2.5 Key Terms
action plan
organized, step-by-step outline or guide that pulls together the ideas, thoughts, and key steps necessary to help set the stage for entrepreneurial success
benchmarking
comparing one’s own company’s performance with an industry average, a leader within the industry, or a market segment
bootstrapping
funding strategy that seeks to optimize use of personal funds and other creative strategies (such as bartering) to minimize cash outflows
breakeven point
level of operations that results in exactly enough revenue to cover costs
business model
plan for how venture will be funded; how the venture creates value for its stakeholders, including customers; how the venture’s offerings are made and distributed to the end users; and the how income will be generated through this process
capitalism
system in which individuals, people, and companies have the freedom to make decisions and own property as well as benefit from their own efforts, with government playing a secondary role in oversight
cash flow
money collected by the business through revenue and funding versus money disbursed by the business through expenses
cash management
management of cash inflows and outflows to support cash needs of the venture
corporate entrepreneurship
development of new ideas, opportunities, or ventures through formal research and development processes that focused on the corporation’s strategy and goals
creative destruction
theory developed by Joseph Schumpeter stating that entrepreneurial innovation is the disruptive force that creates and sustains economic growth, though in the process, it destroys established companies and disrupts employment
due diligence
conducting the necessary research and investigation to make informed decisions that minimize risk
e-commerce
electronic transactions, particularly over the Internet, for the exchange of goods and services
entrepreneurial journey
your exploration to discover if entrepreneurship is right for you
entrepreneurial process
set of decisions or actions that can be outlined and followed as a guide to developing or adjusting a venture
entrepreneurial spirit
describes a quality of those individuals who are productive self-starters focused on making changes happen
entrepreneurial venture
any business, organization, project, or operation of interest that includes a level of risk in acting on an opportunity that has not previously been established
framework
structure or outlined process that can be used to accomplish entrepreneurial goals through problem solving, idea generation and validation, and brainstorming
franchising
form of licensing that allows the business (franchisor) to share its business model to expand through various distributors (franchisees) for a fee
independent contractor
(also, freelancer) people or businesses that provide work similar to an employee without being part of the payroll for the contracting business, and who pay their own taxes and pay for their own benefits
innovation
new idea