Business Finance, Planning, Marketing, and Strategic Entrepreneurship

Comprehensive vocabulary flashcards covering sources of business finance, business plan development, vertical versus horizontal markets, marketing frameworks, and strategic entrepreneurship theory.

Internal Finance

Funds obtained directly from the trading operations of a business, including day-to-day sales revenue, retained profits, extended trade credit, inventory reductions, and the disposal of surplus assets.

External Finance

Capital acquired from outside individuals or entities that do not trade directly with the firm, such as commercial banks, equity investors, and government agencies.

Short-Term Finance

Financing designated to support the day-to-day running of an enterprise, maturing in up to $1\text{ year}$ and generally presenting lower risk to lenders.

Medium-Term Finance

Business financing arrangements with repayment periods spanning up to $5\text{ years}$.

Long-Term Finance

Financing intended for major projects requiring more than $5\text{ years}$ to pay back, characterized by higher risk for lenders who usually mandate security or collateral.

Profit (Internal Funding)

The after-tax earnings retained within a business (retained earnings) that constitute an essential, inexpensive, and primary internal source of funds.

Depreciation (Funding Source)

An internal accounting provision set aside over time to replace worn-out machinery and equipment.

Sales of Assets

The internal liquidation of physical assets (e.g., vehicles, real property, or associated companies) to generate immediate liquidity when external bank financing is inaccessible.

Share Capital

Permanent capital raised by a limited company that is not repaid to investors, whose owners receive distributed returns called dividends.

Ordinary Shares

The most common and riskiest equity class, conferring voting rights on holders but offering no guaranteed dividend, as payouts rely directly on profits earned.

Preference Shares

Shares that provide a fixed rate of return and entitle owners to dividend disbursements prior to ordinary shareholders, though holders are not strictly owners of the company.

Deferred Shares

Shares commonly held by the founders of a firm that receive dividend distributions only after ordinary shareholders have been paid.

Loan Capital

External borrowed funds that a business contracts for long-term periods and must repay over time, including debentures and mortgages.

Debentures

Long-term debt securities whose holders are creditors rather than owners, earning a fixed rate of return without voting rights and requiring full repayment by an expiry date.

Mortgage

A secured long-term bank loan (typically spanning over $1\text{ year}$) in which physical land or real estate property serves as collateral.

Business Angels

Wealthy private individuals who invest their own financial capital and expertise into small businesses, particularly early-stage, high-tech ventures.

Bank Overdraft

A flexible short-term bank facility allowing a firm to draw funds in excess of its credit balance up to an agreed threshold, with interest calculated from the time of overdraft.

Operating Lease

A contractual hiring agreement where a business leases equipment or machinery for operational use without ever having the option to own the asset.

Finance Lease

A leasing contract where the hiring firm makes regular payments and retains the explicit option to take full ownership of the equipment upon lease expiration.

Trade Credit

A common short-term financing arrangement where suppliers permit purchasers to defer payment for materials, typically for a period of $30\text{ to }90\text{ days}$, interest-free.

Gearing

The structural relationship between the loan capital (debt) and share capital (equity) utilized by a business.

High Gearing

A capital structure dominated by a high ratio of loan capital to share capital, which avoids equity dilution but elevates liquidity risk due to fixed repayment and interest burdens.

Debt Capital

Capital secured through borrowing agreements that demand fixed interest payments, specify rigid maturity dates, and maintain prior claims over company assets ahead of owners.

Equity Capital

Funds supplied by company owners through retained earnings, personal contributions, or share issuances, holding residual claims on income and assets without a maturity deadline.

Financial Leverage

The technique of employing borrowed capital to amplify the rate of return on an investment, which remains advantageous as long as company earnings outpace interest charges.

Executive Summary (Business Plan)

A concise $1\text{ to }2\text{ page}$ introductory synopsis outlining the vital components, goals, and opportunities of a comprehensive business plan.

Strategy Canvas

A visual diagnostic diagram incorporated within a business plan's overview to illustrate how a firm's product or service compares against competitors across key metrics.

Pro Forma Sources and Uses of Funds

A multi-year cash flow forecast (commonly projecting $3\text{ years}$ post-launch) categorizing inflows (sales, investor capital, loans) against outflows (salaries, supplies, overhead, land).

