entrepreneurship terms

Business model

A firm’s plan or recipe for how it creates, delivers, and captures value for its stakeholders.

Business plan

A written narrative, typically 25 to 35 pages long, that describes what a new business intends to accomplish and how it intends to accomplish it.

Corporate entrepreneurship

A behavioural orientation toward entrepreneurship exhibited by established firms.

Creative destruction

The process by which new products and technologies developed by entrepreneurs over time make current products and technologies obsolete. This process stimulates economic activity.

Entrepreneurial firms

Companies that bring new products and services to market by creating and seizing opportunities.

Entrepreneurial intensity

The position of a firm on a conceptual continuum that ranges from highly conservative to highly entrepreneurial.

Entrepreneurship

The process by which individuals pursue opportunities without regard to resources they control currently.

Execution intelligence

The ability to fashion a solid business idea into a viable business; a key characteristic of successful entrepreneurs.

Innovation

The process of creating something new, which is central to the entrepreneurial process.

Lifestyle firms

Businesses that provide their owners the opportunity to pursue a certain lifestyle and earn a living while doing so (e.g., ski instructors, golf pros, and tour guides).

Moderate risk takers

Entrepreneurs who are often characterized as willing to assume a moderate amount of risk in business, being neither overly conservative nor likely to gamble.

Passion for their business

An entrepreneur’s belief that their business will positively influence people’s lives; one of the characteristics of successful entrepreneurs.

Product/customer focus

A defining characteristic of successful entrepreneurs that emphasizes producing good products with the capability to satisfy customers.

Salary-substitute firms

Small firms that yield a level of income for their owner or owners that is similar to what they would earn when working for an employer (e.g., dry cleaners, convenience stores, restaurants, accounting firms, retail stores, and hair salons).

Triggering event

The event that prompts an individual to become an entrepreneur (e.g., losing a job, inheriting money, accommodating a certain lifestyle).

Value

Relative worth, importance, or utility.

Artificial intelligence (AI)

The simulation of human intelligence processes by machines, especially computer systems.

Brainstorming

A technique used to quickly generate many ideas and solutions to problems; conducted to generate ideas that might represent product or business opportunities.

Bug report

A popular technique that is used in classrooms to teach brainstorming.

Creativity

The process of generating a novel or useful idea

Creator economy

An economy consisting of people who earn money, either full time or part time, by creating things.

Customer advisory boards

Panels of individuals set up by some companies to meet regularly to discuss needs, wants, and problems that may lead to new product, service, or customer service ideas.

Day-in-the-life research

A form of anthropological research that companies use to make sure customers are satisfied and to probe for new product ideas by sending researchers to the customers’ homes or businesses.

Entrepreneurial alertness

The ability to notice things without engaging in deliberate search.

Focus group

A gathering of 5 to 10 people who have been selected based on their common characteristics relative to the issue being discussed.

Idea

A thought, impression, or notion

Mentor

Someone who is more experienced than you and is willing to be your counselor, confidant, and go-to person for advice.

Mind map

A diagram used to organize information visually.

Network entrepreneurs

Entrepreneurs who identified their idea through social contacts.

Opportunity

A favorable set of circumstances that creates a need for a new product, service, or business.

Opportunity gap

An entrepreneur recognizes a problem and creates a business to fill it.

Opportunity recognition

The process of perceiving the possibility of a profitable new business or a new product or service.

Solo entrepreneurs

Entrepreneurs who identified their business idea on their own.

Strong-tie relationships

Relationships, characterized by frequent interaction, that form between like-minded individuals such as coworkers, friends, and spouses; these relationships tend to reinforce insights and ideas the individuals already have and, therefore, are not likely to generate new ideas.

Weak-tie relationships

Relationships, characterized by infrequent interaction, that form between casual acquaintances who do not have a lot in common and, therefore, may be the source of completely new ideas.

Window of opportunity

The time in which a firm or an entrepreneur can realistically enter a new market.

Concept statement

A preliminary description of a business that includes descriptions of the product or service being offered, the intended target market, the benefits of the product or service, the product’s position in the market, and how the product or service will be sold and distributed.

Concept test

A representation of the product or service to prospective users to gauge customer interest, desirability, and purchase intent.

Confirmation bias

A tendency to search for information that validates your preconceptions.

Feasibility analysis

The process of determining if a business idea is viable.

Financial feasibility analysis

A preliminary financial assessment of a new venture that considers the total startup cash needed, financial performance of similar businesses, and the overall financial attractiveness of the proposed venture.

Industry

A group of firms producing a similar product or service, such as computers, children’s toys, airplanes, or social networks.

Industry/target market feasibility

An assessment of the overall appeal of the industry and target market of the product or service the entrepreneur is proposing.

Landing page

A single web page that typically provides direct sales copy, like “click here to buy a Hawaiian vacation.”

New-venture team

The group of founders, key employees, and advisers that either manage or help manage a new business in its startup years.

Organizational feasibility analysis

A study conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to launch successfully.

Primary research

Research that is collected by the person or persons completing an analysis; normally includes talking to prospective customers, getting feedback from industry experts, conducting focus groups, and administering surveys.

Product/market fit

The degree to which a product satisfies a strong market demand.

Product/service feasibility analysis

An assessment of the overall appeal of the proposed product or service.

Prototype

An early sample, model, or release of a product that is built to test a concept or a process.

Secondary research

Type of research that probes data that is already collected. The data generally includes industry studies, Census Bureau data, analysts’ forecasts, and other pertinent information gleaned through library and Internet research.

Target market

The portion of the industry that a firm goes after or to which it wants to appeal. For entrepreneurial firms, it is typically a segment within a larger market that represents a narrower group of customers with similar interests.

Basis of differentiation

What causes consumers to pick one company’s products over another’s.

Channels

A company’s description of how it delivers its product to customers.

Churn

Refers to the number of subscribers that a subscription-based business loses each month.

Core competency

A specific factor or capability that supports a firm’s business model and sets it apart from its rivals. Core competencies are what the firm does particularly well and largely determine the details of its core strategy.

Core strategy

A description of how a firm intends to compete against its competitors.

Cost structure

A description of the most important costs a business incurs to support its business model.

Disruptive business models

Business models that are rare, that do not fit the profile of a standard business model, and that are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry.

Fixed costs

The expenses that remain the same for a company despite the volume of products or services it produces. Firms incur fixed costs whether they sell something or not

Freelancer

An independent contractor with skills in a certain area, such as software development or website design, who provides services for several clients.

Key assets

The assets a firm owns that enable its business model to work.

Low-end market disruption

When firms in an industry continue to improve products to the point where they are better than a sizable portion of their clientele’s needs or desires.

Mission or mission statement

Describes why a firm exists and what it hopes to achieve by using its business model.

New market disruption

A market disruption that addresses a market that businesses were not serving.

Operations

Activities that are both integral to a firm’s overall business model and represent the day-to-day heartbeat of a firm.

Product/market scope

Defines a firm’s products and the markets on which it will concentrate to sell them.

Resources

The inputs a firm uses to produce, sell, distribute, and service its product.

Revenue streams

A description of how a firm makes money.

Standard business models

Models that depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value for their stakeholders.

Supplier

A company providing parts or services to another company.

Variable costs

Costs that vary proportionally with the volume of production; firms incur these costs to generate sales.