New Venture Creation - Flashcards Study Pack

A comprehensive set of vocabulary flashcards covering key concepts from the New Venture Creation lecture.

Opportunity

A favorable set of circumstances that creates value and supports a new business.

Four qualities of an opportunity

Attractive, timely, durable, value-creating.

Three ways opportunities are identified

Observing trends, solving a problem, finding market gaps.

Forces that shape opportunities

Social, economic, technological, regulatory.

Entrepreneur traits that help identify opportunities

Experience, creativity, networks, alertness.

Feasibility analysis

Study of product/service, industry/market, organizational, and financial factors.

Four types of feasibility

Product/service, industry/market, organizational, financial.

Target market

A clearly defined group of customers the firm plans to serve.

Concept statement

Short description of the product, benefits, target market, and positioning.

Standard business models

Franchising, marketplace, subscription, manufacturer/retail.

Disruptive business model

A model that changes industry rules (e.g., Uber).

Mission statement

A declaration of a company’s purpose.

Product/market scope

Products/services offered and markets served.

Core competency

What the business does better than competitors.

Fixed costs

Costs that remain constant regardless of output.

Variable costs

Costs that change with the level of production.

Distribution channels

How a product reaches customers.

PESTLE trends

Political, Economic, Social, Technological, Legal, Environmental.

Porter’s five forces

Rivalry, new entrants, substitutes, supplier power, buyer power.

Direct competitors

Sell the same product.

Indirect competitors

Sell substitute products.

Barriers to entry

Brand loyalty, capital requirements, regulation, technology, distribution.

Three types of business plans

Summary, full, operational.

Executive summary

1–2 page overview of the business plan; written last.

Importance of financial statements

Measure performance, guide decisions, attract investors.

Historical financial statements

Financial results from the past.

Pro forma statements

Financial projections for the future.

Three main financial statements

Income statement, balance sheet, cash flow statement.

Sales forecast

Most important forecast for budgeting.

Liability of newness

New firms struggle due to lack of experience and lack of track record.

Venture team

Founders, employees, board, advisors, investors.

Heterogeneous team

Team with diverse skills and backgrounds.

Sweat equity

Value created by founders’ work instead of cash.

Inside director

Board member who works for the company.

Outside director

Board member who is independent.

Why startups need funding

Cash flow issues, product development, equipment, growth.

Burn rate

How fast a company spends cash.

Bootstrapping

Using creative, low-cost methods to fund a business.

Debt financing

Borrowing money; owner keeps equity.

Equity financing

Selling ownership in the company.

Rewards-based crowdfunding

Backers receive a product or perk.

Equity-based crowdfunding

Backers receive shares.

Segmenting the market

Dividing customers into meaningful groups.

Target market (marketing)

The specific segment a company chooses to serve.

Positioning

How a product is placed in the customer’s mind.

Niche market

Small, specialized group of customers.

Brand

Customer perceptions and feelings about a company.

Brand management

Maintaining and growing brand image.

Four Ps

Product, Price, Place, Promotion.

Cost-based pricing

Price based on cost plus margin.

Value-based pricing

Price based on customer’s perceived value.

Price-quality attribution

Higher price signals higher quality.

Reasons for growth

Economies of scale, economies of scope, market leadership.

Internal/organic growth strategies

Better products, market penetration, product line extension, geographic expansion, international expansion.

External growth strategies

Mergers, acquisitions.

Warning signs of growing too fast

Cash shortages, customer service decline, employee burnout, inventory problems.

Why new products fail

Poor market fit, weak marketing, competition, underfunding.