Glossary

This glossary consists of frequently used Entrepreneurial terms and those cited in the Founder’s Journey – An Entrepreneurial Process taught by award-winning professors from Ivey Business School at Western University. It is meant as a reference and supplementary learning resource for personal knowledge. The definitions were assembled using a variety of sources. While the information presented is believed to be factual and current, it should not be regarded as a complete analysis of the terms discussed. The information is not intended as legal, financial, or other professional advice and is subject to change.

Analog

Analogs are examples of companies in the same industry in which you seek to do business. Analogs may also be companies within different industries that have key similarities between how they do business and your prospective business model.

Angel Investor

Successful entrepreneurs who want to re-invest capital into sectors they tend to know about. An angel investor is a wealthy person who invests his or her own money in a company – usually a start-up – that is in the early stages of development. The goal of an angel investor is to help businesses get established. Angel investors may provide a one-time injection of money into a business or invest on an ongoing basis in the company’s fixed assets or working capital.

Ansoff Matrix

A strategic planning tool that provides a framework to help executives, senior managers and marketers devise strategies for future growth.

Antilog

Antilogs are the opposite of analogs, representing business models or practices that you do not want to replicate from other organizations.

B2C

Business To Consumer

Behavioural Segmentation

A process in marketing which divides customers into segments depending on their behaviour patterns when interacting with a particular business or website.

Business Model

A company's core strategy for profitably doing business. Models generally include information like products or services the business plans to sell, target markets, and any anticipated expenses.

Cash Flow Budget

Projects all cash income and all cash expenses and can be completed on a monthly or a quarterly basis. It is the key document in determining when cash flow will be tight, how much operating credit will be needed, and when it will be repaid.

Causal Model

An approach to making decisions and performing actions in entrepreneurship where there is a predetermined goal and the process to achieve it is carefully planned in accordance to a set of given resources.

Competitive Landscape

A business analysis method that identifies direct or indirect competitors to help a company comprehend their mission, vision, core values, niche market, strengths and weaknesses.

Costs of Goods Sold

The cost of goods sold (COGS) is the sum of all direct costs associated with manufacturing a product. It appears on a manufacturer’s income statement and typically includes money spent on raw materials and labour as well as amortization expenses.

Creating Value

From a financial perspective, value is said to be created when a business earns revenue that exceeds expenses. More broadly, creating value is defined by giving away something valuable in return for something that’s even more valuable to yourself.

Crowdfunding

Crowdfunding is a way for companies to raise money by collecting small, individual contributions from a large pool of donors through online platforms.

Crowd storming

The ability to absorb ideas from different sources, mainly external, conducting a brainstorming through the Internet.

Deficiency Management

Deficiencies are commonly cited as the barrier to successful project completion. Deficiency Management is the process of tracking issues in large-scale construction projects.

Diversification

A business development strategy in which a company develops new products and services, or enters new markets, beyond its existing one.

EBITDA

Stands for: Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA refers to cash available to return to investors or to pay for all the things you describe in your sources and uses. It is often a measure of company’s profitability used by investors and is helpful when comparing one company to another in the same line of business. In some cases, it can also provide a more accurate view of the company’s real performance over time.

Effectuation Model

An approach to making decisions and performing actions in entrepreneurship processes, where you identify the next best step by assessing the resources available in order to achieve your goals, while continuously balancing these goals with your resources and actions.

Enterprise Recurring Revenue Model (Recurring Revenue Business Model)

A business model where the vendor provides access to a product or service in exchange for a recurring fee charged at scheduled intervals (monthly, quarterly, or yearly).

Entrepreneur

Entrepreneurs are people who organize and operate businesses that aim to solve problems, fill voids and create better ways of doing things. They create products, processes, or services, and thereby create value for customer and society.

Entrepreneurship

Entrepreneurship is the creation of value. Entrepreneurs create value by solving problems, by filling voids and by creating better ways of doing things.

Equity Based Funding

When companies sell shares to investors to raise capital, it is called equity financing. The benefit of equity financing to a business is that the money received doesn't have to be repaid. If the company fails, the funds raised aren't returned to shareholders.

Fair Trade

Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers.

False Starts

Companies that appear to get off the ground and take their competitors by storm, only to quickly fall short.

Financial Capital

Most commonly refers to assets needed by a company to provide goods or services, as measured in terms of money value. Financial capital is one of the most critical resources necessary for growth in a business.

Five Ps

Prior Planning Prevents Poor Performance (Contrary to the 5 Ps of Entrepreneurship: Passion, Purpose, Planning, Patience, Perseverance)

Fixed Pricing Model

A model that guarantees a fixed budget for the project, regardless of the time and expense. The main advantage of a fixed price model is that it allows the client to plan and set an exact budget.

