DECA Entrepreneurship Terms

Entrepreneurship

The process of identifying opportunities and starting new businesses. These are individuals who take risks to create products, services, or innovations.

Ex: Steve Jobs co-founded Apple, recognizing the need for user-friendly computers and later revolutionizing technology with products like the iPhone.

Entrepreneurial Discovery

The process of identifying unmet needs, trends, or problems and developing innovative solutions or business ideas.

Ex: Howard Schultz, inspired by European coffee culture, created Starbucks, a premium coffee shop experience not common in the U.S. at the time.

Practical Application: Use tools like market research (surveys, focus groups) to identify gaps and opportunities.

Venture Creation

The process of turning a new idea or technology into a successful business that can attract investors. It involves planning, organizing, and establishing a new organization.

Business Plan

A detailed document that outlines your business goals, strategies, target market, financial projections, and operational details.

Ex Structure: Executive Summary (overview of business), Market Analysis (target market demographics), Financial Plan (budget, revenue projections), Importance: Investors and banks use business plans to decide whether to fund your business.

Start-Up Costs

The expenses required to start a business, including equipment, rent, inventory, licenses, and marketing.

Example: If Renting a location: $1,000/month, Buying equipment: $5,000, Marketing: $2,000, then the Total Start-up Costs: $8,000

Risk Management

The process of identifying, assessing, and mitigating risks that could impact the success of a business.

Common Risks: Financial loss (insufficient sales), Operational risks (equipment failure), Competitive risks (new competitors).

Debt Financing

Borrowing money from lenders to start or expand a business, which must be repaid with interest.

Ex: A small business takes out a $50,000 bank loan to purchase equipment. The loan has a 5% annual interest rate.

Pros: Retain full ownership of the business.

Cons: Must repay even if the business is not profitable.

Equity Financing

Raising money by selling ownership shares in your business to investors.

Ex: A tech startup sells 20% of its equity to an investor for $100,000 to fund product development.

Pros: No repayment obligation.

Cons: Lose partial control of the business.

Break-Even Point

The level of sales where total revenue equals total expenses (no profit or loss).

Break-even Point = Fixed Costs ÷ (Price per Unit - Variable Cost per Unit)

• Ex:

  • Fixed Costs: $10,000/month (rent, salaries).

  • Price per Unit: $20

  • Variable Costs: $10/unit.

  • Break-even Point: $10,000 ÷ ($20 - $10) = 1,000 units

Target Market

The specific group of consumers you aim to sell your product or service to

Example: A luxury skincare brand targets women aged 30-50 with high disposable income.

Ways to understand Target Market: analyze demographics (age, income, location) and conduct surveys to understand preferences

Market Research

The process of collecting data to understand consumer needs, preferences, and competition.

Ex: Conducting a survey to find out whether local college students prefer studying at cafés with Wi-Fi.

Competitive Advantage

The unique benefit your business offers that competitors don't.

Ex: A local bakery uses only organic ingredients, setting it apart from larger chains.

Workflow

The organized sequence of tasks to complete a process or deliver a service.

Ex: In a coffee shop, the workflow involves:

• Taking orders.

• Brewing coffee.

• Packaging orders efficiently.

Standard Operating Procedures (SOPs)

Written instructions for performing routine tasks consistently.

Ex: A fast-food chain uses SOPs to train employees on burger assembly, ensuring every burger looks and tastes the same.

Intellectual Property (IP)

A legal term for the products of original human thought, such as inventions, artistic works, and designs.

Harvesting Strategies

A deliberate plan to maximize profits from a product, product line, or business by reducing or stopping investments in it, typically when it's nearing the end of its life cycle.

Ex: Selling the business to another company or licensing the business model to other entrepreneurs.

Continuation Planning

Ensuring the business can sustain operations in the long term, even after leadership changes.

Ex: A family-owned restaurant develops a succession plan to pass ownership to the next generation.

Equity

The portion of a company that is owned by its shareholders.

Patent vs. Trademark vs. Copyright

Patents protect inventions, processes, or scientific creations

Trademarks protect brand names, logos, slogans, and other indicators of a product or service's source

Copyrights protect original works of authorship, such as books, articles, songs, and photographs.