Glossary

A B C D E F G H I J K L M N O P Q R S T U V W Y Z

24/7 Adventure Notebook
a storage place in which to organize your personal and business ideas

A

advisory board
a group of individuals with expertise in various areas who provide advice but are not normally associated with the day-to-day operations of your business

aftermarket
the marketplace where replacement items can be purchased, such as auto tires and sewing machine belts

agent
intermediary, working on commission, who sells an exporter’s products to foreign customers

angels
wealthy individuals from the informal venture capital market that are willing to risk their own money in someone else’s business

application of funds
expenses you pay before starting your business

assets
the dollar value of what the business owns

B

baby boomers
those born between 1947 to 1966 (about 10 million Canadians)

balance sheet
a financial snapshot of the financial health of your business at a given point in time

bankruptcy
a legal process, regulated by the Bankruptcy and Insolvency Act, by which you may be discharged from most of your debts

brainstorming
a free and open exchange of ideas

brand
a name, sign, symbol, design, or combination of these used to identify the products of a firm

bulk sales escrow
an examination process intended to protect buyers from unknown liabilities

business format franchise
a type of franchise in which the product, method of distribution, and sales and management procedures are highly controlled

business-opportunity broker
a real-estate broker or consultant who specializes in representing people who want to sell businesses

business plan
a blueprint or road map for operating your business start-up and measuring progress

business-to-business (B2B) company
a firm whose target market is other businesses

business-to-consumer (B2C) company
a firm whose “heavy” TC is the consumer or end user

buy-sell option
a statement in a shareholders agreement that spells out what happens if one partner should die, become disabled, or want to sell his or her interest in the business

C

Canada Small Business Financing (CSBF) loan
a loan guaranteed by the federal government under the Canada Small Business Financing Act

cash in advance
short-term financing method in which a foreign buyer pays an exporter cash before goods are delivered

common shares
equity investments that confer part ownership of the company, but not as safe as preferred shares should the company fail

competitive positioning
process of positioning and moving your product or service toward a growth market

competitive test matrix
a grid used to get a clear picture of the strengths and weaknesses of a competitor

convertible debentures
loans that can be exchanged for common shares at a stated price, and are better protected than common and preferred shares

cooperative
an organization that is operated collectively by its owners

copyright
the exclusive right to copy a creative work or allow someone else to do so

core benefit proposition
a statement about the benefits of your product or service to your target market

corporation
a legal entity with the authority to act and have liability separate and apart from its owners

D

dealership relationship franchise
also called licensing or associate relationship, a type of franchise in which the franchisee buys the right to distribute a franchisor’s product or service

debt financing
an obligation of a business to repay a lender the full amount of a debt (loan) in addition to interest charges

demographics
key characteristics of a group of people, such as age, sex, income, and where they live

direct mail
advertisements or sales pitch that is mailed directly to target customers

direct selling
the sale of a consumer product or service by an independent sales contractor in a face-to-face manner away from a fixed retail location; selling to foreign markets without an intermediary

distinctive competency
unique features and benefits that attract customers and encourage customer loyalty

documentary collection
an unconditional order from the exporter requiring the buyer to pay on demand or at a determined time a specified amount to a specified person

domestic cost plus markup
simplest pricing approach that adds domestic costs and a markup to include export costs

due diligence
the level of care, judgment, and caution that an employer would reasonably be expected to provide in order to prevent injuries or accidents in the workplace

E

earnout
a contractual arrangement in which the purchase price is stated in terms of a minimum, and the buyer of the business agrees to make future payments to the seller based on the achievement of predefined financial goals after the closing

echo boomers
those born between 1980 and 1995 (about 5.5 million Canadians)

e-commerce
the process of conducting business operations over the Internet

encroachment
situation in which franchisors compete with franchisees by putting an outlet nearby or setting up alternative distribution channels such as mail order or the Internet

equity
the dollar value of what the business owes the owner

escrow company
a neutral third party that holds deposits and deeds until all agreed-upon conditions are met

export shock
the difficulty of opening an export market

F

fidelity bonding
insurance that protects an employer against employee dishonesty

financial statement
a list of assets and liabilities that will show your net worth or equity

fixed rate
interest rate that remains the same over the period of a loan

floating rate
interest rate that changes with changes in the prime rate

foreign distributor
intermediary who purchases products from an exporter and resells them

franchise
authorization granted by a manufacturer or distributor to sell its products or services

franchisee
the individual operator who is licensed to operate under the franchisor’s rules and directives

franchise fee
fee paid by a franchisee for the rights to represent the franchisor in a given geographic area for a specified length of time, commonly five to ten years

franchisor
the firm that sells the rights to do business under its name and continues to control the business

full-cost pricing
pricing approach that includes fixed and variable costs and a profit margin

G

general partnership
a partnership in which each partner has a hand in managing the business and assuming unlimited personal liability for any debts

goodwill
The dollar value obtained when you subtract the total value of the tangible assets from the purchase price

growth industry
an industry whose annual sales increase is well above average

growth segment
an identifiable slice of an industry that is expanding more rapidly than the industry as a whole

H

high-context culture
culture in which communication depends not only on the message itself, but also on everything that surrounds it

I

impact marketing
a one-off campaign designed to attract the attention of your target market

inventory
items carried in the normal course of doing business that are intended for sale

invisible competition
people or businesses that have the capacity or desire to provide the same products, services, or benefits that you do

