Small Business Management Ch. 4-7
Leveraging contingencies
The practice of and ability to seize upon novel opportunities that become apparent during the conduct of business.
What is SCAMPER?
a creativity tool that provides cues to trigger new ideas for your business
Gaps
a market exists for a particular product and you find a way to bring it to a different market segment (demographic, geographic, etc)
Creativity
a process introducing an idea or opportunity that is novel and useful, frequently derived from making connection among distinct ideas or opportunities
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
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.
Parallel Competition
an imitative business that competes locally with others in the same industry
How many Home based businesses are there?
9 Million
Episodic businesses
A temporary, project-based, or sporadically operating business.
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
Industry Dynamics
changes in competitors, sales and profits in an industry over time
Time to start-up
how long it takes to start a new business
Mass Market
large portions of the population
Radical innovation strategy
rejecting existing ideas, and presenting a way to do things differently
Opportunity recognition
searching and capturing new ideas that lead to business opportunities involves creative thinking that leads to discovery of new and useful ideas
What does SCAMPER stand for?
substitute combine adapt modify put to other uses eliminate rearrange
Incremental strategy
taking an idea and offering a way to do something slightly better than it is done presently
Cost to start-up
the amount of money it takes to start a new business
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
Strategy
the ideas and actions that explain how a firm will make its profit
Revolving credit
a type of open credit agreement that allows consumers to pay all or part of the outstanding balance on a loan or credit card.
Permanence
The impression of long-term continuity a business gives others.
Competitive Advantage
The particular way a firm implements customer benefits that keeps the firm ahead of other firms in the industry.
Discounted cash flows
Cash flows that have been reduced in value because they are to be received in the future
Benefits
characteristics of a product or service that the target customer would consider worthwhile value benefit, cost benefit
Causal model of entrepreneurship
one in which you wan 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.
Search engine optimization
A general approach to Web site design intended to result in the site being displayed toward the beginning of a search engine's (e.g., Google, Yahoo!, etc.) listing for that term.
Cost Strategy
A generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer.
Registration
Information provided to the government concerning the existence of, name of, nature of, and contact information for your business.
decline stage
A life cycle stage in which sales and profits of the firm begin a falling trend.
Industry
The general name for the line of product or service being sold, or the firms in that line of business
Affordable loss
The minimum possible expenditure of capital and other resources in order to bring an entrepreneurial idea to market.
Introduction State
The life cycle stage in which the product or service is being invented and initially developed.
Covenants
The limitations imposed on your property by your neighborhood group.
Magic number
The post-tax income the entrepreneur personally seeks from the business. Pretax income = Post-tax income/(1-tax percentage) Company Sales = Pretax income/(1-cost %)
maturity
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.
Multichannel marketing
The use of several different channels to reach your customers; for example, a Web site, direct mail, and traditional retailing
E-Commerce
The use of the Internet to conduct business transactions.
Chargebacks
This is a fee the service levels on you for any of a variety of problems related to the sale
Generic strategies
Three widely applicable classic strategies for businesses of all types—differentiation, cost, and focus.
Boostrapping
Using low-cost or free techniques to minimize your cost of doing business
Seven trends providing opportunity
Wearable trend. Green trend. The payments industry. Maker trend. Mobile trend. Health trend. The Internet of Things - "smart" devices.
Linked sales
When you contain a link to a product on your website
3 ways to buy a small Business
Buy in (purchase of substantially less than 100% of business) Buy entire business Buy key assets
Disadvantages of buyout
Finding a successful business for sale that is appropriate for you is difficult Existing employees may resist change Reputation may be a hindrance Facilities and equipment may be obsolete
Strategic partnerships
Formal or informal relationships with customers, vendors, or mentors to ensure the success of an entrepreneurial venture
Niche Market
a narrowly defined segment of the population that is likely to share interests or concerns
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.
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.
Sponsored link
A form of paid advertising that gets your company's website at the top of a search list.
Informational Web sites
An Internet site designed to introduce and explain a business to others.
Network marketing
An approach to selling in which the salesperson recruits customers to become distributors of the product or service to others.
