5.5 Key Terms
balance sheet
financial statement that summarizes a company’s financial condition according to the accounting equation
breakeven point
level of operations that results in exactly enough revenue to cover costs
business model
plan for how venture will be funded; how the venture creates value for its stakeholders, including customers; how the venture’s offerings are made and distributed to the end users; and the how income will be generated through this process
business model canvas
developed by Osterwalder and Pigneur, used to develop a business model for a venture, including nine blocks that are mapped out to address customer segments, customer relationships, channels, revenue streams, value propositions, key partners, key activities, key resources, and cost structure
business model innovation
occurs when an existing business fundamentally changes their business model
business plan
formal document that typically describes the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives
competitive matrix
shows how and why a startup has a clear if not measurable competitive advantage for relevant features/benefits by weight according to customers, such as price and quality in relation to competitors
customer empathy map
portrayal of a target customer, the most promising candidate from a business’ customer segments, which explores the understanding of that person’s condition from their perspective to understand their problems and needs
disruptive innovation
process that significantly impacts the market by making a product or service more affordable and/or accessible often by smaller companies in an industry
executive summary
initial section of a business plan document that summarizes the key elements of the entire plan
feasibility analysis
feasibility analysis is the process of determining if a business idea is viable; it includes testing the viability of your product or service, evaluating your management team, assessing the market for your concept, and estimating financial viability
financial analysis
forecasts revenue and expenses; projects a financial narrative; and estimates project costs, valuations, and cash flow projections
fixed costs
costs that do not change, regardless of the amount of sales
go-or-no-go decision
determination to proceed with or abandon a plan or project
innovation
new idea, process, or product, or a change to an existing product or process
lean model canvas
developed by Ash Maurya as a derivation of the original business model canvas; this canvas differs by addressing unfair advantages, problems, solutions, and key metrics rather than customer relationships, key partners, key activities, and key resources
market analysis
analysis of the overall interest in the product or service within the industry by its target market
projected cash flow
outline of preliminary expenses, operating expenses, and reserves
serviceable available market (SAM)
portion of the market that a business can serve based on its products, services, and location
social business model canvas
modification of the business model canvas, designed for social entrepreneurship venues; new areas address impact measures around social impacts and its measurement, surplus, beneficiary segments and social and customer value propositions
SWOT analysis
strategic analytical tool used to help a potential venture or existing company identify its strengths, weaknesses, opportunities, and threats related to business competition
total available market (TAM)
total perceived demand for a product or service within the marketplace
value proposition
summary describing the benefits (value) customers can expect from a particular product or service
value proposition canvas
one of the nine blocks on the business model canvas, this additional tool developed by Osterwalder and Pigneur is designed to illustrate a deeper dive into customer understanding and value creation of a business
variable costs
costs that fluctuate with the level of revenue