mid term 1 Flashcards
Business Model
The pattern of activities a company uses to make profit
Small Business
An independently owned organization that exists to make profit for its owner(s), often measures a having fewer than 500 employees
Micro-Enterprise
A very small business, usually measured as having fewer than 5 employees
Self-employment
An entrepreneur working either as a freelancer or as a short-term contract worker– not a permanent employee of any firm, but not technically a business owner (not having employees or any significant business assets)
Canada Revenue Agency
A department of the federal government that acts as Canada’s tax collector
Freelance
An independent service provider, not employed by any one company, and sometimes producing work before it has been sold
Entrepreneur
Someone who risks money (or their own time and effort) to make a profit. All business owners, freelancers, and otherwise self-employed people are entrepreneurs
Junk Research
Studies that are based on flawed logic or poor application of scientific methods
Reluctant Entrepreneur
Someone who would rather work for an employer but is forced into self-employment because they cannot find a suitable job in their chosen field
Underground Economy
All of the illegally unreported business and customer transactions conducted for cash or barter on which taxes are not paid
Employability Skills
The general knowledge and abilities that employers seek in prospective employees.
Ex. literacy, numeracy, time management, teamwork, and computer skills
Entrepreneurial Skills
The knowledge and abilities necessary to make profit in business. These include financial, negotiation, and people skills
Gap
An unsatisfied need or opportunity in the marketplace, produced by some kind of change that has taken place
Targeting
Specializing in a particular group (or groups) of potential customers
Location
The general geographic area where a business can be found, expressed as a neighbourhood or municipality or even a region of the country
Site
A specific place where business is conducted, expressed as a particular block, address, suite, or part of a building
Mediation
The use of a neutral third party to settle a dispute by assisting the disputing sides to come to a voluntary agreement
Arbitration
The use of a neutral third party to settle a dispute by examining the arguments of the disputing parties then imposing a binding decision on the parties
Partnership Agreement
The contract between two or more people who are entering business ownership together
Sole Proprietorship
A legal form of business where only one person owns and has the legal right to operate the company. The sole proprietor has unlimited liability for the company’s debts
Unlimited Liability
Total personal responsibility for the debts of a business
General Partnership
A business where two or more people own and have the right to manage the company. Each owner in a general partnership has unlimited liability for all the debts of the company
Corporation
A legal form of business that exists separately from its owners (shareholders), who have limited liability for the company’s debts
Limited Liability
A situation where company owners do not have the personal responsibility for the debts of their company
Limited Partnership
A legal form of business with some partners (at least one) having unlimited liability and some having limited liability
Limited Liability Partnership
A legal form of business available to professional firms that provides a partial liability protection to the partners
Worker Co-operative
A legal form of business where the employees (at least a majority of them) are the owners of the company. Each owner has one equal vote in selecting management and directing the company
Feasibility
The likelihood that a concept or plan could work
Market Research
Gathering and organizing information about groups of potential customers
Marketing Research
Gathering and organizing information about the process for getting products or services to customers
Complementary Business
A company that sells products or services different from yours, but to the same potential customers
Basic Rent
The minimum rent charged by a landlord for commercial space, on top of which may be charged a percentage of sales, maintenance fees, and other expenses
Leasehold Improvements
Modifications to the structure or decor of a commercial property that will remain the property of the landlord, even though they may have been paid for by the lessee
Market Potential
How much money a group of potential customers will spend on a particular product or service
Trade Journal
A periodical publication about a specific industry or profession
Secondary Research
Using information that has already been gathered and published
Primary Research
Gathering new information from original sources
Inferential Statistics
Using data and logical assumptions to draw conclusions about markets or populations
Direct Competition
Businesses similar to your own that provide products and services similar to yours and that pursue the same potential customers you are pursuing
Indirect Competition
Sources of supply that are not similar to your business but that are an alternative way for your potential customers to satisfy their needs
Sales Forecast
An estimate of how much money a business will bring in over a given time period. Typically a business plan includes at least 3 years of annual sales forecast
Correlations of Sales
Know facts about an industry that can be expressed as a ratio of the industry’s sales
Test Marketing
Trying to sell your product or service to a limited number of customers and carefully measuring factors like customer feedback and how long it takes to make a sale
Business Owner Policy (BOP)
A package of insurance policies specific to the needs of a particular kind of small firm
Insurance Broker
An independent intermediary who sells insurance policies on behalf of a variety of large insurance companies
Risk Management Consultant
An independent (usually licenced) advisor on property and casualty insurance risks and coverages