Founder

The person who starts or owns their own company. They secure funding, bring resources and market the brand. Unlike a CEO, the Founder will always remain the same, even if they leave.

Gross Margin

The amount of money a company has left after subtracting all direct costs of producing or purchasing the goods or services it sells. The higher the gross margin, the more money the company is able to contribute to its indirect costs and other expenses like interest.

Growth

A stage or condition of increasing, developing or maturing a business

High Growth Company

A firm with 10 or more employees at the beginning of the period that has an average annualized growth greater than 20 percent year over year, over a 3-year period.

High Growth Venture

Small businesses designed for the purpose of achieving high growth and rapid profit increases. Often, to achieve profit and growth objectives, these businesses develop products and promotion strategies with a pool of investors providing working capital.

Ideation

The formation of ideas or concepts.

Initial Capital

Refers to the money raised by a new company in order to meet its initial costs. Entrepreneurs who want to raise initial (or start-up) capital have to create a solid business plan or build a prototype in order to sell the idea. Initial capital may be provided by venture capitalists, angel investors, banks, or other financial institutions and is often a large sum of money that covers any or all of the company’s major initial costs such as inventory, licenses, office space, and product development.

Innovation

An innovation can be something new, such as an invention, or the practice of developing and introducing something new. Often a new product, an innovation can also be a new way of doing something or even a new way of thinking.

In the Flow

A state of mind in which everything seems possible. Also known as “in the zone” it’s when a person performing an activity is fully immersed in the energy and enjoyment of the process.

Investment Dollars

An asset purchased with the hope that it will generate income or appreciate in value at some point in the future.

Investors

Any person or other entity (such as a firm or mutual fund) who commits capital with the expectation of receiving financial returns.

Letter of Intent

A document declaring the preliminary commitment of one party to do business with another. The letter outlines the chief terms of a prospective deal and is commonly used in business transactions. LOIs are useful when two parties are initially brought together to hammer out the broad strokes of a deal before resolving the finer points of a transaction.

Lifetime Value

Customer lifetime value is the total worth to a business of a customer over the whole period of their relationship. It’s an important metric as it costs less to keep existing customers than it does to acquire new ones, so increasing the value of your existing customers is a great way to drive growth.

Loan with Terms (Term Loan)

A loan for equipment, real estate or working capital that is paid off like a mortgage for between one year and ten years. Term loans are basic commercial loans that typically carry fixed interest rates, monthly or quarterly repayment schedules and include a set maturity date.

Market Development

A strategic step taken by a company to expand or penetrate new markets with existing products & services.

Market Penetration

A measure of how much a product or service is being used by customers compared to the total estimated market for that product or service.

Mentor

An experienced and trusted advisor or coach.

Microcredit

Microcredit is a common form of microfinance that involves an extremely small loan given to an individual to help them become self-employed or grow a small business. Microcredit is also known as "microlending" and often aids in lifting women in impoverished countries.

Mission Statement

A concise explanation of the organization's reason for existence. It describes the organization's purpose and its overall intention and vision and serves to communicate purpose and direction to employees, customers, vendors and other stakeholders.

Mutually Beneficial Agreement

A contract or deal which includes both parties taking advantage of it.

Non-Profit Business

Also referred to as a non-profit organization, not-for-profit business is a legal entity organized and operated for a collective pubic or social benefit, in contrast with an entity that operates as a business aiming to generate a profit for its owners.

Outsource

An agreement in which one company hires another to be responsible for a planned or existing activity that is or could be done internally. Outsourcing sometimes involves transferring employees and assets from one firm to another.

Pareto Distribution

A power-law probability distribution that is used to describe social, quality control, scientific, geophysical, actuarial and many other types of observable phenomena.

Payables

Refers to the money a company owes its suppliers for goods and services that have been provided and for which the supplier has submitted an invoice.

PESTEL Analysis

A PESTEL analysis is a framework or tool used by marketers to analyze and monitor the macro-environmental (external marketing environment) factors that have an impact on an organization, company, or industry. It examines the Political, Economic, Social, Technological, Environmental, and Legal factors in the external environment.

Pivot Process

A pivot means fundamentally changing the direction of a business when you realize the current products or services aren’t meeting the needs of the market. The main goal of a pivot is to help a company improved revenue or survive in the market.

Problem Discovery

The process of Problem Discovery involves finding problems in people’s lives, uncovering the importance of those problems, understanding what those problems entail and learning how those problems are currently being solved.

Product Development

The complete process of delivering a new product or improving an existing one to service current customers.

