Entrepreneurship 4e by Frederick, O'Connor, Kuratko

Entrepreneurship by Frederick, O'Connor, Kuratko (4th edition) is the 4th edition of the Entrepreneurship: Theory/Process/Practice textbook authored by Howard H. Frederick, Allan O'Connor, and Donald F. Kuratko, and published by Cengage Learning Australia Pty Limited in 2016.

• Absolutist ethics. The belief that there are absolute standards against which moral questions can be judged, and that certain actions are right or wrong, irrespective of the context of the act.
• Accounts payable. Liabilities incurred when goods or supplies are purchased on credit.
• Accounts receivable. Money that is owed to a company by a customer for products and services provided on credit. Treated as a current asset on a balance sheet.
• Accounts receivable financing. Involves either the pledge of receivables as collateral for a loan or the sale of receivables (factoring).
• Accrual system of accounting. A method of recording and allocating income and costs for the period in which each is involved, regardless of the date of payment or collection. For example, if you were paid $100 in April for goods you sold in March, the $100 would be income for March under an accrual system. (Accrual is the opposite of the cash system of accounting.)
• Achievement. Accomplishing a business goal successfully through skill, risk-taking or perseverance.
• Adaptation. Changing practice due to the new biophysical conditions; that is, adapting to changes in temperature, sea level, storm patterns and so forth. (See also mitigation.)
• Adaptive firm. A venture that remains adaptive and innovative both through and beyond the growth stage.
• Administrative expenses. An overhead cost associated with managing business affairs not directly attributable to sales, marketing, production or service delivery.
• Affordable loss. The level of loss that can be endured by an entrepreneur or a business that can be reasoned to be affordable in order to explore the potential of an opportunity.
• Allowance for uncollectable accounts. Accounts receivable judged to be uncollectable.
• Angel capital. Investment in a business to provide equity capital by an affluent individual.
• Anthropocene extinction event. Ongoing mass extinction of species during the modern era, for the past 10 000 years.
• Anthropogenic. Caused by human beings and generally refers to their impact on nature, e.g. anthropogenic air pollution.
• Appositional relationship. A relationship among things and people existing in the world in relation to other things and other people.
• Arbitrage. In simple terms it is the practice of taking advantage of a price difference between two or more markets to make a risk-free profit through trading between the different markets with different market prices.
• Asia–Pacific. Political and economic term used to designate the economies on the edges of the Pacific Ocean as well as the various island nations within the region.
• Asset protection. A way to organise assets and transactions in such a way that personal assets (such as the family home) are shielded from future liabilities or business failure.
• Assets. Anything of value that is owned by you or your business.
• Bai' al 'inah. A term of Islamic finance, it means a sale and buy-back agreement between a financing facility and an entrepreneur.
• Bai Salam. A term of Islamic finance, this is an advance-paid contract to deliver goods (fully specified leaving no ambiguity leading to dispute) at a later date.
• Balance sheet. An itemised statement listing the total assets, liabilities and net worth of your business at a given moment.
• Bank loan. Long-term liability due to a loan from a lending institution.
• Bankruptcy. A legal status of an organisation or a person who cannot pay their debts to creditors to whom they owe money.
• Barriers to entry. Elements restricting an emerging industry, such as proprietary technology, access to distribution channels, access to raw materials and other inputs, cost disadvantages due to lack of experience, and risk.
• Bear markets. Unfavourable markets associated with falling prices and investor pessimism.
• Better widget strategies. A strategy that leverages unique products that open up existing markets or stake out new markets.
• Biobank. A type of biorepository that stores biological samples. Well used in human medical research, they are now being used to preserve biodiversity.
• Biodiversity. The variety of plant and animal life found in an ecosystem and the variation in their genetic make-up. Biodiversity is a measure of the health of an ecosystem, with healthy ecosystems having greater variety and variation in plant and animal life than unhealthy ones.
• Biodiversity offsets. Comes from the concept of biodiversity banking. Applying market solutions to improving biodiversity.
• Biomass. The total mass of all the living organisms in a given area, population, habitat or trophic level, often expressed as kg/ha.
• Bioprospecting. The process of discovery and commercialisation of new products based on biological resources.
• Biosphere. All ecosystems on Earth as well as the Earth's crust, waters and atmosphere on and in which organisms exist; also, the sum of all living matter on Earth.
• Blue Ocean Strategy. The strategy of seeking a market space that is not yet contested or that remains unidentified by competitors. Also the strategy of creating new market spaces to avoid the tightly held known markets that competitors hotly contest for customers.
• Bootstrapping. A means of starting a new venture through highly creative acquisition and use of (sometimes other people's) resources. (See also incrementalist approach.)
• Born global. A company that goes global from its very 'birth'. It rapidly expands on the world market without conquering the domestic market first.
• Break-even analysis. The method of determining the point at which a company makes neither a profit nor a loss. The break-even point for a product is the point where total revenue received equals total costs.
• Bribery. A corrupt activity in which a person offers or receives goods, money, services, etc. to sway another person's opinion, action or decision.
• Brundtland Report. Our Common Future is a report from the United Nations World Commission on Environment and Development (WCED) and was published in 1987.
• Budget. A statement of estimated income and expenses over a specific period of time.
• Build-out allowances. In a lease contract, the landlord will sometimes give an amount to the tenant to buildout the premises.
• Business angel. A private investor who contributes money and experience to early stage investments.
• Business entrepreneurs. Are driven by the profit motive (as distinguished from social entrepreneurs). They seek growth and profits within the business world.
• Business failure. When a fall in revenues and/or rise in expenses are of such magnitude that the firm becomes insolvent.
• Business formation. The act and procedures of starting a business.
• Business model. How a venture is designed to make money, demonstrating a clear method of getting to the market for sales.
• Business plan. The written document that details a proposed venture. It must illustrate current status, expected needs and projected results of the new business.
• Buy/sell agreements. An agreement designed to handle situations in which one or more of the entrepreneurs wants to sell their interest in the venture.
• Calculated risk taking. An entrepreneurial behaviour whereby information and/or expertise is sought to evaluate whether the risk involved in pursuing an opportunity is calculable and worthy of the potential loss.
• Cantillon, Richard. 1680s–1734, an Irish-French economist and author of Essai sur la Nature du Commerce en Ge´ne´ral (Essay on the Nature of Trade in General), was first to introduce the term entrepreneur into economics.
• Capex. Short for 'capital expenditure', refers to costs associated with buying machinery, equipment, property and other fixed assets that provide longterm benefit.
• Capital. (1) The amount invested in a business by the proprietor(s) or shareholders. (2) The money available for investment or money invested.
• Capital budget. Used to plan expenditures on assets whose returns are expected to last beyond one year.
• Capital budgeting. A budgeting process used to determine investment decisions. It relies heavily on an evaluation of cash inflows.
• Capitalism. An economic system based on private ownership of the means of production. Individuals, companies or corporations invest in, own and share in profits (or losses) of the entities that produce goods, distribute products or provide services.
• Carbon emissions. Emissions to the atmosphere principally from the burning of fossil fuels and deforestation.
• Carbon footprint. The carbon footprint is a measure of the impact that human activities have on the environment in terms of the amount of greenhouse gases produced, measured in units of carbon dioxide.
• Carbon sequestration. Removing carbon from the atmosphere and depositing it in a reservoir such as soil, trees and plants, geological formations and oceans. Reduces greenhouse gas and global warming.
• Career risk. Managers with a secure job and benefits often experience this when they consider whether they can go back to their old job if their venture should fail.
• Carrying capacity. The supportable population given the food, habitat, water and other necessities available within an environment without degrading natural capital for future generations.
• Cash. Coins, currency and cheques on hand. It also includes money that the business has in its cheque and savings accounts.
• Cash flow. A measure of the movement of money within a business venture including all outflows and inflows usually measured for a specified period of time either in the past or in the future. For a business venture the flow of money in must provide timely coverage for any necessary flows of money out of the business venture.
• Cash-flow budget. A budget that provides an overview of inflows and outflows of cash during a specified period of time.
• Cash-flow statement. A financial statement that sets forth the amount and timing of actual and/or expected cash inflows and outflows.
• Champion. A person with a vision and the ability to share it.
• Classical liberalism. A political ideology committed to limited government and liberty of individuals including freedom of religion, speech, press, assembly and free markets.
• Climate change. The change in global climate patterns apparent from the mid to late 20th century onwards, attributed largely to the increased levels of atmospheric carbon dioxide produced by the use of fossil fuels.
• Climate change economics. A conceptual framework for considering climate change as an economic problem, that examines public policies and the trade-offs among them, and discusses the potential complications and benefits of international coordination.
• Co-creation. Two or more parties collaborating to produce a product or service or other outcome that has shared benefit. Usually involving the customer as one party in a marketing sense but other co-creators may be suppliers or investors.
• Cognition. It refers to mental processes. These processes include attention, remembering, producing and understanding language, solving problems, and making decisions.
• Collective entrepreneurship. Individual skills integrated into a group wherein the collective capacity to innovate becomes something greater than the sum of its parts.
• Co-marketing. Also known as copromotion, this means two or more companies cooperating to market or promote each other's products.
• Commercialisation. The process of introducing a new product into the market. Sequence of actions necessary to achieve market entry and general market competitiveness of new innovative technologies, processes, and products.
• Common shares. Represents part ownership of a company. Holders of common shares have voting rights but no guarantee of dividend payments. Note: The word 'stock' is used in the US instead of 'shares'.
• Competitor analysis. The quality and quantity of the competition, which needs to be carefully scrutinised by the entrepreneur.
• Comprehensive feasibility analysis. A systematic analysis incorporating external factors.
• Consumer behaviour. Study of how people buy, what they buy and why they buy. It is a subcategory of marketing that blends elements from psychology, marketing and economics. It attempts to understand the buyer decision-making process, both individually and in groups.
• Consumer characteristics. Variables (such as income, occupation, education, perceptions and self-concept) that distinguish one group from another.
• Consumer-driven philosophy. A marketing philosophy that relies on research to discover consumer preferences, desires and needs before production actually begins. (See also product-driven and sales-driven philosophy. One of three dominant marketing philosophies.)
• Consumer pain. Something that you actually solve by your venture. Satisfy the needs, fears and desires of the consumer. The cracks in the footpath that everyone is walking around.
• Consumer pricing. A pricing decision method which is derived by understanding the value consumers (or customers) place on a product and the price they will pay for that value.
