Glossary Part 2

A type of capital similar to traditional venture capital, except that the money comes from corporations that invest in new ventures related to their areas of interest.

A body that is granted a charter recognizing it as a separate legal entity having its own rights, privileges, and liabilities distinct from those of its members. The primary advantage of a corporation is that shield its investors from personal liability for any losses the corporation may experience.

A pricing method in which the list price is determined by adding a markup percentage to the product’s cost.

A strategy used by businesses to create a low cost of operation within their market in order to gain an advantage over competitors. (See Porters Generic Strategies, Differentiation strategy).

A method to determine how much it will cost a company to manufacture a product and how much profit will be recognized from manufacturing the product.

The process by which new products and technologies developed by entrepreneurs over time make current products and technologies obsolete; stimulus of economic activity. (aka Disruptive technologies)

€�the ability to frame problems in new ways and to make original solutions. It’s about more than thinking; it is about learning by doing and learning how to do the new in an uncertain, ambiguous, complex space--our lives today.”

The process of generating a novel or useful idea.

A method of funding in which people pool their money and other resources, usually via the Internet, to support efforts initiated by other people or organizations.

Cash plus items that are readily convertible to cash, such as accounts receivable, inventories, and marketable securities.

Obligations that are payable within a year, including accounts payable, accrued expenses, and the current portion of long-term debt

A ratio that equals the firm’s current assets divided by its current liabilities.

The act of separating a group of clients into sets of individuals that are related from a marketing or demographic perspective.

The second most common type of patent covering the invention of new, original, and ornamental designs for manufactured products

A creative problem-solving methodology and a collection of behaviors at the heart of creativity.

One of three Porter's Generic Strategy; others are cost leadership and focus. When a firm pursues differentiation strategy, it attempts to become unique in the industry by offering products/services that have value to customers.

Diffusion is the process by which innovation are “adopted” by the market in 5 visible stages The 5 stages or categories of adopters are (1) innovators, (2) early adopters (3) early majority (4) late majority , and (5) laggards.

The process of eliminating layers of intermediaries, such as distributors and retailers, to sell directly to customers

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

An innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.

The route a product takes from the place it is made to the customer who is the end user.

An increase in the variety of goods and services produced by an individual enterprise or conglomerate. It may be encouraged, either by business owners or by governments, in order to reduce the risk of relying on a narrow range of products. E-commerce or E-marketing Marketing conducted electronically, usually over the Internet

In a Multi-Level Marketing business, the collection of all people signed up underneath an individual on which the individual receives payment on their sales.

The inquiry process of obtaining sufficient and accurate disclosure of all material documents and other information which may influence the outcome of the transaction.

The sale of products and services over the Internet.

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

A brief, carefully constructed statement that outlines the merits of a business opportunity.

A person who organizes, operates, and assumes the risk for a business venture.

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

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

The 4 steps entrepreneurs take from the first idea to full implementation of the business (1) Decision to become an entrepreneur (2) Developing the business idea (3) Starting the firm (4) Managing & growing the firm (See Barringer 15).

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

The value of the shares issued by a company. Generally speaking, Assets - Liabilities = Equity; however, the true value of a company is also measured by its brand equity.

This type of funding helps businesses raise money by tapping individuals who provide funding in exchange for equity in the business.

A means of raising money by exchanging partial ownership in a firm, usually in the form of stock, for funding

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

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 the new venture.

Most venture capitalists require start-up business plans to include a formal contingency plan / exit strategy in case the business fails. An exit strategy typically includes a planned termination of operations, liquidation of assets etc. To limit any further losses. Some business people also choose to exit if a certain profit level is reached or an attractive offer is made to buy the company.

Growth strategies that rely on establishing relationships with third parties, such as mergers, acquisitions, strategic alliances, joint ventures, licensing, and franchising.

A preliminary evaluation of a business idea to determine if it is worth pursuing. A feasibility analysis can comprise various parts (financial, market, organisational etc.)

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.

Ratios showing the relationships between items on a firm’s financial statements that are used to discern whether a firm is meeting its financial objectives and how it stacks up against industry peers.

Written reports that quantitatively describe a firm’s financial health.

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.

Assets used over a longer time frame, such as real estate, buildings, equipment, and furniture.

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

A gathering of five to ten people who have been selected based on their common characteristics relative to the issue being discussed; conducted to generate ideas that might represent product or business opportunities. (82) follow-on funding. Additional funding for a firm following the initial investment made by investors.