Chapters 1-6

Business model

Business model

A company’s plan for how it competes, uses its resources, structures its relationships, interfaces with customers, and creates value to sustain itself on the basis of the profits it generates.

Business Plan

A written document describing all the aspects of a business venture, which is usually necessary to raise money and attract high quality business partners.

Corporate Entreprenuership

behavioral orientation exhibited by established firms with an entrepreneurial emphasis that is proactive, innovative, and risk taking.

creative destruction

the process by which new products and technologies developed by entrepreneurs over time make current products and technologies obsolete; stimulus of 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 currently control.

execution intelligence

the ability to fashion a solid business idea into a viable business; it is 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 particular 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 his or her 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 yeild a level of income for their owners or owners that is similar to what they would earn when working for an employer (e.g., dry cleaners, convenience stores, restuarants, accounting firms, retail stores, and hairstyling salons).

Triggering events

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

Value

Relative worth, importance, or utility.

brainstorming

a technique used to quickly generate a large number of 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 of useful idea

customer advisory board

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

day-in-the-life-research

a form of anthropological research used by companies 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. The purpose of the group is to generate ideas that might represent product or business opportunities.

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 visually organize information

network entreprenuers

entrepreneurs who identified their idea through social contracts

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; theses relationships tend to reinforce insights and ideas and individuals already have and, therefore, are not likely to introduce 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 period in which a firm or an entrepreneur can realistically enter a new market.

concept test

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

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.

confirmation bias

a tendency to search for information that validates your preconceptions

feasibility analysis

a preliminary evaluation of a business idea to determine if it is worth pursuing,

a financial feasibility analysis

a preliminary financial assessment of a new venture that considers the total start up 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 pulates and yoga studios, and solar panels.

Industry/target market feasibility

an assessment of the overall appeal of the industry and target market for the product or service being proposed.

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 advisors that move a new venture from an idea to a fully functioning firm.

organizational feasibility analysis

a study conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to be successful.

primary research

research that is original and is collected firsthand by entrepreneur by, for example, talking to potential customers and key industry participants.

product/market fit

the benefits your product or service offers and what your prospective customers need and require.

product/service feasibility analysis

an assessment of the overall appeal of the product or service being proposed.

prototype

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

secondary research

data collected previously by someone else for a different purpose.

target market

the limited group of individuals or businesses that a firm goes after or tries to appeal to at a certain point in time.

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 or service to its customers

churn

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

core competency

a unique skill or capability that transcends products or markets, makes a significant contribution to the customer’s perceived benefit, is difficult to imitate, and serves as a source of a firm’s competitive advantage over its rivals.

core strategy

the overall manner in which a firm competes relative to its rivals.

core 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 costs that a company incurs in operating a business whether it sells something or not (e.g. overhead).

key assets

the assets a firm owns that enable its business model to work

low-end market disruption

a type of distribution that is possible when the firms in an industry continue to improve products or services to the point where they are actually better than a sizable portion of their clientele's needs or desires.

mission or mission statement

a statement that describes why a firm exists and what its business model is supposed to accomplish

new market distribution

a market disruption that addresses a market that previously wasn’t served.

operations

activities that are both integral to a firm’s overall business model and representative of the day to day heartbeat of a firm

product/market scope

a range that defines the products and markets on which a firm will concentrate.

resources

the inputs a firm uses to produce, sell, distribute, and service a product or service.

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 that provides parts or services to another company

target market

the limited group of individuals or businesses that a firm goes after or tries to appeal to at a certain point in time

variable costs

the costs that are not fixed that a company incurs at it generates sales.

barrier to entry

conditions that create disincentives for a new firms to enter an industry

competitive analysis grid

a tool for organizing the information a firm collects about it competitors to see how it stacks up against its competitors, provide ideas for markets to pursue, and identify its primary sources of competitive advantage.

competitive intelligence

the information that is gathered by a firm to learn about its competitors.

competitor anakysis

a detailed evaluation of a firm’s direct, indirect, and future competitors

cost reduction strategy

a strategy that is accomplished by achieving lower costs than industry incumbents through process improvements

declining industry

an industry that is experiencing a reduction in demand

economies of sale

a phenomenon that occurs when mass producing a product results in lower average costs.

emerging industry

a new industry in which standard operating procedures have yet to be developed.

first mover advantage

a sometimes significant advantage, created by the opportunity to establish brand recognition and/or market power, gained by the first company to produce a product or service or the first company to move into a market.

fragmented industry

an industry characterized by a large number of firms approximately equal in size.

geographic roll-up strategy

when one firm starts acquiring similar firms that are located in different geographic areas.

global strategy

an international expansion\ strategy in which firms compete for market share by using the same basic approach i all foreign markets.

global strategy

an international expansion strategy in which firms compete for a market share by using the same basic approach in all foreign markets.

industry

a group of firms producing a similar product or service, such as Pilates and Yoga studios, and solar panels

industry analysis

business research that focuses on the potential of an industry

leadership strategy

a competitive strategy in which the firm tries to become the dominant player in the industry

mature industry

an industry that is experiencing slow or no increase in demand, has numerous repeat (rather than new) customers, and has limited product innovation.

multidomestic strategy

an international expansion strategy in which firms compete for market share on a country by country basis and vary their product or service offerings to meet the demands of the local market.

niche strategy

a marketing strategy that focuses on a narrow segment of the industry

position

how the entire company is situated relative to its competitors

assumption sheet

an explanation in a new firm’s business plan of the sources of the numbers for its financial forecast and the assumption used to generate them

board of advisors

a panel of experts asked by a firm’s management to provide counsel and advice on an ongoing basis

board of directors

a panel of individuals who are elected by a corporations shareholders to oversee the management of the firm

contribution margin

the amount per unit of sale that is left over and is available to contribute to covering the firms fixed costs and producing a profit

executive summary

a quick overview of the entire business plan that provides a busy reader everything that he or she needs to know about the distinctive nature of a new venture

cost of goods sold

the materials and direct labor needed to produce a firm’s revenue

fixed costs

the costs that a company incurs in operating a business whether it sells something or not (e.g., overhead)

full business plan

a document that spells out a company’s operations and plans in much more detail than a summary business plan; the format is usually used to prepare a business plan for an investor

market analysis

an analysis that breaks the industry into segments and zeros in on the specific segment (or target market) to which the firm will try to appeal.

market segmentation

the process of studying the industry in which a firm intends to compete to determine the different potential target markets in that industry