• Contract manufacturing. A contractee/manufacturer assembles the product under a contract arrangement.
• Contribution margin approach. A company's contribution margin is the percentage of each sale that remains after the variable costs are subtracted.
• Convertible debentures. Loans to a company made by investors, as opposed to loans raised from a bank. The investors receive a fixed rate of interest. Debentures may be 'convertible' into shares or 'redeemable' for cash at a specified future date.
• Cooperative society. A cooperative operates on a service motive that provides services to its members and any return of capital is limited. Unlike a company, all members of a cooperative have only one vote, irrespective of their shareholding.
• Copreneur. Copreneurs are couples who have a personal relationship in addition to a business relationship.
• Co-production. A relationship in which companies agree to manufacture each other's products.
• Copyright. A legal protection that provides exclusive rights to creative individuals for the protection of their literary or artistic productions.
• Corporate angels. A type of angel investor, typically senior managers who have been laid off with generous severances or have taken early retirement.
• Corporate entrepreneurship. The entrepreneurial behaviour of people within large firms and organisations. Other related terms include intrapreneurship, innovation or venturing. In this book we use the word intrapreneurship.
• Corporate Entrepreneurship Assessment Instrument (CEAI). A questionnaire designed to measure the key entrepreneurial climate factors within a corporate entity or established business environment.
• Corporate responsibility for a sustainable environment. When companies look at the degradation of the planet's assets and the part they can play in stopping it.
• Corporate social responsibility. A business process that guides a company's activities in the protection and promotion of international human rights, labour and environmental standards by minimising their environmental impact, adhere to international labour standards, contribute to their communities and manage towards a more economically sustainable world.
• Corporate venturing. Another word for intrapreneurship or corporate entrepreneurship.
• Corporation. In the US, a corporation is a legal business entity that often has similar rights in law to those of a natural person. In Australia, New Zealand and Singapore, as well as in the UK and Ireland, this is known as an incorporated company. They both have limited liability and their shareholders are not normally responsible for the company's debts beyond the amount they paid for their shares. Accordingly, while the terminology differs, the concept of a company or corporation is largely the same.
• Corruption. Corruption is defined as the abuse of power for private gain. It is an organised system of improper conduct such as bribery, extortion and influence peddling.
• Cost of borrowings. Cash required over a given period for the repayment of interest and principal on a debt. Also called debt servicing.
• Cost of goods sold (cogs). The value of products sold to customers in a period. This is determined by subtracting the value of the ending inventory from the sum of the beginning inventory and purchases made during the period. Gross sales less cost of goods sold give you gross profit.
• Cradle-to-cradle. The idea that at the end of life any product can be turned into something else to close the cycle so that ultimately there is no waste.
• Creative process. A process of exploration, selection, combination, refinement and reflection to create a new idea or innovation.
• Creativity. The generation of ideas that results in improved efficiency or effectiveness of a system.
• Critical factors. Important newventure assessments.
• Cross-licensing. This is what happens when a firm grants a licence to another firm to exploit proprietary rights in its patents, copyrights, trademarks, trade secrets and so forth.
• Crowdfunding. Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the Internet.
• Current assets. Items on the balance sheet listed as assets such as cash, accounts receivable, inventory and short term investments that can be converted to cash and/or used to pay current liabilities within 12 months.
• Current liabilities. Debts you must pay within a year (also called shortterm liabilities).
• Customer availability. Having customers available before the venture starts.
• Customisation. Refers to the production of a good or service particularly tailored to a specific customer's need.
• Dark side of entrepreneurship. A destructive side existing within the energetic drive of successful entrepreneurs.
• Debt financing. Financing in which you get a loan and go into debt. You are obliged to repay the loan at a predetermined interest rate.
• Debt servicing. See cost of borrowings.
• Deforestation. Destruction of forests to make land for agriculture. Cutting down trees, which provide oxygen and absorb carbon dioxide, is seen as a cause of increased greenhouse effect. Deforestation also entails the destruction of animal habitats.
• Demand-oriented pricing. Typical of the maturity stage of the product life cycle (e.g. when sales growth declines), this is a flexible strategy that bases pricing decisions on the demand level for the product.
• Depreciation. Lost usefulness; expired utility, the diminution of service yield from a fixed asset or fixed asset group that cannot or will not be restored by repairs or by replacement of parts.
• Desertification. When an area begins to develop desert-like conditions due to lack of water, deforestation, overgrazing and overcropping.
• Design registration. A means to protect the way a product looks, its shape and/or configuration in either two-dimensional detail representing the product's pattern or the threedimensional visual appearance.
• Diaspora entrepreneurs. Diaspora (from Greek diasporþ) means people who are scattered from their original homelands. Diaspora entrepreneurs support their home countries by sending remittances, and combining local business know-how with knowledge of their home countries.
• Direct foreign investment. A domestically controlled foreign production facility involving ownership of 10–25 per cent of the voting shares in a foreign enterprise.
• Disadvantaged entrepreneurs. Entrepreneurs who come out of a background of hardship or suffering.
• Disclosure. Information relevant to specific transactions that is required by law.
• Displacement school of thought. Views the factors that prevent (or displace) a person from doing other activities, such as a political regime or a regulatory environment that blocks free enterprise; cultural aspects that might prevent a person from choosing self-employment; or economic factors such as job loss or even full employment that might affect one's choice to become an entrepreneur.
• Dividends. Cash, shares or other assets from an incorporated company's profits distributed to shareholders, an equal amount for each share owned. Paid from the total net earnings. Retained earnings are what remain after that.
• Domain name. The last part of a URL that includes the organisation's unique name followed by its organisational form, such as .com for 'commercial' or .edu for 'educational'.
• Dotcom crash. End of the speculative IT bubble covering roughly 1995–2001.
• Double bottom line. Creation of both a financial and social return on investment. (See also triple bottom line.)
• Double taxation. Double taxation is a situation in which taxes must be paid for the same asset or financial transaction in different countries, either by corporations or by individuals.
• Down-cycling. Recycling of a material into a material of lesser quality.
• Drive to achieve. A strong desire to compete, to excel against self-imposed standards, and to pursue and attain challenging goals.
• Due diligence. A process undertaken by potential investors to analyse and assess the desirability, value and potential of an investment opportunity.
• Duplication. Creative replication of an existing concept, such as taking pizzas and making Pizza Hut.
• Durable competitive advantage. In marketing and strategic management an advantage that one company has relative to competing companies.
• Dynamic capabilities. The strategic capabilities that lead a business to change the what, the how and/or the why it does what it does.
• Early stage financing. Provided to companies that have completed the product development stage and test marketing as well, but require additional financing to expand commercial manufacturing and sales.
• Ecological concern. The belief that today's environmental problems are a result of industrial and personal disregard for the environment.
• Ecological fatalism. The belief that some amount of pollution is unavoidable in industrial societies and accept it as a part of life.
• Ecological school of entrepreneurial thought. The perception of the natural world and our relationship to it as entrepreneurs. Based on the idea that everything is related with everything everywhere. Focuses on intergenerational equity, irreversibility of environmental change, uncertainty of long-term outcomes, and sustainable development.
• Ecology of commerce. Based upon Paul Hawken's book by the same name (1994), the concept means the environmentally destructive aspects of many current business practices along with businesses adopting new practices to promote environmental restoration.
• Economic capital. Economic capital is composed of both finance capital (cash, money) and manufacturing capital (manufacturing plants and other physical assets).
• Economic growth. Increase in the capacity of an economy to produce goods and services as well as to improve the wellbeing of its citizens.
• Econosphere. Total capital stock; that is, the set of all objects, people, organisations and so on, which are interesting from the point of view of the system of exchange.
• Ecopreneur. Combines the unrelenting drive and imagination of the entrepreneur with the stewardship of a conservator.
• Ecopreneurship. The study and practice of nascent and new business owners who innovate, upcycle and offer environmentally friendly services, goods and technology.
• Ecosystem. All the organisms in a community, together with the associated physical environmental factors (living and non-living) with which they interact.
• Ecotourism. Nature-based tourism that respects the culture, natural history and environment of destinations and seeks to minimise the negative impact of travel on the environment.
• Effectual logic. An approach to entrepreneurial strategy, popularised by Saras Sarasvathy, that is unconstrained by either limited resources or fixed objectives.
• Eisenhower recession. From 1953–55, a post-Korean War inflationary period when funds were transferred into national security.
• Electronic waste. Discarded computers, office electronic equipment, entertainment device electronics, mobile phones, television sets and refrigerators.
• Elevator pitch. The brief oral presentation for selling a business plan to potential investors (named for the analogy of riding an elevator and having only two minutes to get your story told to another person in the elevator).
• Embodied water. The amount of water used during the growing, processing and transportation of the goods we use or consume, or the services we use.
• Employee stock ownership plans (ESOPs). Passing control of the enterprise to the employees if the owner has no immediate successor in mind.
• Enterprise. Enterprise – as in an enterprising individual – is the process of identifying, developing and bringing a vision to life, be it an innovative idea or simply a better way of doing something. Enterprise applies not only to business ventures, but also to political decisions and social decisions.
• Entomophagy. The consumption of insects as food.
• Enthusiast angels. Angels that simply love to be involved in deals. Typically play no role in management and rarely seek to be placed on a board.
• Entreprendre. French verb meaning to undertake, begin, start (upon), embark upon.
• Entrepreneur. (1). An innovator or developer who recognises and seizes opportunities; converts these opportunities into workable/marketable ideas; adds value through time, effort, money or skills; assumes the risks of the competitive marketplace to implement these ideas; and realises the rewards from these efforts. (2) An individual who organises and manages labour, capital and natural resources to produce goods and services to earn a profit, but who also runs the risk of failure.
• Entrepreneurial. A person is entrepreneurial if they have the mind-set to spot opportunities, have a social or enterprising spirit, are willing to take calculated risks, and wish to enjoy a good outcome for themselves and the community.
• Entrepreneurial angels. The most prevalent type of investor is the entrepreneurial angel. Most of these individuals own and operate highly successful businesses.
• Entrepreneurial capabilities. The set of skills and abilities of an individual that support identifying an entrepreneurial/business opportunity and developing the resource base needed to pursue an opportunity.
• Entrepreneurial career. A career that involves the work and effort required to spot opportunities and pursue new endeavours or ventures.
• Entrepreneurial characteristics. The set of attitudes, behaviours and character traits associated with an individual who identifies opportunities and gathers the needed resources to pursue a new endeavour or venture.