Advantages of start-up
Begin with a clean slate Use the most up-to-date technologies Provide new, unique products or services Can be kept small deliberately to limit the magnitude of possible losses
Industry Heuristics
Common metrics used to value a business in a given industry
Licensing
Documented permission from the government to run your business.
Disadvantages of startups
No initial name recognition Require significant time Very difficult to finance Cannot easily gain revolving credit May not have experienced managers and workers
Part time Vs Full time
Part time: Fewer than 35 hrs Full Time: More than 35
What are the 5 questions for RBI
People: Who are you? Offering: What are you offering? Customer: Whom are you offering it to? Value Proposition: Why do they care? Distinctive Competencies: Do you have any key or core?science/technology or feature?
Variance
Permission from a government organization to act differently that the laws state.
What doe RBI screen mean?
Really Big Screen fast technique for making initial assessments (called screens) of prospective business ideas based on five questions
Bricolage
Refers to the process of analyzing the resources available and creating a product or service from them. (making something from whatever you have at hand)
Scale
Size of market
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
Start-up vs Buyout
Start-up: Creating a new business Buyout: Buying an already existing business
Effectuation
Taking stock of the resources you have (skills, knowledge, networks) and figure out what need you can meet
Asset Valuation
The difference between the original acquisition cost of assets and the amount of accumulated depreciation. Doesn't take into account goodwill, internally developed assets
Hybrid entrepreneurship
the process of initiating a business while simultaneously remaining employed for wages or salary
Stand retail
the roadside, flea market, farmers' market, or craft fair business
Reciprocal links
A listed, live connection to a different Web site, which in turn displays a similar link to the first Web site
Effectual reasoning
A logical process in which one analyzes the resources available and restraints on the use of resources to create an attainable goal.
Reserve price
A minimum acceptable selling price in an auction. If the bidding does not exceed the price, the sale will not go through.
Growth Stage
An industry life cycle stage in which customer purchases increase at a dramatic rate.
Market vs Scope
Market: Business term for the population of customers for your product or service Scope: Geographic range covered by the market
Perceptual map
A graphic display which positions products, services, brands, or companies according to their scores of important strategic dimensions.
Franchise
A legal agreement that allows a business to be operated using the name and business procedures of another firm.
Pop-up business
A temporary business that offers services or products in a variety of locations for a brief period at a time
Pass off
A type of business transfer where the owner gives the business to someone else without a payment
Reverse auction
An auction in which the low bid gets the business or wins.
Transfer
An endgame strategy in which ownership is moved from one person or group to another. (selling)
Termination in business
An endgame strategy in which the owner closes down a business
Retranchment
An organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival
Incremental innovation
An overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas.
Financial Ratios
Earnings Multiple
What are the different types of Trends?
Economic Social Technological Political
Degree of similarity
The extent to which a product or service is like another
Imitative strategy
an overall strategic approach in which the entrepreneur does more or less what others are already doing
Differentiation strategy
A type of generic strategy aimed at clarifying how one product is unlike another in a mass market.
Bankruptcy
An 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
five initial key decisions
As owner, what do you expect out of the business? What is your product or service idea (and its industry)? For your product or service, how innovative or imitative will you be? Scale: Who do you plan to sell to—everyone or targeted markets? Scope: Where do you plan to sell—locally, regionally, nationally, globally?
Walkaway
Business termination in which the entrepreneur ends the business with its obligations met.
Advantages of buyout
Established customers Business processes are already in place Often requires less cash outlay
Zoning Laws
Government specifications for acceptable use of land and buildings in particular areas.
Problems
Identify a problem in your life or in the lives of people around you or that you are aware of through your experience at work or play.
Imitative Strategy vs. Innovative Strategy
Imitative - An overall strategic approach in which the entrepreneur does more or less what others are already doing Innovative - An overall strategic approach in which a firm seeks to do something that is very different from what others in the industry are doing
Points of Indifference
The price at which a buyer is indifferent about buying or not buying the business
Pure innovation (blue ocean strategy)
The process of creating new products or services, which results in a previously unseen product or service
Causal (predictive) reasoning
The process of setting a goal and then determining the strategy and resources required to attain the goal.
Home Retail
entrepreneur arranges a get-together at someone's home where participants can socialize and get acquainted with the entrepreneur and the products or services offered. (parties and door-to-door)