Pro Forma Income Statement

A financial projection spanning $3\text{ years}$ post-launch that details expected sales revenues, costs of goods sold, operating expenditures, and final net profit or loss.

Vertical Market

A focused market niche wherein businesses cater directly to the specialized goods, services, and operational demands of a single industry, trade, or profession.

Horizontal Market

A broad marketplace delivering products or services across an extensive variety of unrelated industries and widespread consumer demographics.

Niche Concentration Risk

The primary strategic drawback of vertical markets where the customer base is restricted in size, exposing the firm to severe losses if that specific sector undergoes a downturn.

Marketing Planning

The systematic process of evaluating market opportunities and organizational resources, establishing objectives, mapping strategies, and executing implementation and control systems.

Marketing Mix (4Ps)

The foundational set of controllable marketing tactical tools—Product, Price, Place, and Promotion—utilized by a firm to influence customer demand.

Extended Marketing Mix (7Ps)

A services-based marketing model incorporating People, Process, and Physical Evidence alongside the traditional Product, Price, Place, and Promotion.

Unique Selling Proposition (USP)

An explicit product feature, function, or attribute that differentiates a good or service from competitors and provides compelling value to consumers.

Product Lifecycle

The sequential stages of market presence that track product sales over time: Development/R&D, Launch, Growth, Maturity, and Decline.

Extension Strategies

Marketing interventions employed during a product's maturity or decline—such as price discounts, functional enhancements, repackaging, or targeting new niches—to prolong sales life.

Price Leader

A dominant company whose market share allows it to determine price levels that rival firms in the industry subsequently follow.

Price Taker

A company with minimal market influence that must accept prevailing market rates determined by open industry competition.

Price Skimming

A pricing tactic of setting a high introductory price when market competition is low, then progressively reducing it over time; widely used in high-technology sectors.

Penetration Pricing

A strategy of charging an artificially low initial price to swiftly enter a competitive market and establish brand loyalty before increasing the price.

Loss Leader

Selling a product at a price lower than its cost of production to entice shoppers into a commercial retail outlet in hopes they will purchase other profitable items.

Psychological Pricing

Pricing items at figures that buyers perceive as notably cheaper than they actually are, such as charging $\text{£}39.99$ instead of $\text{£}40.00$.

The 7 Cs

The customer-facing counterpart to the 7Ps: Customer/Consumer (Product), Cost (Price), Convenience (Place), Communication (Promotion), Caring (People), Co-ordinated (Processes), and Confirmation (Physical Evidence).

Strategic Entrepreneurship

The simultaneous integration of opportunity-seeking actions (entrepreneurship) and advantage-seeking behaviors (strategic management) designed to drive innovation and create organizational wealth.

Entrepreneurial Mindset

A cognitive framework and skill set that equips individuals to rapidly recognize opportunities, overcome setbacks, and initiate innovative entrepreneurial ventures.

Entrepreneurial Culture

A shared system of organizational values, norms, and expectations that encourages employees to actively engage in entrepreneurial behavior and innovation.

Entrepreneurial Leadership

The ability to influence and guide personnel to manage organizational resources strategically, prioritizing opportunity-seeking, advantage-seeking, and the protection of innovation.

Dominance Perspective (Strategic Entrepreneurship)

The theoretical perspective (Baker and Pollock, 2007) asserting that strategic management acts as the dominant discipline that encompasses entrepreneurship concepts.

Subset Perspective (Strategic Entrepreneurship)

The academic viewpoint (Browne & Harms, 2003) arguing that strategic management is merely a sub-discipline or division within the broader field of entrepreneurship.

Intersection Perspective (Strategic Entrepreneurship)

The integrative view (Rensburg, 2013) establishing strategic entrepreneurship at the direct convergence of strategy and entrepreneurship, combining core capabilities of both fields.

Sustainable Competitive Advantage (Porter)

A long-term competitive position established by tailoring unique activities to strategy, making clear trade-offs against competitors, and generating fit across an entire activity system.

Environmental Scanning

The monitoring and evaluation of external general societal forces and industry task environments, balanced against internal structure, organizational culture, and resource competencies.

Dynamic Capability Renewal

The continuous organizational mechanism of refreshing and reconfiguring internal strategic competencies through explorative and exploitative organizational learning.