important to make a successful transition

new entrant

o a firm whose product or service is established elsewhere but is new to this market.

supply shortages

occur when a new product is in demand. The target audience is leading-edge buyers who are willing to pay a premium to be the first to have the product. This is a short-term market and one that changes rapidly. The key benefits are delivery, shopping ease, and style.

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

why are part time businesses important?

1.) most businesses start as part time ventures 2.) the amount of part time businesses in the economy (almost half)

tweet

A 140 character-long post on a social media site

elevator pitch

A 30 second (100 words or less) action-oriented description of a business designed to sell the idea of the business to another

caveat emptor

A Latin expression that means "let the buyer beware" which has been made into a philosophy sometimes used by businesses to put the burden for consumer protection onto the customer

part time business

A business in which the owner either participates fewer than 35 hours per week or operates on a temporary or seasonal basis while maintaining employment elsewhere for wages or salary.

home party

A business model in which the entrepreneur arranges a customer to host a party, inviting friends, family, and neighbors. During the party, the entrepreneur demonstrates products and accepts orders for future delivery.

famous organizations that started as part time ventures

Accion, American Information Systems, Apple, Dell, Facebook, Ford Modeling Agency

RSS feed

An internet messaging service that pushes whatever web material you specify to subscribers to that feed

business-to-consumer (B2C)

Business-to-consumer transactions using e-commerce.

discounted cash flows

Cash flows that have been reduced in value because that are to be received in the future.

NAICS code

six digits; covers more industries and more newer type industries

Business-to-business (B2B)

E-commerce transactions between businesses.

affordable loss

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

the financials

The one page financial summary section starts with a paragraph showing the overall financial results. Followed by 'the ask' which is what you are seeking from others.

critical risks

The parts of a business or business plan that expose the firm to any kind of loss

due diligence

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

causal (predictive) reasoning

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

operational plan

a business plan designed to be used internally for management purposes

key employer/partner plan

a business plan that provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees.

market scope

a characteristic of a market that defines the geographic range covered by the market form local to global

market scale

a characteristic of a market that describes the size of the market- mass market or niche market

mass market

a customer group that involves large portions of the population

incubator

a facility that offers subsidized space and business advice to companied in their earliest stages of operation

pioneering business

a firm whose product or service is new to the industry or is itself creating a new industry

offering circular

a legal document required by firms seeking funding through equity crowdfunding platforms created under the JOBS act. An OC contains SEC required forms, an offering memorandum, and the financial statements of the firm.

decline stage

a life cycle stage in which sales and profits of the firm begin a falling trend

niche market

a narrowly defined segment of the population that is likely to share interests or concerns

boom

a type of life cycle growth stage marked by a very rapid increase in sales in a relatively short time

shake out

a type of life cycle stage following a boom in which there is a rapid decrease in the number of firms in an industry

vision statement

a very simple 5-10 word sentence or tagline that expresses the fundamental idea or goal of the firm

blog

a webpage in which entries are posted in reverse chronological order

network marketing

an approach to selling in which the salesperson recruits customers to become distributors of the product or service to others

growth stage

an industry life cycle stage in which customer purchases increase at a dramatic rate

informational websites

an internet site designed to introduce and explain a business to others

entry wedge

an opportunity that makes it possible for a new business to gain a foothold in a market

aggrandizing

attempting to make your business or yourself seem more accomplished or grander than reality

asset valuation methodology

based on the assumption that a business is worth the value of its assets minus the value of any liabilities

unutilized resources

can be a physical resource like gravel in a farm field or even entire inner cities (see the following Small Business Insight). It can also be a human resource. The key benefits are lower costs, scale savings, or organizational practices.

government rules

can help small firms compete. Key benefits here are technology, service, personalization, lower costs and organizational practices

Industry Life Cycle Stages

introduction, growth, maturity, decline

tagline

memorable catchphrase that captures the key idea of a business, its service, product, or customer (aka a slogan)

buy an existing business

o Advantages: established customers, business processes are in place, less cash otlay than a startup o Disadvantages: finding a successful business, difficult to value, existing employees and customers may resist change, a bad reputating may follow, business may be declining

franchise a business

o Advantages: fully developed way of doing business, o Disadvantages: legal considerations o Example: McDonalds

start a new business

o Advantages: you can do it your way, start with a clean slate, able to use the best tech, new and unique products, deliberately restrict the size of the business, take time to perfect the product o Disadvantages: risky, lack of brand, a lot of time, difficult to finance, difficult to gain revolving credit, lack experience employees

favored purchasing

occurs because government agencies, government-sponsored commercial contracts, and many big businesses have policies that provide for set-asides or quotas for purchases from small businesses, minority businesses, and disadvantaged businesses (see the Small Business Insight below). Key benefits are quality, delivery, service, assurance, place, and belonging

customer contracting

occurs when a customer, most often a business, is willing to sign a contract with a small business to ensure a product or service. Because big businesses frequently downsize, they have ongoing needs to outsource work. Former employees are often the preferred source for independent subcontractors. The key benefits are quality, delivery, technology, shopping ease, brand/reputation, and assurance. Style and personalization are often factors too.

market relinquishment

occurs when business firms leave a market. Key benefits are place, shopping ease, quality, delivery, and service.

examples of critical risks

overstated numbers, numbers that are wrong, inadequate cushion, inadequate payback, narrative and financials that do not fit, or no direct customer connection

executive offices

provide small amounts of short term space for an office or work area

second sourcing

seeks out customers who are already being serviced by another firm. The strategy is to offer customers a second place to obtain goods or services. Often the advantage the small business offers is being locally based. Like customer contracting, the key benefits are quality, delivery, technology, shopping ease, brand/reputation, and assurance.

test marketing

selling your product or service in a limited area, for a limited time

ways of increasing odd of start up success

start the business in an incubator, take a part in a mentoring program, have a detailed budget, produce a product with a proven demand

cannibalizing

taking business away from your employer

market

the business term for the population of customers for your product or service

industry

the general name for the line of product or service being sold

multichannel marketing

the idea of several different channels to reach your customers; examples website, direct mail, and traditional retailing

introduction stage

the life cycle stage in which the product or serviced is being invented and initially developed

covenant

the limitations imposed on an individuals property by the neighborhood group

door-to-door selling

the practice of taking products directly to the homes or places of business of potential customers and attempting to sell the product immediately

maturity stage

the third life cycle stage, marked by a stabilization of demand, with firms in the industry moving to stabilize or improve profits through cost strategies

why are home based businesses used?

they are convenient

why are home based businesses used?

they are convienent

part time employment

working less than 35 hours per week

moonlighting

working on your own part time after your regular job

problems faced by home based businesses

zoning laws, covenant

how to minimize problems

§ Using a private mailbow for your business § Getting a variance: Permission from a government organization to act differently from the state laws