• Entrepreneurial cognition. How entrepreneurs perceive, recognise, conceive, judge, sense, reason, remember and imagine.
• Entrepreneurial crime. Punishable acts to benefit the entrepreneur personally.
• Entrepreneurial ecocide. Largescale environmentally catastrophic business activities by an entrepreneur.
• Entrepreneurial ecology. Focuses on the sustainable combination of environment and entrepreneurship. Entrepreneurial ecology shifts the entrepreneurial process from linear (open loop) systems, in which resource and capital investments move through the system to become waste, to a closed loop system where wastes become inputs for new processes.
• Entrepreneurial economy. A new emphasis on entrepreneurial thinking that developed in the 1980s and 1990s and is prevalent now in the twentyfirst century.
• Entrepreneurial ecosystem. An area or region that nurtures, sustains and supports entrepreneurs to start, grow and harvest new business ventures. It contains individuals, organisations and/or institutions that are either drivers or inhibitors to a person becoming an entrepreneur and being able to sustain a start-up business through growth and success.
• Entrepreneurial ethics. Moral principles that govern an entrepreneur's behaviour. Presume the entrepreneur is always seeking an 'honourable course of action'.
• Entrepreneurial impact loops. When a proportion of an entrepreneur's product or service is returned (fed back) to nature. It can be positive or negative.
• Entrepreneurial leadership. An entrepreneur's ability to anticipate, envision, maintain flexibility, think strategically and work with others to initiate changes that will create a viable future for the organisation.
• Entrepreneurial marketing. The proactive identification and exploitation of opportunities for acquiring and retaining profitable customers through innovative approaches to risk management, resource leveraging and value creation.
• Entrepreneurial marketing plan. Part of a company's overall strategic effort, this plan promotes the restless pursuit of opportunity, an obsession with the customer and a focus on sales above all else.
• Entrepreneurial mind. Describes the mind of an entrepreneur and the way they think about, make decisions and view the world and its opportunities for new ventures.
• Entrepreneurial mind-set. All the characteristics and elements that compose the entrepreneurial potential in every individual.
• Entrepreneurial motivation. The willingness of an entrepreneur to sustain his or her entrepreneurial behaviour.
• Entrepreneurial opportunity. An opportunity for the creation of a new venture that can obtain an identified and superior competitive advantage and provide a profitable return to its investors.
• Entrepreneurial Revolution. Throughout the world, there is compelling evidence linking entrepreneurship and economic performance, including job creation, growth, firm survival, innovation and technological change, productivity increases and exports.
• Entrepreneurial risk. See risk.
• Entrepreneurial strategy. Strategies that underpin long-range plans for the effective management of opportunities and threats in light of an entrepreneur's, an entrepreneurial team's or a venture's, strengths and weaknesses.
• Entrepreneurial stress. A function of discrepancies between one's expectations and one's ability to meet those demands.
• Entrepreneurial successor. A successor to a venture who is highly gifted with ingenuity, creativity and drive.
• Entrepreneurial trait school of thought. One of the micro views of entrepreneurship, this seeks to identify traits common to successful entrepreneurs (e.g. achievement, creativity, determination and technical knowledge).
• Entrepreneurial vision. See vision.
• Entrepreneurship. The practice of starting new organisations, particularly new businesses. The process of innovation and new-venture creation. The commercialisation of innovation.
• Entrepreneurship education. Programs devoted to raising the level of enterprise and new venture creation, usually within secondary and tertiary (university) levels.
• Entropy. When natural (or even business) systems run down or become depleted, we call this entropy.
• Entwicklung. Broadly speaking, the global movements for conserving the environment and ensuring sustainable use of natural resources for the future.
• Environmental crime. Illegal acts that harm the environment such as illegal wildlife trade in endangered species, waste smuggling and dumping, and illegal fishing.
• Environmental protection. The practice of individuals, organisations and/or governments to protect the natural environment from harm and preserve it for the benefit of current and future human generations.
• Equity capital. Owners who have put some funding into the business in order to finance start-up operations.
• Equity financing. The sale of some ownership in a venture in order to gain capital for start-up.
• Ethical wealth creation. Investing in projects that promote a better world for all.
• Ethics. A set of principles prescribing a behavioural code that explains what is good and right, or bad and wrong.
• Ethnic entrepreneurs. Small and medium-size businesses owned by ethnic or immigrant entrepreneurs and their co-ethnic helpers and workers sharing common national background or migration experiences.
• Eureka factor. Attributed to Archimedes, it means 'I have found it'. It is used to celebrate a discovery.
• Existential risk. A possible event with the potential of seriously damaging human well-being around the world. Possible events include: volcanic eruptions, pandemics, nuclear accidents, climate change or bioterrorism.
• Exit strategy. Methods by which the initial investors in a company can liquidate their investment. The two most common exit strategies are either to take the company public by an initial public offering (IPO) or to sell the company to another firm.
• Expansion financing. Financing for a company that is viable and is reaching break-even, usually used to increase production capacity, market or product development.
• Expenses. An expired cost; any item or class of cost of (or loss from) carrying on an activity; a present or past expenditure defraying a present operating cost or representing an irrecoverable cost or loss; an item of capital expenditures written down or off; a term often used with some qualifying expression denoting function, organisation or time, such as a selling expense, factory expense, or monthly expense.
• Experimentation. A form of research that concentrates on investigating cause-and-effect relationships.
• Export consortium. A joint bid by several small firms on a foreign project.
• Export management company. A firm that serves as an export department for a manufacturer by soliciting business and exporting the product(s) for the client in return for a commission, salary or retainer plus commission.
• Exporting. Participating actively in the international arena as a seller rather than a buyer.
• Exporting social entrepreneur. This refers to the originator of social innovation who has implemented it already in other locales. The 'exporting' social entrepreneur can demonstrate that the innovation has generated improvements in social wellbeing in other locales and that the innovation fills an important gap (or entrepreneurial pain) in other populations. (See also importing social entrepreneur.)
• Extension. A basic type of innovation that involves extending the life of a product, service or process already in existence.
• External locus of control. The perception of the factors responsible for the outcome of an event. An individual with an external locus of control believes the outcome was determined by outside forces.
• External optimism. Ceaseless optimism emanating from entrepreneurs as a key factor in the drive towards success.
• 4Fs. Friends, family, founders and other 'foolhardy investors' – types of informal investors.
• Factoring. Process of purchasing commercial accounts receivable (invoices) from a business at a discount.
• Factors of production. The natural resources, labour, capital and entrepreneurship used to create the goods and services desired by people.
• Fair use doctrine. An exception to copyright protection that allows limited use of copyrighted materials.
• Familiness. Those unique resources that emerge from interactions between the family system as a whole, the individual family members and the business itself.
• Family and social risk. Starting a new venture uses much of the entrepreneur's energy and time. Entrepreneurs who are married, and especially those with children, expose their families to the risks of an incomplete family experience and the possibility of permanent emotional scars. In addition, old friends may vanish slowly because of missed get-togethers.
• Family emotional capital. The passion that unites a family over generations of business ownership.
• Family life cycle. The changing priorities and resulting consumer behaviour over the life cycle of teens, through courting, nest building, full nest, empty nest and sole survivor.
• Family social capital. Goodwill among family members and between families and their communities that can be used in business development.
• Feasibility criteria analysis. A criteria selection list from which entrepreneurs can gain insights into the viability of their venture.
• Finance companies. Asset-based lenders that lend money against assets such as receivables, inventory and equipment.
• Financial capital. Sometimes just called 'money', this is what entrepreneurs use to leverage other resources in the process of making products and services for the marketplace.
• Financial/capital school of thought. Refers to the need for capital and focuses on the relationship between entrepreneurs and investors, funding sources, returns for investors and entrepreneurs and performance of entrepreneurial investments, and public policy issues.
• Financial ratio analysis. Financial ratio analysis provides a way of organising and interpreting information from financial data. This analysis quantifies relative performance by analysing the ratio of one performance measure against another and is used to manage a firm's performance by comparative analysis with industry standards or other benchmarks derived from similar firms.
• Financial ratios. A financial ratio is a ratio of two numbers of reported levels or flows of a company, e.g. two financial flow categories: profit/revenue or earnings/equity.
• Financial risk. The money or resources at stake for a new venture.
• Financial statement. An accounting term for an account or formal record that shows the financial activities of a firm, person or other entity.
• First Gulf War. Fought between Iraq and a coalition led by the US that freed Kuwait from Iraqi invaders; 1990–91.
• Five Capitals. There are five types of capital from which we derive the goods and services we need to improve the quality of our lives: financial, manufactured capital, human, social and natural.
• Five forces model. Michael Porter's famous five forces that determine the competitive intensity and market attractiveness in the context of profitability. A very unattractive industry would be one approaching 'pure competition'.
• Five-minute reading. A process venture capitalists use when they are reviewing a business plan for potential investment.
• Fixed assets. Land, building, equipment and other assets expected to remain with the firm for an extended period.
• Fixed cost. Part of the operating budget, a cost that does not change in response to changes in activity for a given period of time. Rent, depreciation and certain salaries are examples. (See also variable costs and mixed costs.)
• Flow-through taxation. All business losses, profits and expenses flow through the company to the individual members, thus avoiding double taxation of paying corporate tax and individual tax.
• Focus groups. A qualitative market research technique where 8–12 market participants are gathered in one room for a discussion under the leadership of a trained moderator. Discussion focuses on a consumer problem, product or potential solution to a problem. The results of these discussions cannot be projected to the general market.
• Food entrepreneurs. Entrepreneurs dealing with new and innovative ways to store, move, grow and develop food products.
• Food miles. Distance that food (or any product) is transported from the time of its production until it reaches the consumer.
• Forcing events. Unavoidable events that cause the replacement of the owner–manager. This could be for many reasons, including death, legal problems or mental health.
• Foreign agent. In an 'agency agreement' the producer retains title until the goods are delivered to the buyer or even to the consumer. The agent merely 'represents' the producer but never takes ownership of the goods.
• Foreign distributors. The foreign distributor takes title to the goods in the home country of the distributor and has to resell them down the distribution chain.
• Fossil fuels. Coal, oil or natural gas that result from the fossilisation of ancient plants or animals. These fuels have taken millions of years to form.
• Franchise. Any arrangement in which the owner of a trademark, tradename or copyright has licensed others to use it to sell goods or services.