Pilfering
Theft of small quantities committed by employees
Patent
Exclusive rights to a useful invention, granted by a government for a specified period of time
Invention
A new technology or a new application of a existing technology
Patent Agent
Someone trained in engineering and law and registered with the federal Commissioner of Patents. Patents agents can assess inventions and assist with the patent application process
Copyright
Protection against anyone (other than the creator, or someone authorized by the creator) reproducing a creative work such as drawing, piece of writing, audiovisual production and so on
Trademark
A word, phrase, or visual symbol that identifies the products or services of a company
Industrial Design
Registered rights to the original, visually aesthetic elements of a manufactured product
Integrated Circuit Topography (ICT)
The design of mircochip, which can be registered for protection of exclusive rights for up to 10 years
Marketing
The process of selecting groups of potential customers, identifying their need and developing a strategy to satisfy those needs
Projected Image
The impression of your business created in the minds of potential customers by everything you do
Expected Image
An impression carried by potential customers of what your business should be like
Marketing Mix
The particular combination of marketing elements that a business uses to find and satisfy its customer; the marketing strategy, usually described in terms of its product/service, price, distribution, and promotion elements
Penetration Pricing
Setting prices lower than those of the competition
Price Skimming
Setting prices higher than those of the competition
Competitive Pricing
Setting prices at the same level as those of the competition
Negotiation
The process used to arrive at the terms of an agreement
Distribution
A company’s strategy for getting services or products from the producer to the end-user. Distribution is sometimes referred to as a place so that elements of the marketing mix can be described as the Four P’s: product, price, promotion and place
Distribution Channel
The legal of contractual elements of how a service or product gets from the producer to the end-user
Physical Distribution
The chain of production storage and delivering that products move through, from producer to end user
Supply Chain
All of the contractual and physical aspects of bringing a product or service from its most basic components to the end-users
E-commerce
The selling, ordering, payment and sometimes the delivery of the product over the internet
E-tailing
Selling products to consumers via the internet without the use of a physical store
Promotion Strategy
The approach a business uses to inform and persuade its customers, including techniques of advertising, publicity, personal selling and sales promotion
Trade Journals
Magazines written for people involved in specific industries; for example, a commercial fishing publication or professional teachers’ magazine
Directories
Published lists of suppliers for particular goods and services; for example a trades directory, an antique dealers directory, a directory of professional actors
Publicity
Promotion by spreading information about a company, product or service without directly paying for the use of media space or time
Personal Selling
Promotion of services/products through person-to-person interaction between the supplier and the potential customer
Sales Promotion
A collection of techniques for getting potential customers to buy goods or services. Theses techniques do not fit into any of the more discrete categories of advertising, publicity or personal selling
lease
The long- term rental of property or equipment. Most leasing contracts for equipment (such as vehicles) include an agreement to ultimately buy the equipment
Logistics
The study and management of the planning procurement, transportation and storage of products
Supply Chain Management
Planning, implementing, and controlling all of the contractual and physical aspects of bringing a product or service from its most basic components to the end-user
Accounting
The recording, classifying, analyzing and reporting of financial information
Retainer
An amount of money paid to a professional advisor (such as a lawyer) before any services have been given. This amount ensures that the services of the retained professional will be available when required, and charges for service are then deducted from the retainer
Sequential List
A simple, chronological ordering of procedures that will be followed by a business
Financial Statements
Accounting reports that summarize the position of a business and the financial changes that have taken place over a period of time
cash flow
The analysis of how money comes into and goes out of a business and the factors that affect the cash balance
management
The setting and achieving of the company’s goals and objectives, often through the work of others
goals
Things to be achieved in the long term, expressed as broad concepts
objectives
Things to be achieved in the short term, usually expressed as specific numbers with specific dates
Job Description
A statement of the duties, responsibilities and other issues pertaining to a particular job within a company
Accountabilities
Those duties on which an employer judges the performance of the employee
Employee Benefits
The non-monetary compensation of employees through items such as pension plans, extended health care and other insurance programs
Balance Sheet
A statement of the financial position of a business at a particular point in time
Income Statement
A statement of a business’s profit or loss over a given period of time
Cash Flow Statement
A statement of cash going into and out of a business over a given period of time and how this has affected the cash balance
Projected Financial Statements
Pro forma financial statements
Statements predicting what the financial performance and position of a business will be in the future
fixed assets
Things that are owned and that tend to keep their value or form for long periods (in excess of a year). For example, buildings, machinery and equipment