Profit

Profit describes the financial benefit realized when revenue generated from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity in question.

Proprietary Information

Information a company wishes to keep confidential. Proprietary information can include secret formulas, processes and methods used in production. It can also include a company's business and marketing plans, salary structure, customer lists, contracts and details of its computer systems.

Prototype

An early sample, model, or release of a product built to test a concept or process.

Psychographic Market Segmentation

A process that breaks down your customer groups into segments that influence buying behaviors, such as beliefs, values, lifestyle, social status, opinions and activities.

Receivables

The money that is owed to the company, typically by customers.

Resilience

The capacity to recover quickly from difficulties or adversity

Risk Distributor

One who spreads risk from one to many receivers. It is a risk mitigation strategy whereby risk exposure is reduced by spreading it to a number of risk receivers.

Risk Taker

Someone who takes on risk in the hope of achievement or reward. Someone who accepts the potential for loss and tolerates uncertainty.

Scalable Demand Generation Channel / Product Channel Fit

Demand generation is a data-driven marketing program leveraging the inbound methodology to drive awareness and interest throughout the entire buyer and customer lifecycle. Demand generation is focused on revenue creation and is most successful when executed through an integrated tech stack. Product Channel Fit is when your product attributes are moulded to fit with a specific distribution channel.

Scale-Up

A distinct phase of company growth. It occurs when a company has achieved some impressive success and is ready to take the business to the next level.

Self-Starter

A person who begins work or undertakes a project by his or her own initiative, without needing to be told or encouraged to do so.

Serial Entrepreneur

One who starts several businesses one after another, rather than beginning one venture and staying focused on it for many years. Serial entrepreneurs may sell their businesses after they reach a certain level of maturity.

Serviceable Market

The part of the total addressable market that can actually be reached.

Shares are units of equity ownership in a corporation. For some companies, shares exist as a financial asset providing for an equal distribution of any residual profits, if any are declared, in the form of dividends.

Social, Economic Change

The way social and economic factors influence one another and lead to change, often to public policy and planning.

Social Enterprise

An organization that applies commercial strategies to maximize improvements in financial, social and environmental well-being. These companies can make profits, unlike non-profit businesses.

Social Impact

Any significant or positive changes that solve or at least address social injustice and challenges. Businesses or organizations achieve these goals through conscious and deliberate efforts or activities in their operations and administrations.

Social Mission

A social mission is a cause that benefits society, the economy and/or the environment in various ways. When a company has a social mission, it communicates to customers, employees and stakeholders the values that drive it. Customers feel like they make a difference when they purchase from the company.

Steadfast

Resolutely or dutifully firm and unwavering.

Strategic Plan

Defines who you are as a business and lists concrete actions to achieve your goals.

Switching Cost

The costs a consumer pays as a result of switching brands or products. Switching costs can be monetary, psychological, effort-based and time-based.

Three Fs

Friends, Families, Fools. These are the sources of funds to start your business.

Total Addressable Market

Also referred to as total available market, is a term that is typically used to reference the revenue opportunity available for a product or service. TAM helps prioritize business opportunities by serving as a quick metric of a given opportunity's underlying potential.

Trade Off

Giving up one thing in return for another.

Triple Bottom Line

The triple bottom line is a sustainability framework that measures a business's success in three key areas: profit, people, and the planet.

Value for Stakeholders

A stakeholder is an individual or group that has an interest or “stake” in an organization. Stakeholder value involves creating the optimum level of return for all stakeholders. It is a broader concept than shareholder value, which generally focuses solely on maximizing net profits or cash flows.

Value Proposition

A value proposition:
• Refers to the process of explaining to customers what problem you solve, how your solution is different from solutions that already exist in the market and what key benefits the customers will get from purchasing your product or service
• Refers to the value a company promises to deliver to customers should they choose to buy their product.
• Provides a declaration of intent or a statement that introduces a company’s brand to consumers by telling them what the company stands for, how it operates, and why it deserves their business.

Venture

A new business that is formed with a plan and expectation that financial gain will follow. Often, this kind of business is referred to as a small business.

Volume Pricing

A pricing structure that figures in discounts for large quantity purchases. The more that is purchased at one time, the larger the discount.

Workforce Intelligence Program

Workforce intelligence uses artificial intelligence-powered bots on employees’ desktops to collect and analyse information on work patterns. The data helps organizations improve, design, automate and align internal business models to identify the right opportunities and a better work experience.

Working Capital

Working capital is the amount of cash and other assets a business has available after all its current liabilities are accounted for.

Work Place Social Integration

Refers to the attachments individuals sustain with the larger society and are typically measured in terms of occupational, organizational, and community roles.