• Franchise fee. Fee that a person pays to operate a franchise branch of a larger company and enjoy the profits therefrom.
• Franchisee. An independent business (the franchisee) sells or markets the products and/or services of a larger firm (the franchisor). The franchisee receives training and marketing support from the franchisor and pays a fee for ongoing support.
• Franchising. A form of licensing that involves selling the rights to a complete package of trademarks, processes, technologies, designs and copyrights, as they are all involved in the operation of a specific business.
• Franchisor. A company or person that grants franchises.
• Free enterprise capitalism. Private ownership of the means of production and enterprise management that is free and independent from state control. The allocation of productive resources is decentralised and obeys the decisions of free individuals who act guided by their own interest.
• Free-rider. An individual who benefits from another's work without paying for it.
• Gaiapreneurship. Entrepreneurship on behalf of an infirm planet. Gaia was the Greek goddess of the earth and mother of the Titans in ancient mythology.
• Gazelle. A business establishment with at least 20 per cent sales growth every year (for five years), starting with a base of at least $100 000.
• Generalised Darwinism. Using Darwinism to analyse social-economical systems. For example, there might be an entrepreneurial gene that when selected led communities to prosper.
• Generation E. As opposed to Generation X (who feel they have been 'X-ed' out of traditional opportunities), young entrepreneurs have become known as Generation E for 'entrepreneurship'. Young people are now part of one of the most entrepreneurial generations since the Industrial Revolution.
• Generation X. Generation X is a term used to describe generations in many countries around the world born from 1965 to around 1980.
• Genogram. A graphic display of a firm's evolution over time from the perspective of family relationships, medical history, and now even climate change.
• Geo-engineering. Deliberate largescale manipulation of environmental processes so as to change the earth's climate, in an attempt to counteract the effects of global warming, e.g. reflective aerosols or (atmospheric) dust, cloud seeding, reforestation and space sunshade.
• Global Entrepreneurship Monitor (GEM). A global study conducted yearly since 1999 analysing the level of entrepreneurship in nearly one hundred countries.
• Global financial crisis. Also known as the GFC or the 'Great Recession', it was the worst financial crisis since the Great Depression of the 1930s and resulted in the collapse of large financial institutions, the bailout of banks by national governments and downturns in stock markets around the world. In many areas, the housing market also suffered.
• Global sourcing. Today importing is called global sourcing. A cross-border search for suitable suppliers that meet specific quality, time and price requirements.
• Global warming. A gradual increase in temperature due to greenhouse gases caused by increased levels of carbon dioxide, CFCs and other pollutants.
• Goal orientation. A predisposition to defining priorities and monitoring progress towards specific high but attainable goals to maintain focus and manage energy when faced with multiple opportunities.
• Goodwill. Goodwill is an intangible asset of a company.
• Governpreneurship. Entrepreneurship within the governmental sector.
• Great chef strategies. Leveraging great and unique people with special skills or talents around whom the venture is built.
• Great Depression. Deepest economic decline in history. It began in October 1929 following the collapse of the Wall Street stock market and ended in about 1934.
• Green marketing. Marketing of products that have regard for the environmental consequences of product formulation, marketing, manufacturing and packaging.
• Greenfield investment. A market entry strategy of building everything from the ground up.
• Greenhouse gases. Gases present in the Earth's atmosphere which reduce the loss of heat into space and therefore contribute to global temperatures through the greenhouse effect.
• Greenwashing. Disinformation disseminated by an organisation so as to present an environmentally responsible public image.
• Gross profit. The difference between revenue (or the income from sales) and the costs associated with producing the goods or services of a business before administration and overheads, interest and taxes are deducted.
• Growth rate. The percentage rate of change (usually by year) in any financial characteristic of a company or an economy, such as population, jobs or sales.
• Growth stage. The third stage of a new-venture life cycle, typically involving activities related to reformulating strategy in light of the competition.
• Growth wall. A psychological wall against change that prevents entrepreneurs from developing a managerial ability to deal with venture growth.
• Guerrilla marketing. An unconventional way of performing marketing activities (primarily promotion) on a very low budget.
• Gumboot factory or skunkworks. A highly innovative enterprise that uses groups functioning outside traditional lines of authority.
• Halal finance. 'Lawful' or 'permissible' types of financing. In Islam there are activities that are prohibited (haram) by the Quran. All other activities, professions, contracts and transactions are halal.
• Harvest plan. Family-business entrepreneurs' decision to sell the venture.
• Harvest positioning. Bringing a high-value company to a trade-sale. Involves effort to put all systems in order, drive up value, secure customers and maximise a company's assets.
• High-growth venture. When sales and profit growth are expected to be significant enough to attract venture capital money and/or funds raised through public or private placements.
• Hire purchase. The right to purchase an asset by the user of the asset according to a pre-agreed method. The user may be the owner for tax purposes.
• Horizontal analysis. A technique that involves comparing financial statement amounts and ratios for a particular company from year to year.
• Human capital. Talents and capabilities that individuals contribute to the process of production.
• Human freedom. The power or right to act, speak or think as one wants without hindrance or restraint. The highest expression of freedom is the ability to choose what kind of life one wants to lead, to be the sole proprietor of one's own destiny.
• Human resources. Collective capabilities, experiences, potential and commitment of the entrepreneur, management team and employees.
• Hydropreneur. Entrepreneurs working with water.
• Ijara Ijara means 'lease'.. The Ijara plan is basically a lease-to-own plan.
• Impact investor. A person who invests with the intention to generate a measurable, beneficial social or environmental impact, as well as financial return.
• Importing. Buying and shipping foreign-produced goods for domestic consumption.
• Importing social entrepreneur. This refers to the originator of social innovation who has implemented it already in other locales. The 'importing' social entrepreneur will be a leader in the adaptation of the innovation into a new context. She or he can show an unmet gap in the communities she or he serves and has the capacity to carry out the implementation and adaptation. (See also exporting social entrepreneur.)
• Inc.. An incorporated association; that is, a non-profit entity in Australia. But in the US it is a corporation or incorporated company.
• Income. A firm's income is the difference between total revenues and the total expenses. It is also called the net profit, which in effect is the income of a firm after taxes, depreciation and interest charges are deducted from the operating profit. It is commonly referred to as the 'bottom line'.
• Income statement. Also called profit and loss (P&L) statement. A statement summarising the income of a business during a specific period. The income statement illustrates the projected operating results based on profit and loss.
• Incongruities. Whenever a gap or difference exists between expectations and reality.
• Incorporated company. An incorporated company with the official acronym at the end of its name. While more expensive to set up than as a sole trader, it is legally seen as being quite separate from the owner – a point that can be important should things go wrong.
• Incorporated limited partnership (ILP). In Australia, a form of a limited partnership (confusingly entitled a limited liability company or LLC in the US) with the capacity and powers of an individual as well as the powers of a company. Limited partners are not entitled to participate in management and general partners have unlimited liability.
• Incorporation. Incorporation is the birth of a company; it means giving legal form to a company. The Certificate of Incorporation is like a birth certificate. Incorporated businesses become separate legal entities in their own right and are recognised therefore as separate from their owners.
• Incremental innovation. Systematic or step-by-step transformation of an existing product or service into something 'better'. For example, popcorn into microwave popcorn.
• Incrementalist approach. The notion that firms go through a predictable pattern of escalating activities when they develop export strategies – from non-exporting domestic producer through to fully globalised operations. This is the opposite of the 'born global' firm.
• Indigenous entrepreneurs. An Indigenous person creates, manages and develops new ventures by and for Indigenous people. The organisations thus created can pertain to the private, public or non-profit sectors.
• Indigenous people. Cultural groups that have a historical continuity with a region before its colonisation and who have lived largely independent or isolated from the influence of the larger nation–state. These are people who have maintained at least in part their distinct linguistic, cultural and social/organisational characteristics. Characteristics common across many Indigenous groups include reliance upon subsistence-based production and a predominantly non-urbanised society.
• Indirect exporting. Selling goods to foreign buyers through third parties such as export agents, export merchants or buying houses.
• Individual entrepreneurship. As opposed to collective entrepreneurship, the focus here is on the individual self-benefit.
• Individualism. Degree of emphasis placed on individual accomplishment rather than on collectivism or group accomplishment.
• Industrial ecology. Sustainable combination of the natural environment, the business economy, and technologies and knowledge which link them.
• Industrial entrepreneurship. Refers to entrepreneurship during the Industrial Revolution in the late 18th and early 19th centuries when major changes in agriculture, manufacturing, mining and transportation had a profound effect on the socioeconomic and cultural conditions. (See also sustainable entrepreneurship.)
• Industrial metabolism (IM). Collection of physical processes that convert raw materials and energy, plus labour, into finished products and wastes.
• Industrial Revolution. Usually dated from 1750 to 1900, the movement from an agricultural economy to an industrial economy based on production of factories and machine labour. A period characterised by many industrial innovations and discoveries.
• Industry environment. The structure of one's industry and how it is likely to evolve over time, as well as the company's relative position in the industry. Using Porter's Five Forces Model is a good way to analyse the industry environment.
• Inertia. The tendency of an object to remain in motion or to stay at rest unless acted upon by an outside force.
• Informal investors. The 4Fs – Friends, Family, Founders and other 'Foolhardy' investors (to that we could also add neighbours, work colleagues and even strangers).
• Initial public offering (IPO). A corporation's way of raising capital through the sale of securities on the public markets.
• Innovation. The process by which entrepreneurs convert opportunities into marketable ideas.
• Innovation team (I-Team). A team inside a business formulated for the purpose of creating innovations for the firm. (See also venture team.)
• Intellectual property rights (IPR). Provides protection such as patents, trademarks or copyrights against infringement by others.
• Interactive learning. Learning ideas within an innovative environment that cuts across traditional, functional lines in the organisation.
• Interdisciplinary. Relating to more than one branch of knowledge.
• Interest. The price paid for borrowed money or the return earned from money deposited or lent.
• Interest expense. Interest expense on long-term loans, also known as debt service.
• Intergovernmental Panel on Climate Change (IPCC). A scientific intergovernmental body tasked to evaluate the risk of climate change caused by human activity. IPCC shared the 2007 Nobel Peace Prize with former Vice President of the United States Al Gore, and publishes special reports on topics relevant to the implementation of the UN Framework Convention on Climate Change.
• Internal locus of control. The perception of the factors responsible for the outcome of an event. An individual with an internal locus of control believes their actions caused the outcome.