Current Assets
Things that are owned and tend to be impermanent in value or form. For example cash, inventory, prepaid expenses
Accounts Receivable
Assets in the form of money that is owed to a company by its customers
liabilities
Legal debts; money owed by a business
current liabilities
Short-term debts that will have to be paid off within a year
Long-term Liabilities
Debts that will have to be paid off within a period greater than a year
Equity
The amount of claim an individual has on asset; or the measure of an individual’s wealth
Accounting Equation
The basis for the balance sheet, showing that the value of assets is equal to the sum of the values of liabilities and equity
Cost of Goods Sold
What a business paid for the goods that it purchased and resold over a given period of time
groos profits
The sales of a business minus the cost of the goods sold over a given period of time
Expenses
All the money that a company pays out (other than cost of goods sold) in order to stay in business. This includes rent, utilities, supplies, advertising, salaries…
Depreciation
An asset’s loss in value of a given time period
break-even
The point at which a company starts to make a profit; the point where sales are sufficient to cover all of the costs and expenses of a company
Fixed Expenses
Expenses of a business that tend to remain constant regardless of the sales level of the business. For example, rent, utilities, permanent salaries
Variable Expenses
Expenses of a business that tend to fluctuate with sales. For example, supplies, packaging, delivery expenses
Bankruptcy
When a business does not have sufficient assets or earning power to repay it debts and legal action is taken to dissolve the company and compensate the creditors as much as possible
revenue
income of a business from sales
Creditors
Those to whom a business owes money
Projected Cash Flow
Cash Budget
A statement predicting how much money will flow into and out of a business during a given period in the future
Expenditures
The money a business pays out in a given period for costs and operating expenses
Prepaid Expenses
Expenses of a business that must be paid in advance such as insurance and legal retainers. The value of the prepaid expense shows as an asset in the balance sheet and the value goes down as the value of the expense is used up
Collateral
Assets of a borrower that are pledged to a lender in the event of non-payment of a loan
Business Development Bank of Canada (BDC)
A federal government agency charged with lending money to small and medium enterprises, under reasonable terms
Canada Small Business Financial
guarantees to banks that lends money to small and medium enterprises for the purchase of fixed assets
Human Resources and Skills Development Canada (HRSDC)
HRSDC is the department of the federal government concerned with training and employment. It has various programs that support entrepreneurship and provide training assistance to small business
Credit Bureau
An organization that gathers and reports information on the financial status and borrowing and borrowing and repayment histories of customers and businesses
Crowdfunding
Web-based methods for small donors/investors to provide money for start ups or social enterprises
Indirect Financing
Methods whereby a business has the use of assets for which it has not paid
Consignment
When an item is taken into inventory and held for sale by a business but still remains the property of the supplier to the business. The proceeds of any sale are split between the supplier and the selling business
rough threshold for successful business
1$ million in sales / 20 employees first year. break even second year. positive cash flow 3rd year. 4th year high growth commenses
lemons and pearls
lemons ripen in 2, pearls take 7
6 reoccurring themes essential to entrepreneure’s
commitment and determination leadership opportunity obsession tolerance of risk, uncertainty ambiguity sense of adaptability and self reliance motivation to excel
and one more - experience
creative destruction
activity was rejuvenating and leads to higher standard of living.
different types of startups
gazelles - grow 20% annually or generating $100K or more each year
mice - little growth - lifestyle venture
fold
when founders sell out
outside investors
family, friends, fools (FFF) / angles (Private) investors, government agencies, venture capitalists
5 key facets of any opportunity
add significant value to customer/ end user
done through resolution of significant problem or meeting a need paying a premium
large enough market with solid growth and margins to make it attractive
fits well with interests and capabilities of founder and his/her team.
windows of opportunity long enough to be exploited.
best opportunities come form 2 sources
changes in society and economy
shifts in one industry applied to another
2 essentials to start up success
entrepreneur who has most if not all of the traits necessary
a genuine opportunity - a fundamental idea that can become a viable commercial venture.
how to overcome a lack of experience
connect with distributors and whole saler’s
former employees
professionals
social networking
initial criteria of planning a business
value proposition for customer
can a premium be charged to obtain higher margins
is the market substantial enough to justify the outlay
does the opportunity fit with capabilities and interests
is the position at the onset of a strong demand curve.
you need to do a comprehensive analysis of:
industry and market
finances
harvesting options
competitive advantages
management team
personal criteria
strategic differentiation
2 types of business plans
dehydrated - 7-15 pages
complete - 23-35 pages usually in the hundreds
business plan serves two purposes
attempts to entice outside investors
internal goals as a purpose and process
traditional marketing
push or broadcasting / shotgun approach
more efficient marketing
pull or narrow casting option
bootstrapping marketing
low cost, unconventional, creative “pull” strategy
