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Business Unit 2
Business Essentials
| Term | Definition |
|---|---|
| Start-up | A company or a project that is usually begun by an entrepreneur in order to refine and research an idea to validate its scalability and/or repeatability, to attract investment, and to test the marketplace (to see if it is commercially viable). |
| Innovate | In business, the process by which an entrepreneur or business uses information, imagination and initiative to transform resources into useful products that satisfy the needs or wants of potential consumers. |
| “Me Too” Product (Imitator) | Developing the market with a more effective approach to an existing product, either by producing it more efficiently, adding incremental performance to the product, or drawing in additional consumers to the market through lower pricing. |
| Spin-off (and Spin-out) | A byproduct of a larger project. |
| Entrepreneur | An individual who creates a new business, and in doing so bears the risks and rewards. |
| Necessity entrepreneur | Means of survival, begins a company based on what will immediately return a profit rather than on any other investment criteria. Brings no financial resources to the company,. Beginning the start-up phase solely with own labor and intellectual property. |
| Hobby (Passion) entrepreneur | A hobby into a profession, usually “accidental” entrepreneurs. One of the keys to entrepreneurial success is a passion for one’s work and products. |
| Social entrepreneur | A compelling interest to utilize the business to do social good, to improve humanity’s condition, or to benefit the earth in our care. Other entrepreneurs invoke a social entrepreneurial spirit in order to appeal to their markets. |
| Opportunity entrepreneur | An individual who, once presented with a likely viable business opportunity, decides to pursue it when he or she likely would have not otherwise. |
| Serial entrepreneur | An individual whose profession is the continued pursuit of start-up work, and who is willing to repeatedly take on the risks associated with initial investment. |
| Intellectual property | A work that is the result of creativity, imagination, discovery or new thought, for which the originating individual can apply for a patent, copyright or trademark. |
| Product Classification | The organization of products by some sort of exhibited characteristic or set of characteristics. Products can be classified informally by the company itself, or formally using a standardized classification scheme devised by industry organizations. |
| Elevator Pitch | A speech to create interest in investors. Can be for products, companies, Or ideas. Only takes 20-30 seconds |
| Lean start-up | A method of learning fast and discarding what does not work in order to keep start up costs down. |
| Start-up Pivot | The act of quickly changing direction or correcting mistakes in a new business based on early customer feedback or technological opportunities. |
| Micropreneur | An entrepreneur willing to accept the risk and responsibility associated with starting a business that will remain small by design in order for him or her to do the kind of work he wants to do and still have a balanced lifestyle. |
| Business Plan | A precise statement of the rationale for a business, and a step-by- step explanation of how it will achieve its goals. |
| Strategic Plan | A written document which conveys a company’s goals, sets its priorities, focuses its operations, and ensure that employees, suppliers and other stakeholders are working towards common goals. |
| Goal | In business, a broad outcome that is desired to be reached in order to fulfill the corporate vision and mission. |
| Objective | In business, the expression of a goal utilizing numerics, the quantification of a goal. |
| SMART Goal | Way of expressing goals |
| Strategy | The larger moves, taken or intended, to reach a longer-term business goal. |
| Tactic | Actions taken to support the achievement of strategic goals. Tactics can be broken down into the steps that make up an action plan. |
| Action Plan | A “to do” list that can be executed to bring a company’s strategy to life within day to day operations. |
| SWOT Analysis | A quadrant analysis completed as part of strategic planning which aims to place a company relative to its competitors within the marketplace. It informs strategic choices. |
| Strength | Something that a business does well or considers an asset relative to competitors. Resources, assets, experience and inherent characteristics which are advantages over competitors. |
| Weakness | Something that a business does poorly or considers a detractor relative to competitors. Limitations, inexperience, shortcomings, and inherent characteristics which are disadvantageous relative to competitors. |
| Opportunity | Elements within the marketplace which have the opportunity to affect the business positively and increase market share and/or profitability, and also improve competitive positioning. |
| Threat | Challenges within the marketplace which have potential to affect the business negatively and erode market share and/or profitability, and can pose a risk to its competitive positioning. |
| Business Background | In planning, a summation of the events, ideation, R&D, and other factors which brought about a business’ current status. What its founder brought to the business and what fundamental problem is being solved by the new business. |