• Internal rate of return (IRR) method. The interest rate at which the net present value of an investment project is zero; thus, the internal rate of return represents the interest yield promised by a project over its useful life.
• Internet marketing. Allows the company to increase its presence and brand equity in the marketplace and cultivate new customers. Allows website visitors to match their needs with the offerings of the company and to serve themselves when and where they choose.
• Intracapital. Special capital set aside for the intrapreneur to use whenever investment money is needed for further research ideas.
• Intrapreneurs. A person within a large social or business organisation (such as a corporation or a nongovernmental organisation) who takes direct responsibility for turning an idea into reality by going through a process of assertive risk-taking and innovation.
• Intrapreneurship. Entrepreneurial activities that receive organisational sanction and resource commitments for the purpose of innovative results. Americans prefer the term 'corporate entrepreneurship'. It means the infusion of entrepreneurial thinking into large bureaucratic structures, including corporations and governments.
• Intraprise. A company created by an intrapreneur, a spin-off of a larger company.
• Invention. A basic type of innovation that involves the creation of a new product, service or process that is often novel or untried.
• Inventory. Merchandise held by the company for resale to customers.
• Investing activities. Cash-flow effects from long-term investing activities, such as purchase or sale of plant and equipment. The net cash flow from investing activities can be either positive or negative.
• Investment. (1) In finance, the purchase of a financial product or other item of value with an expectation of favourable future returns. In general terms, investment means the use of money in the hope of making more money. (2) In business, the purchase by a producer of a physical good, such as durable equipment or inventory, in the hope of improving future business.
• Investor protection. Guarantee that investments made will not be lost due to misuse of corporate assets by directors for their personal gain, fraud, self-dealing, expropriation, etc.
• Islamic finance. Islamic entrepreneurs have very tight strictures on what they may and may not transact as business. Islamic finance is based on Islamic law, or sharia, which emphasises justice and partnership.
• Job creation. One of the goals of economic development.
• Joint production. An agreement where companies cooperate to produce goods. Companies may cooperate to make components or even entire products.
• Joint venture. An organisation owned by more than one company – a popular approach to doing business overseas.
• Knowledge school of economics. Grounded in the works of such economists as Ludwig von Mises (1881–1972) and later Israel Kirzner (1930–), the knowledge school of economics argues that entrepreneurship originates through an uneven distribution of information and knowledge and an entrepreneur has specialist knowledge of markets, industry, technology or networks not generally known by others.
• Kyoto Protocol. The Kyoto Protocol intends to achieve stabilisation of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.
• Labour regulations. The body of laws passed by governments that regulate the legal rights of, and restrictions that apply to employees, workers and organisations.
• Laissez faire. Free from state intervention, including regulations, taxes, tariffs and enforced monopolies.
• Late-stage funding. Financing for new product development or introduction, or to support major capacity expansion. Offered before public offering investments for strengthening the company.
• Left brain. The part of the brain that helps an individual to analyse, verbalise and use rational approaches to problem solving. (See also right brain.)
• Legal restraint of trade. A legal document signed by the seller of a business that restricts him or her from operating in the same business for a reasonable amount of time and within a reasonable geographic jurisdiction.
• Liabilities. Amount owing to your creditors. Liabilities can be in the form of a bank loan, accounts payable and so on. They represent a claim against your assets.
• Licensing. A business arrangement in which the manufacturer of a product (or a firm with proprietary rights over technology or trademarks) grants permission to a group or an individual to manufacture that product in return for specified royalties or other payments.
• Life cycle stages. The typical life cycle through which a venture progresses, including venture development, start-up, growth, stabilisation, and innovation or decline.
• Life-cycle segmentation. A market approach that looks at different age categories of the population based upon the fact that consumer needs and desires change with age.
• Lifestyle venture. A small venture where the primary driving forces include independence, autonomy and control.
• Limited liability. A restriction on the amount of financial responsibility assumed by a partner or shareholder. (See also unlimited liability.)
• Limited liability partnership (LLP). A relatively new form of partnership that allows professionals the tax benefits of a partnership while avoiding personal liability for the malpractice of other partners.
• Limited partnerships. An organisational arrangement that allows investors to put money into a partnership without assuming liability for any losses beyond this initial investment.
• Linear regression. The process of fitting the best possible straight line through a series of points.
• Liquidity. Any asset that can be sold without causing a significant price change and with minimum loss of value.
• Liquidity constraints. Liquidity is the ease with which an asset can be turned into cash. Sometimes assets are tied up and cannot be converted to cash.
• Liquidity event. The way in which an investor plans to close out an investment. Liquidity event is also known as 'exit strategy'.
• Loan payable. Current instalment on a long-term debt that must be paid this year; part of the current liabilities.
• Loan with warrants. Provide the investor with the right to buy shares at a fixed price at some future date. Terms on the warrants are negotiable.
• LOHAS consumers. Consumers (or customers) who lead lifestyles of health and sustainability (LOHAS).
• Long Tail. Potential customers that seek goods with unusual characteristics, whose needs can now be met through reduced marketing costs (Internet) and distribution costs.
• Long-term debt. Usually loans maturing in the three to five year range used to finance the purchase of property or equipment, with the purchased asset serving as collateral for the loans.
• Long-term liabilities. Items or longterm debt on a balance sheet that fall due or require paying-off beyond a timeframe of one year.
• Loss leader pricing. Pricing the product below cost in an attempt to attract customers to other products.
• Macro view of entrepreneurship. Examines the huge array of external processes and factors that are sometimes beyond the control of the individual entrepreneur, such as the environment and financial markets. (See also external locus of control.)
• Management succession. The transition of managerial decisionmaking in a firm, one of the greatest challenges confronting owners and entrepreneurs in family businesses.
• Management team. The founders of a new venture who plan on managing the company, as well as any advisers, consultants or members of the board.
• Managerial mind-set. All the psychological characteristics and elements that tend to make an individual a good manager.
• Managerial successor. A successor to a venture who is interested in efficiency, internal control and the effective use of resources.
• Manufactured capital. Physical means of production that can be acquired or found in nature, e.g. tools, clothing, shelter, irrigation systems, dams, roads, boats, ports and factories.
• Market. A group of consumers (potential customers) who have purchasing power and unsatisfied needs. (See also market niche.)
• Market capitalisation. Price per share multiplied by the total number of shares outstanding; also the market's total valuation of a public company.
• Market failure. Situation where a market does not efficiently allocate resources to achieve the greatest possible good.
• Market gap. Synonym for niche market or market niche, an identifiable market segment that addresses customer needs not being addressed by competitors.
• Market niche. A homogeneous group of consumers with common characteristics.
• Market penetration. A growth strategy achieved by winning the competitors' customers (part of their market share) through lower prices, by attracting non-users or convincing current clients to use more of your product/service.
• Market segmentation. The process of identifying a specific set of characteristics that differentiate one group of consumers from the rest.
• Marketability. The extent to which a company is able to successfully identify and target customers who will recognise a need and be prepared to pay for a product or service intended to be provided by the company.
• Marketing concept. An overall marketing approach that manages a customer's entire experience with a product or a company through a marketing philosophy and through scientific knowledge of market segmentation and consumer behaviour.
• Marketing mix. Actions a marketer can take to promote a brand or product. Usually referred to as the 4Ps: Price, Product, Promotion and Place, they could today be replaced with 4Cs: co-creation, communities, customisation and choice.
• Marketing philosophy. The foundational idea that drives the marketing department. There are three major marketing philosophies: is it product-focused, sales-focused or consumer-focused? Sometimes called the 'marketing orientation'.
• Marketing planning. Process of determining a clear, comprehensive approach to the creation of customers.
• Marketing research. A gathering of information about a particular market, followed by an analysis of that information.
• Marketing segment. The segment of a business plan that describes aspects of the market such as the target market, the market size and trends, the competition, estimated market share, market strategy, pricing, and advertising and promotion.
• Marketing stages. Most emerging ventures go through four marketing stages: entrepreneurial marketing, opportunistic marketing, responsive marketing and diversified marketing. Each stage requires a different strategy and the entrepreneur must adjust accordingly.
• Marketing strategy. The general marketing philosophy of the company should be outlined to include the kinds of customer groups to be targeted by the initial intensive selling effort; the customer groups to be targeted for later selling efforts; methods of identifying and contracting potential customers in these groups; the features of the product or service (quality, price, delivery, warranty) to be emphasised to generate sales; and innovative or unusual marketing concepts that will enhance customer acceptance.
• Mass customisation. Refers to production of a final product or service assembled for the customer in accordance with specific preferences based on standardised mass-produced components or service modules.
• Mega-cities. Metropolitan areas with total population in excess of 10 million people.
• Mergers and acquisitions. A market entry strategy with two varieties. A merger occurs when two corporations join together into one, with one corporation surviving and the other corporation disappearing. An acquisition is one company taking control of another, often through an 'unfriendly' or 'hostile' acquisition.
• Metrics. Assumptions and calculations used for any revenue projections.
• Micro view of entrepreneurship. Examines factors that are within the entrepreneur's ability to direct or adjust. (See also internal locus of control.)
• Micro-credit. Small loans (microloans) to aspiring entrepreneurs who lack collateral to offer as security to a bank, who may not be steadily employed or may have no credit history.
• Micro-finance. A full range of banking needs for poor people.
• Micro-management angel. An investor who imposes tactics on their company that worked for them. Can be a bothersome angel.
• Milestone schedule segment. The section of a business plan that provides investors with timetables for the accomplishment of various activities such as completion of prototypes, hiring of sales representatives, receipt of first orders, initial deliveries and receipt of first accounts receivable payments.
• Millennium Development Goals (MDG). The MDGs are eight international development goals which 192 United Nations member states agreed to achieve by the year 2015. They include halving the proportion of people whose income is less than one dollar a day and reversing the loss of environmental resources.
• Mission. In an entrepreneurship context, mission is a stated mid-term objective that will affect or change a venture's position by incremental steps towards a particular strategic direction.
• Mitigation. Managing the risks of climate change, e.g. by reducing greenhouse gas emissions. (See also adaptation.)
• Mixed costs. Part of the operating budget, a blend of fixed and variable costs. An example is utilities, since part of this expense would be responsive to change in activity and the rest would be a fixed expense, remaining relatively stable over the budget period. (See also fixed costs and variable costs.)
• Mobile marketing. The marketing of goods and services through portable wireless devices that connect to the Internet.
