Entrepreneurial Business Models and Strategies

Vocabulary flashcards covering revenue models, pricing strategies, financing methods (bootstrapping, debt, equity), investor types, legal structures, intellectual property, and entrepreneurial marketing frameworks.

Revenue model

A key component of the business model that identifies how the company will earn revenue and generate profits.

Unit Sales Revenue Model

A model that measures the amount of revenue generated by the number of items (units) sold by a company, such as a retail company.

Razor and blade model

A strategy that generates revenue by offering a physical product at no or low cost to encourage sales of a more expensive related product.

Advertising Revenue Model

A model that relies on revenue gained through advertising products and services, including CPC, CPA, and promoted content.

Cost-per-click (CPC)

A fee charged to an advertiser every time a user clicks on an ad.

Cost-per-action (CPA)

A model where advertisers only pay when a click converts to an actual sale of a product or service.

Data Revenue Model

Generating revenue by selling high-quality, exclusive, and valuable information to other parties.

Intermediation Revenue Model

Methods by which third parties, or brokers ("middlemen"), generate money by organizing transactions between buyers and sellers.

Licensing Revenue Model

Earning revenue by giving permission to other parties to use protected intellectual property, such as copyrights, patents, and trademarks, in exchange for fees.

Franchising Revenue Model

The process whereby the owner of an existing business (franchisor) sells the rights to another party (franchisee).

Subscription Revenue Model

Involves charging customers for continuous or recurring access to a product or service, such as Blue Apron or streaming services.

Professional Revenue Model

A model where professional services, like those from consultants, lawyers, or accountants, are provided on a time and materials contract.

Utility and Usage Revenue Model

A pay as you go model that charges customers fees based on how often goods or services are used, such as hotels and rental cars.

Freemium Revenue Model

Mixing free basic services (often web-based) with premium or upgraded services, exemplified by LinkedIn or Hinge.

Cost of goods sold (COGS)

All the direct costs associated with making a product, including raw materials and labor.

Operating expenses

The costs of running a business, including rent, utilities, administration, marketing/advertising, employee salaries, and legal fees.

Competition-led pricing

Copying prices suggested by other businesses selling the same or very similar products and services.

Customer-led pricing

A strategy where you ask customers how much they are willing to pay and then offer the product at that price, such as Priceline.

Loss leader

The practice of offering a product at a below-cost price, including special discounts, to attract more customers.

Introductory offer

Offering a product for free or at a heavy discount to a limited audience for a certain number of days to encourage trial.

Skimming

A form of high pricing used for new products that face little or no competition.

Psychological pricing

Encouraging customers to buy based on the belief that a product is cheaper than it is, such as pricing an item at $19.99$ instead of $20$.

Bundled pricing

Packaging a set of goods and services together to sell them for a lower price than if they were sold separately.

Bootstrapping

The process of starting a business without external financing, relying on personal savings, creative resourcefulness, and reinvested profits.

Debt Financing

Borrowing money (short-term or long-term) that requires regular interest payments but does not require relinquishing ownership.

Equity Financing

Capital invested in a venture with no legal obligation to repay, but which requires sharing ownership with the funding source.

Patronage Model

A type of crowdfunding where funding is given without the expectation of an investment return.

Lending Model

Debt-based crowdfunding where funding is given by backers in the form of a loan.

Reward-Based Model

A crowdfunding type where gifts or experiences are given to backers as thanks for their funding support.

Investor Model

Equity-based crowdfunding where backers receive an equity stake in the business for their support.

Venture capitalists

Professional investors who provide capital for start-up, early stage, or expansion, seeking a higher rate of return than traditional investments.

Angel Investors

Accredited, wealthy individuals who invest personal funds in start-ups, typically within $50\,miles$ of the venture.

Entrepreneurial Angels

Experienced entrepreneurs willing to take bigger risks and provide mentorship to new ventures.

Corporate Angels

Former business executives looking for a paid position and hands-on involvement in a new venture.

Professional Angels

Silent investors from fields such as medicine or law who may want to become paid advisors later.

Enthusiast Angels

Independently wealthy retired entrepreneurs or executives who invest in ventures as a hobby.

Sole Proprietorship

A business owned and operated by one person where the enterprise has no existence apart from its owner.

Partnerships

An association of two or more people acting as co-owners of a business for profit.

Articles of Partnership

A document outlining financial and managerial contributions and roles; without it, the default is equal responsibility and liability.

Corporation

A separate legal entity apart from its owners, described as an "artificial being, invisible, intangible, and existing only in contemplation of the law."

Limited Liability Company (LLC)

A hybrid business form offering the limited liability of a corporation but the tax advantages of a partnership.

Intellectual Property (IP)

Intangible personal property created by human intelligence, such as patents, copyrights, trademarks, and trade secrets.

Patent

Exclusive rights to hold, transfer, and license the production and sale of a product, process, machine, or plant.

Copyright

Exclusive rights granted to creative individuals for literary or artistic productions like books, music, art, and movies.

Trademark

A distinctive name, mark, symbol, or motto identified with a company or its products, registered for periods of $10\,years$.

Trade Secrets

Business processes and information, such as customer lists or marketing techniques, that provide value and cannot be patented, copyrighted, or trademarked.

Entrepreneurial marketing

Unconventional marketing practices based on discovery and experimentation that focus on customers and dialogue rather than just profit.

Guerrilla Marketing

A low-budget strategy focusing on surprise or unconventional interactions to enhance customer perception and word of mouth.

S.A.V.E. Framework

An entrepreneurial marketing framework standing for Solution, Access, Value, and Education.

Social responsibility marketing

An approach to attract customers who want to support a cause or make a positive difference through their purchases.

SMILE

A branding acronym standing for Simple, Meaningful, Imagery, Legs, and Emotional.