| Product Description | A written and pictorial presentation of the product(s) to be offered by a company, including any registrations for intellectual property, and any schematics or other illustrations of prototypes. It lays out the unique value proposition for the product. |
| Market Description or Analysis | Determine where a business or product fits in a marketplace: how the marketplace is trending, and therefore what the company’s potential market niche and share can be. Includes who the typical customer will be, and what their buyer behavior might be like. |
| Competitor Analysis | A strategic technique used to evaluate direct competitors and substitute products. |
| Marketing Strategy | The overall plan for reaching potential customers and then closing sales, in order to increase market share relative to competition. |
| Cost and Pricing Strategy | A method that a business uses to anticipate and account for resource costs plus added profit, in order to set a price that positions a product in the marketplace to maximize sales. |
| Operations Plan | The operating manual for a business. It defines how human, financial, physical, and other resources are allocated on a day to day basis within the company to ensure that it completes its action plans, runs operations smoothly, and reaches its goals. |
| Financial Forecast | A technique that typically uses historical data as inputs to make predictions about future trends. It generally includes: sales forecasts, the cost of goods sold, and projected cash flow (how much money will flow in and out of the company). |
| Contingency Plan | A plan that can be followed if an original plan is not possible for some reason. The contingency plan addresses short and long term problems that a company may face. It may even include an exit strategy or closure plan for extreme circumstances. |
| Liability | Something a person or a company owes. |
| Sole Proprietorship | The legal form of a business that is owned and operated by one individual. It is the easiest way to begin and conduct business. |
| Partnership | The legal form of a business that is an association of two or more persons who carry on as co-owners of a business for profit. It is the easiest way for a group of people to conduct business. |
| Corporation | A legal entity whose assets and liabilities are separate from its owners. Corporations are created by the State in which incorporation papers are filed. |
| Articles of Incorporation | Legal documents filed with a State to create a corporation. They must include the firm’s name, contact information, officers, and number of shares to be issued. |
| Stock | Shares of a corporation that may be bought or sold. |
| Dividends | Profits of a corporation that are distributed in the form of cash payments to stockholders. The decision to pay dividends is made by a company’s Board of Directors. |
| Stockholders | Those who purchase stock of a corporation. (Also known as shareholders. They are one of many types of stakeholders.) |
| Corporate Charter | A legal document that the state issues to a company based on information the company provides in the articles of incorporation. |
| Private Corporation | A corporation owned by just one or a few people who are closely involved in managing the business. |
| Initial Public Offering (IPO) | Selling a corporation’s stocks on public markets for the first time. Public markets include such institutions as the NYSE |
| Non-Profit Corporations | Providing a service not earning a profit. Not owned by a government entity. There are tax benefits associated with “doing business with” a non-profit. (Also known as a not-for-profit.) Non-profits generally exist in the philanthropic sector (industry). |
| Preferred Stock | A special type of stock whose owners, thought not generally having a say in running the company, have a claim to profits before other stockholders |
| Common Stock | Stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends |
| S Corporation | A corporation taxed as though it were a partnership with restrictions on shareholders |
| Limited Liability Corporation (LLC) | Form of ownership that provides limited liability and taxation like a partnership does, but places few restrictions on members |
| Multinational | Has business operations in more than one country. It usually starts in one Nation, building out locations there, and then sets up subsidiary (branch) companies overseas for the purpose of improving production or facilitating sales. |
| Franchise | An independent entity (a franchisee) buys the right to set up a branch of an establish brand (the franchisor). There are advantages for both parties. Franchise participants can receive information and support from the International Franchise Association. |
| Franchise Disclosure Document | The legal documentation that must be presented by the franchisor for public review by a potential franchisee. Reviewing the documents is part of the franchisee’s due diligence (the “checking out that everything is ok and as promised” process). |
| Microfranchising | A method of providing support and training to very small scale businesses especially in the developing world. |
| Public Corporation | A corporation whose stock can be made available for anyone to buy, sell, or trade. |
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Pl237112
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