• Moral failure. This form of failure is a violation of internal trust.
• Mountain gap strategies. Leveraging new and unique markets by identifying existing major market segments and going after the gaps in between larger markets.
• Murabaha. A term of Islamic finance. A cost-plus sale. The bank buys your machinery and then immediately sells it on to you for a profit. Used for shortterm financing, similar in form to purchase finance.
• Musharaka. A term of Islamic finance. Musharaka means 'partnership'. Under a Musharaka plan, you buy the machinery jointly and gradually buy the bank out of it.
• 9/11 attacks. Often referred to as nine-eleven (written '9/11') these were a series of coordinated suicide attacks by al-Qaeda upon the US on 11 September 2001.
• Natural advantage of nations. An approach by which economies can achieve a competitive advantage while dramatically reducing their negative impacts on the natural environment.
• Natural capital. Stock of natural ecosystems that yields a flow of goods or services into the future. Recognises the essential relationship between the Earth's valuable resources and the business environment.
• Natural Step, The. An organisation and a framework setting out the system conditions for the sustainability of human activities on Earth.
• Natural Step Funnel. A metaphor and graphic figure to help visualise the economic, social and environmental pressures that are growing on society as natural resources and ecosystem services diminish and the population's numbers and consumption grow.
• Near-shoring. Moving jobs to a nearby foreign country.
• Necessity-driven entrepreneurship. An entrepreneur who starts a business because there were no better options for work, rather than because s/he saw an opportunity. (See also opportunitydriven entrepreneurship.)
• Need to achieve. People with a high need for achievement seek to excel and thus tend to avoid both low-risk and high-risk situations.
• Need to control. The strong desire entrepreneurs have to control both their venture and their destiny.
• Negative entrepreneurship. The notion that entrepreneurs undervalue biodiversity and natural resources. Rather than adding value to living materials, they only aim to reduce (e.g. through recycling) the quantity of dead resources. (See also positive entrepreneurship.)
• Negative externality. A cost imposed on people who are not part of the decision and are not considered in any way by the decision-maker. (See also positive externality.)
• Nepotism. The hiring of relatives in preference to other, more qualified candidates.
• Net income. The excess of revenue over expenses during the particular period. If revenues exceed expenses, the result is a net profit. If the reverse is true, the firm suffers a net loss.
• Net present value (NPV) method. A measure of the equivalent lump-sum value of a stream of payments over time. In effect, the NPV represents the amount that would need to be invested at a commercial interest rate at the beginning of the period of payments, such that, with accumulated interest, it would be just adequate to meet all the payments as they fell due.
• Net profit. Sometimes referred to as the 'bottom line', it is the difference between the revenue (or income from sales) and all associated business expenses including production or service delivery costs, sales, marketing, payroll, overheads, interest and taxes.
• Net profit margin. The percentage profit a company makes for every $1 it generates in revenue or sales.
• Net worth. Sometimes called net assets, it can be applied to either individuals or firms and is the value of the difference between an individual's or firm's total assets and total liabilities.
• New business start-up. A business that is newly originated by an entrepreneur in response to some form of recognised opportunity to provide products and/or services to satisfy a perceived market demand.
• New-new approach. A start-up approach to business in which the concept is a brand-new idea to the marketplace.
• New-old approach. A start-up approach to business in which the concept provides a new angle to something that already exists in the marketplace.
• New-venture development. Essentially a start-up business launched by an entrepreneur. The first stage of a venture's life cycle.
• Niche advantage. See market niche.
• Non-compete clause. An agreement stating that when purchasing an existing venture the previous owner will refrain from conducting the same business within a reasonable distance for a reasonable period of time. Also known as legal restraint of trade or an agreement to not compete.
• Non-profit organisation. An organisation whose main objective is not profit, such as a religious, charitable or educational institution.
• Norm entrepreneur. Someone interested in changing social norms. If they are successful in their endeavours they can produce what is called norm bandwagons and norm cascades which lead to substantial changes in social norms.
• Note payable. A list of face amounts of the promissory notes. (See also promissory notes.)
• One-person-band syndrome. Exists when an entrepreneur fails to delegate responsibility to employees, thereby retaining all decision-making authority.
• Operating budget. A detailed projection of all estimated income and expenses during a given future period.
• Operating cash flows. Cash generated from or used in the course of business operations of the firm. The net operating cash flows will be positive for most firms, because their operating inflows (primarily from revenue collections) will exceed operating cash outflows (for example, payment for raw materials and wages).
• Operating expenses. The major expenses, exclusive of costs of goods sold. These represent the resources expended, except for inventory purchases, to generate the revenue. (See also selling expenses and administrative expenses.)
• Operational capabilities. The capabilities that are inherent in maintaining the routine organisation and management of a firm in conducting its regular business.
• Opportunity. Something that an entrepreneur recognises as solving a real problem or adding value for people.
• Opportunity cost. The cost of a resource, measured by the value of the next best, alternative use of that resource.
• Opportunity-driven entrepreneurship. Opportunity entrepreneurship is where a person becomes self-employed due to available opportunities that the person has spotted, has prepared him or herself for and has the resources to carry it out. (See also necessity-driven entrepreneurship.)
• Opportunity identification. The ability to recognise a viable business opportunity within a variety of good ideas.
• Opportunity landscape. Analysis of the process of moving innovations through to commercial markets. Analysis of the disconnect between a novel idea and the harsh rigours of the real world. Taking into account socioeconomic and technology trends in combination with the strengths and characteristics of the innovation.
• Opportunity orientation. Entrepreneurs focus on and relentlessly pursue opportunities by marshalling resources and letting their understanding guide them.
• Opportunity space. An identified area where the ideas of an entrepreneur can visualise value creation limited only to who they are, what they know, can do and want. It is defined by the social world we live in and in particular the opportunities provided by unmet needs, trends and wants of potential customers.
• Owner's equity. Assets minus liabilities equals owner's equity.
• Pain. Pain is the nickname for exactly what problem is being solved by your venture. Painkiller solves the pain that the customer experiences. (See also PITA products.)
• Partnership. An association of two or more persons acting as co-owners of a business for profit.
• Patent. An intellectual property right granted to an inventor giving him or her exclusive right to make, use or sell an invention for a limited time period (usually 20 years).
• Pathways principle. Belief that proper preparation in the interdisciplinary business segments will enhance the ability to recognise venture opportunities.
• Payback method. This measures the length of time taken for the return on an investment exactly equal to the amount originally invested.
• Payments for ecosystem services (PES). PES is an umbrella term applied to schemes in which the beneficiaries, or users, of ecosystem services provide payment to the stewards, or providers, of ecosystem services.
• Peak resource theory. Point in time when the maximum rate of extraction is reached, after which the rate of production enters terminal decline. Used for natural resources, especially oil.
• Peer-to-peer lending (P2P). Loans typically funded by specific individuals lending their own money on a fractional basis at interest to specific borrowers.
• Penetration. See market penetration.
• Persona. A group of customers united by behavior patterns, goals, skills, attitudes, and a few fictional details that make the persona a realistic character.
• Personal failure. A form of failure brought about by a lack of skill or application.
• Petty entrepreneurship. Lower forms of social enterprises ranging from quasi-legal street peddling, which is an easy way to enter the market, to more criminal activities such as pirated DVDs and money-laundering.
• Piracy. Copyright infringement (or copyright violation) in a manner that violates one of the copyright owner's exclusive rights.
• PITA products. A product or service that solves the customer's 'Pain in the Arse'. (See also pain and painkiller.)
• Ponzi schemes. A scam in which high returns are promised and new investors must continue to be drawn in to pay off earlier investors.
• Positive entrepreneurship. Positive impacts brought about by entrepreneurs when they create added value through eliminating designed waste, duplication, disposability, planned obsolescence and wasteful end purposes. (See also negative entrepreneurship.)
• Positive externality. Benefit given to people who are not part of the decision and are not considered in any way by the decision maker. (See also negative externality.)
• Preferred shares. Share that pays dividends at a specified rate and that has preference over common stock in the payment of dividends and the liquidation of assets. The word 'stock' is used in the US instead of 'shares'.
• Prepaid expenses. Expenses the firm already has paid, but that have not yet been used. For example, insurance paid on the company car every six months is a prepaid expense entry because it will be six months before the entire premium has been used.
• Pricing strategies. (1) The evaluation of something in terms of its price. (2) How to price something.
• Primary data. New data that is often collected by using observational or questioning methods.
• Principal. The amount of the entire mortgage loan, not counting interest.
• Private offerings. Raising of capital from friends, employees, customers, relatives and local professionals.
• Private placement. A method of raising capital through securities; often used by small ventures.
• Private sector entrepreneurs. As opposed to public sector (governmental) entrepreneurs.
• Product availability. The extent to which a firm will have a product or service prepared and available for sale to the intended market at the time of opening the business venture.
• Product-driven philosophy. An entrepreneur's perception (or philosophy) that the product and production are of primary importance in marketing and managing a company. (See also consumer-driven and sales-driven philosophy. One of three dominant marketing philosophies.)
• Professional angels. Professionals such as doctors or lawyers who invest in companies that offer a product or service with which they have some experience.
• Profile analysis. The investigation of a combination of variables to highlight the major financial, market, marketing, organisational and human resource strengths and weaknesses that will influence a new venture idea's progress to success.
• Profit and loss statement. Also known as an income statement, it is a financial record or account of all of a firm's revenues and all of the expenses and costs incurred by the firm in achieving those revenues that shows the level of profit or loss produced by the firm over a period of time.
• Profit trend. The pattern of profit earned by a firm observable over time that can be extrapolated to suggest a future profit position.
• Profitability. The extent to which a firm or transaction will generate a return in excess of its expenses or costs.
• Pro forma balance sheet. A financial statement that projects the results of future business operations, such as a pro forma balance sheet, an income statement or a cash-flow statement. The term pro forma (Latin for 'as a matter of form') is a term applied to practices that seek to satisfy the minimum requirements or to conform to convention. The pro forma accounting is a statement of the company's financial activities while excluding 'unusual and non-recurring transactions'.
• Pro forma statement. A pro forma statement is a financial statement projecting anticipated income, expenses and cash flow for some specified future period.
• Promissory note. A promissory note (note payable) given as tangible recognition of a supplier's claim or a note given in connection with an acquisition of funds.
• Property laws. The laws passed by governments that govern the ownership and rights of various forms of tangible and intangible property.