J

joint health and safety committee (JHSC)
a group consisting of labour and management representatives who meet on a regular basis to deal with health and safety issues

joint venture
partnership formed for a specific undertaking; it results in the formation of a new legal entity

just-in-time team
a group of individuals who are hired on a contract basis to perform a specific functions

L

leadership
act of motivating others to do what is expected of them because they believe in what you are doing and share your vision

letter of credit
sometimes called documentary credit, a document issued by a bank at the request of an importer, in favour of a supplier/exporter, to finance the importation of goods and services

liabilities
the dollar value of what the business owes to parties other than the owner

liens
a legal obligation filed against a piece of property

life cycle
four stages, from birth to death, of a product, business, service, industry, or location

limited partnership
a partnership composed of at least one or more limited partners and at least one general partner

location escape hatch
a way to cancel or modify your lease if the landlord fails to meet the specified terms

love money
investment from friends, relatives, and business associates

low-context culture
culture in which communication tends to rely on explicit written and verbal messages

M

manufacturer’s representative
specialized agent, working on commission, who sells a manufacturer’s products to a specific group of customers within a given geographic area

market gap
an area of the market where needs are not being met

market-pull approach
determining what the customer wants through a customer profile and then adapting or creating a product or service to satisfy this want or need

market research
collection and analysis of data pertinent to an existing or potential market

market segmentation
breaking down potential markets into homogeneous groups with similar characteristics and qualities

marginal-cost pricing
pricing approach that includes floor price (unit cost) and marginal (export) cost

matrix grid
a screen through which ideas are passed in order to find solutions

mentoring
a mutually beneficial partnership between a more experienced entrepreneur or businessperson, and an entrepreneur who is in the infant or start-up phase of a venture

mind map
an idea-generating sketch—also known as a spoke diagram, a thought web, or a clustering diagram—that features circled words connected by lines to form units

mission statement
a statement of your company’s purpose and aims

N

networking
communicating through person-to-person channels in an attempt to sell or gain information; talking to people with the purpose of doing business

net worth (personal equity)
your total personal assets minus your total personal liabilities

new-eyes research
the use of intuition and observation to learn about the marketplace

O

operating loan (line of credit)
money loaned to help finance short-term business needs like inventory and accounts receivables

outsourcing
farming out one or more company operations to specialists

P

partnership
an association of two or more individuals carrying on a business to earn income

patent
a federal government grant that gives an inventor exclusive rights to his or her invention

personal selling
the selling and taking of orders by an individual salesperson

PERT
acronym for Program Evaluation and Review Technique

Plan B
An alternative strategy for bailing the business out of a tight spot created by some unforeseen or unfortunate situation

positioning
the process of establishing in the mind of the consumer a unique image or perception of a company, product, or service

price/earnings (P/E) ratio
the market price of a common stock divided by its annual earnings per share for the latest 12-month period

prime rate
the lowest rate of interest charged by banks on commercial loans to their most preferred customers

preferred shares
equity investments that confer part ownership of the company, earn investors dividends at a fixed rate, and are safer than common shares

primary research
interacting with the world directly by talking to people

product penetration
a calculated thrust into the market

profiling
describing the needs and behaviour of your target customer

pro forma (or projected) income statement
an itemized statement of sales (or revenues) and corresponding expenses

projected (pro forma) cash flow
a financial statement which helps you control the money that comes into your business and the money that is spent

promotion
the art or science of moving the image of your business into the prospective customer’s mind

promotional campaign
a sales program designed to sell a specific product or service or to establish an image, benefit, or point

promotional mix
all the elements that you blend to maximize communication with your target customer

psychographics
segmenting of the population by lifestyle behaviour, buying habits, patterns of consumption, and attitudes

R

relationship marketing
the development of long-term, mutually beneficial, and cost-effective relationships with your customers

renegotiate a lease
obtaining a new or modified contract for occupancy

ROI (return on investment)
net profit to owner’s investment

royalty fee
ongoing obligation to pay the franchisor a percentage of the gross sales

S

secondary research
reading about someone else’s primary research

shareholders loan
owner investment in the form of a loan

small business
any venture with spirit, any business you want to start, or any idea you want to bring into the marketplace

small business entrepreneur
agents of change—doers who see a market need and satisfy that need by translating it into a successful business

sole proprietorship
a business that is owned by one person

strategic alliance
goal-oriented partnership formed between companies to create a competitive advantage; a partnership between one or more organizations that is formed to create a competitive advantage

strategic business units
independent teams or small businesses that support the functional needs of the main organization

strategy
the broad program for achieving an organization’s objectives and implementing its vision

SWOT analysis
honest appraisal of your internal Strengths and Weaknesses and external Opportunities and Threats

T

tangible assets
things your business owns (lasting more than one year) that you can see and touch, such as real estate, equipment, and inventory

target customer (TC)
a person, type of person, or business that has the highest probability of buying your product or service

term loan
loan used for medium- to long-term financing of fixed assets like equipment, furniture, expansion, or renovation

touchpoint analysis
analyzing customers’ perceptions of the competition in order to find out what benefits are important to them

trading houses
domestically based intermediaries that market exporters’ goods abroad

trademark
a word, symbol, or design, or a combination of these, used to distinguish the goods or services of one person or organization from those of others in the marketplace

V

values
the things in life that are important to you

vendor statement
a personally designed form that allows you to negotiate with each vendor from a position of informed strength

virtual organization (or network organization)
organizational structure in which the major functions are broken up into strategic business units

W

Workplace Hazardous Materials Information System (WHMIS)
a comprehensive national plan for providing information on the safe use of hazardous materials used in Canadian workplaces