• Proprietary limited company (Pty Ltd). Same as private limited company in Australia.
• Proprietorship. See self-proprietorship.
• Prospectus. A document, published prior to the issue of shares to the public, which explains all aspects of a company's business.
• Psychic risk. The great psychological impact on and the wellbeing of the entrepreneur who is creating a new venture.
• Psychographics. Attributes relating to personality, values, attitudes, interests or lifestyles contrasted with demographic variables (such as age and gender).
• Psychological disequilibrium. Part of social marginality theory. Hagen says a person who experiences incidents or life experiences that demand adjustment or highlight discrimination will be more entrepreneurial. This might drive a person into enterprising behaviour to compensate for this lack.
• Public limited company. Liability limited by shares which are traded publicly in Commonwealth countries (other than Australia).
• Public sector entrepreneurship. Combining public and private resources in pursuit of social objectives.
• Radical innovation. The inaugural breakthroughs launched from experimentation and determined vision that are not necessarily managed, but must be recognised and nurtured.
• Rainforest. Woody native vegetation dominated by rainforest species and with a rainforest structure.
• Reachable market. The immediate reachable group of customers that will be targeted by a new venture.
• Reducing emissions from deforestation and forest degradation (REDD). REDD is a market/financial system of incentives to reduce the emissions of greenhouse gases from deforestation and forest degradation.
• Regulatory body. Every country has a regulatory regime – composed of legislation and a regulatory authority – that dictates how businesses are started, operated and wound up.
• Relationship intensity. Stages of customer loyalty ranging from simple awareness of a product, through exploration and familiarity with the product, to commitment and finally to separation.
• Relativist ethics. The belief that moral propositions do not reflect absolute and universal moral truths, but instead make claims relative to social, cultural, historical or personal references. Moral relativists hold that no universal standard exists by which to assess an ethical proposition's truth.
• Resource depletion. Exhaustion of raw materials within a region.
• Retail outlets. A retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells individual items or small quantities to the general public or end user customers, usually in a shop.
• Retained earnings. Accumulated net income not distributed to owners over the life of the business to date. Every year this amount increases by the profit the firm makes and keeps within the company.
• Return on investment (ROI). Net profit divided by investment.
• Revenues. Gross sales the business made during the particular period under review.
• Right brain. The part of the brain that helps an individual understand analogies, imagine things and synthesise information. (See also left brain.)
• Risk. See calculated risk taking, career risk, climate change risk, financial risk, psychic risk, risk aversion and risk versus reward.
• Risk aversion. Desire to avoid uncertainty, more typical of public sector employees.
• Risk versus reward. Within the financial capital domain, it is the tradeoff between the amount of risk taken weighed against the potential reward to be gained.
• Rogue state. A rogue state, in the most general sense, is a state that abides neither by international law nor international standards of proper governance and behaviour.
• Royalty. Sum of money paid for the use of a licence, or for use of works covered by copyright, patent, registered design or trademark.
• Rugged individualist. A person who cherishes individual liberty and selfreliance.
• Sales forecast. The projected or predicted pattern or estimate of sales at some future point or period.
• Sales forecasting. Process of projecting future sales through historical sales figures and the application of statistical techniques.
• Sales research. Sales research is geared towards finding data required to make additional sales to a company's existing customers.
• Sales-driven philosophy. An entrepreneur's perception (or philosophy) that the customer and sales are of primary importance in marketing and managing a company. (See also consumer-driven and product-driven philosophy. One of three dominant marketing philosophies.)
• School of thought. Opinion subscribed to by a group of scholars, theorists or researchers.
• Schumpeter Joseph. 1883–1950, the Austro-Hungarian-American economist and political scientist who popularised the role of entrepreneurship within economics.
• Schumpeterian. Someone who believes that innovation and technological change comes from the 'wild spirits' or 'fiery souls' of entrepreneurs who engage in a process of 'creative destruction'.
• Secondary data. Data that has already been compiled. Examples are periodicals, articles, trade association information, governmental publications and company records.
• Seed financing. Initial funds for a business concept to be developed.
• Segmentation variables. Categorising consumers by geographic, demographic, psychographic and behavioural variables in order to target specific types of people and not just people in a geographic area. (See also market segmentation.)
• Self-efficacy. Refers to an individual's self-assessed conviction or confidence about personal abilities to muster the motivation, perform cognitive tasks and conduct the actions needed to successfully execute a specific task within a given context.
• Self-employment. Someone who is self-employed works for himself/herself, not as an employee of another person or organisation, and draws income from a trade or business.
• Self-proprietorship. The idea that you are the master of your own life, including your business. You control your own destiny.
• Selling expenses. Expenses from displaying, selling, delivering and installing its products or performing a service.
• Seniorpreneur. Someone who starts a business after the age of 55.
• Sensitivity analysis. An analysis that checks to see to what extent under- or overestimated assumptions may influence cash needs and profitability and the financial strength of the business.
• Sequestration. See carbon sequestration.
• Shared value. Shared value treats social problems as business objectives and recognises that a prosperity of the company and the surrounding community are mutually dependent.
• Shareholder. One who owns shares in a corporation or mutual fund. The word 'stockholder' is used in the US instead of 'shareholder'.
• Shares. An equity or ownership interest in a corporation, measured in shares. Ownership of shares is demonstrated by share certificates. The word 'stock' is used in the US instead of 'shares'.
• Sharia. Traditional Islamic law. Like most religious cultures, Islam classically drew no distinction between religious and secular life. Hence sharia covers not only religious rituals, but many aspects of day-to-day life, such as business and social entrepreneurship.
• Short-term liabilities. Where the business orders some merchandise, receives it, but has not yet paid for it. This often occurs when a company receives merchandise during the third week of the month and does not pay for it until it pays all of its bills on the first day of the next month.
• Skimming. Deliberately setting a high price to maximise short-term profits.
• Small-business owners. As distinguished from entrepreneurs, small-business owners may once have captured an opportunity, but they then rested on their laurels. They may never grow large and they may prefer a more stable and less aggressive approach to running these businesses. Also called small-business managers.
• Social and cultural school of thought. This school of thought deals with external factors and surrounding conditions and influences that affect a potential entrepreneur's lifestyle.
• Social capital. Connections within and between social networks as well as connections among individuals.
• Social cognition theory. Cognition is used to refer to the mental functions, mental processes (thoughts) and mental states of intelligent humans. Social cognition theory introduces the idea of knowledge structures – mental models (cognitions) that are ordered in such a way as to optimise personal effectiveness within given situations – to the study of entrepreneurship.
• Social discount rate. A measure of the social view on how the future should be valued against the present.
• Social enterprise. Businesses that fulfil social aims.
• Social entrepreneur. Has many of the same personality characteristics as business entrepreneurs, but is driven by a mission and seeks to find innovative ways to solve problems that are not being or cannot be addressed by either the market or the public sector.
• Social entrepreneurship. The art of leveraging resources to capitalise upon marketplace opportunities in order to achieve sustainable social change. Social entrepreneurs innovate and act according to the desire to create and sustain social value for others.
• Social impact assessment (SIA). Methods used to measure the intended and unintended social consequences, both positive and negative, of planned interventions (policies, programs, plans, projects) and any social change processes invoked by those interventions. Its primary purpose is to bring about a more sustainable and equitable biophysical and human environment.
• Social innovation. New strategies, concepts, ideas and organisations developed by social entrepreneurs that have a social purpose – such as microcredit and social investing.
• Social intrapreneurs. A person working in a large business or social organisation developing and promoting solutions or products that both add value to the company's bottom line as well as to society and the planet. (See also intrapreneur.)
• Social intrapreneurship. Creating new value by developing practical solutions to social or environmental challenges within a large organisation. Sometimes called a corporate social entrepreneurship.
• Social marginality theory. Sometimes individuals or a whole social sector will be excluded by wider society and ostracised as undesirables. Social marginality theory posits that the perceived incongruity between an individual's (self-perceived) prodigious personal attributes and the position they hold in society might propel them to be entrepreneurial.
• Social media marketing. Describes the use of social networks, online communities, blogs, wikis and other online collaborative media as tools to promote the goods and services of a business.
• Social return on investment (SROI). Measures the value of the benefits relative to the costs of achieving those benefits. It is a ratio of the net present value of benefits to the net present value of the investment.
• Social venturing. A form of entrepreneurship that seeks to resolve or address social issues through the use of economic models and the practice of business-like behaviours.
• Socially responsible investing (SRI). Also known as sustainable, socially conscious, 'green' or ethical investing, is any investment strategy that seeks to consider both financial return and social good; promoting environmental stewardship, consumer protection, human rights and diversity.
• Sociosphere. All the people in a social system, all the roles they occupy, all their patterns of behaviour, all their inputs and outputs relevant to other human beings, and all the organisations and groups they belong to.
• Sole proprietor of the rest of their life. Controller of one's own destiny. A free and sovereign individual.
• Sole tradership. A sole trader (also known as a sole proprietor) is a business that is owned and operated by one person. The enterprise has no existence apart from its owner.
• Sovereign individuals. A person or a business that is not beholden to a nation. For example, someone who resides on the Internet and selects where to reside and do business based on cost versus profit.
• Species banking. Also known as conservation banking, this generates endangered species mitigation credits by restoring, enhancing and permanently protecting threatened and/or endangered species habitats. Often used to offset unavoidable impacts from projects such as on wetlands.
• Stabilisation stage. The 'swing' stage of new venture growth characterised by increased competition, consumer indifference, market saturation, 'me too' lookalikes and sales plateauing. Either the firm swings into higher gear or moves towards decline.
• Stakeholder. A person, group, organisation or system that affects or can be affected by an organisation's actions.
• Start-up. New business or new venture creation – such as self-employment, a new business organisation or the expansion of an existing business – by an individual, teams of individuals or established businesses.
• Start-up activities. The second stage of a new-venture life cycle, encompassing the foundation work needed for creating a formal business plan, searching for capital, carrying out marketing activities and developing an effective entrepreneurial team.
• Start-up financing. Funding for use in prototyping and product development as well as initial marketing before sales. Most start-up funding comes from the 4Fs. (See also 4Fs.)
• Strategic alliance. Any formal relationship, short of a merger or acquisition, between two companies, formed for the purpose of gaining synergies.
• Strategic backcasting. The opposite to forecasting, this strategy formulation method assumes a future state and works backwards to identify the programs, tasks and strategies needed to reach that future.
• Strategic entrepreneurship. Focuses on large-scale, highly consequential innovations that are adopted in the firm's pursuit of competitive advantage.
• Strategic formulation school of thought. One of the micro views of entrepreneurship, it views strategic planning as interwoven into the entire fabric of management, not as something with a separate office and staff.
• Strategic intent. A statement that envisions a desired leadership position for a venture for the purpose of guiding resource allocation, providing stability under changing circumstances, focusing attention on the essence of winning, motivating people by communicating value while leaving room for individual and team contributions.
• Strategic planning. The primary step in determining the future direction of a business influenced by the abilities of the entrepreneur, the complexity of the venture and the nature of the industry.
• Strategic planning school of thought. Emphasises planning, leveraging of unique markets, unique people, unique products or unique resources.
• Strategic positioning. The process of perceiving new positions that attract customers from established positions or draw new customers into the market.
• Strategic renewal. Intrapreneurship is not just about creating new ventures, but also about transformation of organisations (strategic renewal) to put them in a more competitive position and improve financial performance.
• Strategic uncertainty. When there are no unified approaches to product positioning, advertising, pricing and the like, as well as different product configurations or production technologies.
• Stress. See entrepreneurial stress.
• Succession. The process of transferring the assets of a family business to the future generation.
• Succession plan. Process whereby the firm identifies, recruits and cultivates an internal candidate to fill key positions. Particularly important in family businesses.
• Sukuk. Asset-backed bonds which are structured in accordance with sharia law under a system of Islamic finance.
• Surveys. A method of collecting primary data, such as mail, telephone or personal interviews.
• Survivalist entrepreneurs. When starting a business is the only choice or a survival strategy.
• Sustainability. The term originally applied to natural resource situations. Today, it applies to many disciplines, including economic development, environment, food production, energy and lifestyle. Basically, sustainability refers to doing something with the long term in mind (several hundred years is sufficient). Today's decisions are made with a consideration of sustaining our activities into the longterm future.
• Sustainability entrepreneurs. Entrepreneurs who recognise, develop and exploit opportunities that create economic, ecological and social value.
• Sustainability performance measures. Measures that many companies are required to disclose under a range of legislative and regulatory requirements and increasingly for commercial reasons because they are accountable to internal and external stakeholders for organisational performance towards the goal of sustainable development.
• Sustainable design. Design factors in products and services that allow entrepreneurs to reduce negative effects to the biosphere and increase netpositive contributions. (See biosphere.)
• Sustainable development. Development which seeks to produce sustainable economic growth while ensuring future generations' ability to do the same by not exceeding the regenerative capacity of nature.
• Sustainable entrepreneurship (SE). An attitude towards entrepreneurial activity that thinks ecologically about the biosphere and considers the waste embodied in products.
• SWOT analysis. A strategic analysis that refers to strengths, weaknesses, opportunities and threats.
• Synthesis. A basic type of innovation that involves combining existing concepts and factors into a new formulation.
• Taxation. Liabilities owed to the government as GST (goods and services tax), sales or value-added taxes.
• Taxes payable. The amount payable to governments or statutory bodies calculated as a percentage of income according to government-devised formulae.
• Technical feasibility. Producing a product or service that will satisfy the expectations of potential customers.
• Technological uncertainty. The situation where no one knows which product configuration will prove to be the best, which production technology will prove to be the most efficient, or how easy it will be to develop or even copy the technological breakthroughs in the industry.
• Theory. A well-substantiated explanation of some aspect of the natural world; an organised system of accepted knowledge that applies in a variety of circumstances to explain a specific set of phenomena.
• Three-Circles Model. Describes the three overlapping groups that comprise the family business system: family, business and ownership. Together with the overlaps, there are seven interest groups, each with its own legitimate perspectives, goals and dynamics.
• Time value of money. The idea that money available today is worth more than the same amount in the future due to its potential interest-earning capacity. Any amount of money is worth more the sooner it is received.
• Tipping point. Levels at which the momentum for change becomes unstoppable or when a previously rare phenomenon becomes rapidly and dramatically more common. In climate change, it's the point at which human activity brings degradation in nature, making any human reversal of the damage impossible.
• Tolerance for ambiguity. Uncertainty compounded by constant changes introducing ambiguity and stress into every aspect of the enterprise.
• Tolerance for failure. The iterative, trial-and-error nature of a successful entrepreneur due to serious setbacks and disappointments that are an integral part of the entrepreneur's learning experience.
• Top management support. When upper-level managers in a company can concentrate on helping individuals within the system develop more entrepreneurial behaviour.
• Total customisation. Involves the customer at the design stage of the product or service creation whereby the final output is unique and customised to the user's needs without standardised inputs.
• Total early-stage entrepreneurial activity (TEA). Also known as TEEA and devised by the Global Entrepreneurship Monitor, this is the proportion of the adult population between 18-64 years that in the last three years has started a business, still controls that business and has paid wages.
• Trade credit. Temporary financing extended by suppliers of goods and services pending the customer settlement.
• Trade secrets. Customer lists, plans, research and development, pricing information, marketing techniques and production techniques. Generally, anything that makes an individual company unique and has value to a competitor could be a trade secret.
• Trademark. A distinctive name, mark, symbol or motto identified with a company's product(s).
• Trading house. Trading houses are commercial intermediaries specialising in the long-term development of trade in goods and services supplied by other parties.
• Trading trust. In Australia and New Zealand, similar to a family trust; one can pay money (profits) to the beneficiaries without them having to work in the business (unlike a company). Generally taxed on a 'flowthrough' basis.
• Tragedy of the commons. A process of degradation of communal resources due to self-interest.
• Traits. Entrepreneurs' traits distinguish their personal nature from others'.
• Transgenerational. Transgenerational entrepreneurship looks at the processes that help family firms succeed beyond the first generation. Families are the dominant form of business around the world.
• Triple bottom line. An accounting method that captures the values and criteria for measuring organisational (and societal) success: economic, ecological and social. (See also double bottom line.)
• Triple bottom line (TBL) indicators. Estimates of a firm's positive and negative contributions to the biosphere, such as the use of nonrenewable fuels, greenhouse gas emissions, water usage, land disturbance and so forth.
• Uncontrollable failure. A form of failure caused by external factors that are outside the control of employees, such as resource limitations, strategic direction and market changes.
• Undertaker. The French verb entreprendre actually means to undertake. So the originally English translation was 'undertaker'. Unfortunately undertaker is already used by another profession, namely funeral directors.
• Unincorporated businesses. Businesses such as a sole tradership and a partnership that are not organised and maintained as a legal corporation.
• Uniqueness. The special characteristics and/or design concepts that draw the customer to the venture and should provide performance or service superior to competitive offerings.
• United Nations Framework Convention on Climate Change (UNFCCC). International environmental treaty produced at the United Nations Conference on Environment and Development (UNCED), informally known as the Earth Summit, held in 1992. The treaty is aimed at stabilising greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous human-caused interference with the climate system.
• Universal Declaration of Human Rights (UDHR). A document published by the United Nations in 1948 stating that all people have certain basic rights including life, liberty, equality, justice and so forth.
• University-based entrepreneurship ecosystem (U-BEE). Refers to those elements within a university that help or hinder an individual's choice to become an entrepreneur, such as curriculum, incubator, research institute and business plan competitions.
• Unlimited liability. A condition existing in sole proprietorships and partnerships wherein someone is responsible for all the enterprise's debts.
• Unscrupulous practices. Business practices that are devoid of ethics and seek personal gain at any cost.
• Up-cycling. Reusing a waste material in a fashion that increases its value.
• Upside gain and downside loss. Within the financial capital domain, this is the best possible gain weighed against the worst possible loss. (See also risk versus reward.)
• Usage-based market segmentation. A market segmentation technique that differentiates usage behaviour patterns of each customer or type of customer, e.g. Internet surfers or Internet shoppers.
• Usury. The lending of money at exorbitant interest rates.
• Value innovation. Innovation that considers new conceptions or means to create value for customers that step outside of pre-existing or established industry and market norms and practices.
• Value proposition. A strategic concept that accounts for the value of a firm's product or service offering to a particular customer or to a market segment. The product or service must provide customer value in one or more terms of functionality (it must do something the customer needs to be done), emotional considerations (it must make the customer feel good by or about the purchase) or meet a set of expected ideals or beliefs (align with the value system of the customer) for a price the customer is prepared to pay.
• Variable cost. Costs that vary with the level of production or sales, such as shipping supplies and sales commissions. Part of the operating budget, a cost that changes in the same direction as, and in direct proportion to, changes in operating activity. Direct labour, direct materials and sales commissions are examples. (See also fixed and mixed costs.)
• Venture capitalists. People who will invest in a company start-up for a share of the company.
• Venture opportunity school of thought. One of the micro views of entrepreneurship. It focuses on sources of ideas and development of concepts within the context of creativity and market awareness. Developing the right idea at the right time for the right market.
• Venture team. A group of individuals who manage a new business enterprise.
• Vertical analysis. The conversion of an entity's profit and loss account and balance sheet (normally for a number of accounting periods) so that the amount of each item in the accounts is represented as a percentage of the total amount.
• Vertical integration. An arrangement whereby the same company owns all the different aspects of making, selling and delivering a product or service.
• Vietnam War. A US-led effort to assist South Vietnam in repelling communist forces from North Vietnam.
• Viral marketing. Analogous to the spread of a virus, this form of marketing relies on a rapidly spread self-replicating marketing message, particularly through the Internet and social media, that creates heightened interest in a product or service.
• Vision. In an entrepreneurship context, vision is a stated long-term objective for a venture to create or achieve an altered future that to some may seem incredible or impossible but which to the entrepreneur and others working with the venture is a very real possibility.
• Water well strategies. Leveraging unique resources (land, labour, capital, raw materials) that no one else has.
• White knight. Someone with better credit who might buy the products and resell them to you for a few percentage points. Also a company which rescues another that is in financial difficulty, especially one which saves a company from an unwelcome takeover bid.
• Whole systems approach. Thinking about whole systems involves shifting our attention from the parts to the whole, from objects to relationships.
• Working capital. Otherwise known as the operating liquidity it is calculated by the difference between short-term (or current) assets and short-term (or current) liabilities. It is a measure of the financial health of a business that demonstrates that a firm has sufficient surplus of cash generated from its operations to pay its debts as they fall due.
• Zero-budget marketing. Entrepreneurial marketing techniques that require few or no resources.