what-is-entrepreneurship

Business Glossary: The Advanced Business Terms For Entrepreneurs

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The FourWeekMBA Business Glossary guides you through key concepts to leverage to build a valuable company and a sustainable business model.

The continuous quest for problem-solving in the real world

Entrepreneurship is about solving problems by leveraging on markets’ feedback to develop products with high potential, which people want and desire.

Entrepreneurs then must understand some of the tools they can leverage to build valuable companies able to capture some of the value delivered through their products and services and build sustainable business models.

what-is-entrepreneurship
Entrepreneurship is a continuous quest for real-world problem-solving. The success of a business is measured by how well you helped people solve those problems. While entrepreneurs can rely on methodologies, systems, and processes, they also need to know when to revert to instinct and leverage on their experience.
Read the full guide on What Is Entrepreneurship

Bootstrap your way to sustainable growth

bootstrapping-business
The general concept of Bootstrapping connects to “a self-starting process that is supposed to proceed without external input.” In business, Bootstrapping means financing the growth of the company from the available cash flows produced by a viable business model. Bootstrapping requires the mastery of the key customers driving growth.

Brand equity as a lasting asset

When business model innovation is achieved, and a sustainable business model is built, a company can also leverage its brand equity as an additional long-term advantage.

what-is-brand-equity
Brand equity is the premium that a customer is willing to pay for a product that has all the objective characteristics of existing alternatives, thus, making it different in terms of perception. The premium on seemingly equal products and quality is attributable to its brand equity.
Read the full guide on Brand Equity 

Business model innovation as a competitive advantage

When all the things above are met, business model innovation becomes a propeller that drives long-term advantage.

business-model-innovation
Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.
Read the full guide on Business Model Innovation

Business modeling as a toolbox

One of the conceptual tools that entrepreneurs can leverage is a business model or a framework that helps them identify the key building blocks that by time to time a company is built upon.

Business modeling is useful to build valuable companies but also to observe existing companies in several industries to understand what parts of those companies can be borrowed.

By assembling those parts, and mixing them together with tinkering and experimentation that is how entrepreneurs can build a sustainable advantage.

business-model
A business model is a framework for finding a systematic way to unlock long-term value for an organization while delivering value to customers and capturing value through monetization strategies. A business model is a holistic framework to understand, design, and test your business assumptions in the marketplace.

Read the full guide on What Is a Business Model

Business design rather than business planning

In the times in which capital is easily available, companies put up hundreds of pages of business plans just to discover the next day how useless they were.

While in the past, using business planning made more sense. In the current times also, companies with substantial capital injections need fast validation from the market to build something sustainable.

Thus, where in the past, massive capital injections would be used as moats, capital without a sustainable business model won’t last long (see the most recent and exemplary WeWork case, but also at the rise of the dot-com bubble the Webvan case). Therefore, a company that wants to build something valuable needs to master business model design.

Business model design is not about sketch on a piece of paper, but that is about experimentation.

business-design
Business design enables organizations to deliberately craft a business model to prove sustainability in the marketplace by validating the building blocks of a business model. The business designer can help an organization to build a viable business model by readily testing its riskiest assumptions against the marketplace.
Read the full guide on Business Design

Business experimentation rather than business theory

Business experimentation is the key ingredient also when a company has massive capital injections because that strikes a balance and feedback loop which keeps companies grounded.

In short, a company that just uses capital to grow without testing whether its growth is sustainable in the marketplace will need a reality check sooner or later.

For that matter, a company built on the ground up with a continuous loop with the marketplace can grow organically and exponentially.

business-experimentation
Business experiments help entrepreneurs test their hypotheses. Rather than define the problem by making too many hypotheses, a digital entrepreneur can formulate a few assumptions, design experiments, and check them against the actions of potential customers. Once measured, the impact, the entrepreneur, will be closer to defining the problem.
Read the full guide on What Is a Business Experimentation

Continuous iteration and market feedback loop

Therefore, the key to building a sustainable business model is about having a continuous feedback loop between vision (where you want to be in a decade from now), key customers (representing your ideal market at any given time), and offered value proposition.

how-to-create-a-business-model
Define the problem you’re going to solve, then define the customers for which the problem will be solved. Next, identify the customer and the problem. After that, define a set of possible solutions. After, define a set of possible monetization strategies for that solution, and test and choose your business model.
Read the full guide on How to design a create model

Customer is the key investor

When your key customers love your product so much to make it grow organically and exponentially, that is when you hit the home run! What venture capitalists like to call Product-Market Fit.

product-market-fit
Marc Andreessen defined Product/market fit as “being in a good market with a product that can satisfy that market.” According to Andreessen, that is a moment when a product or service has its place in the market, thus enabling traction for the company offering that product or service.
Read the full guide on Product-Market Fit

Customer obsession as North Star

customer-obsession
Customer obsession goes beyond quantitative and qualitative data about customers, and it moves around customers’ feedback to gather valuable insights. Those insights start by the entrepreneur’s wandering process, driven by hunch, gut, intuition, curiosity, and a builder mindset. The product discovery moves around a building, reworking, experimenting, and iterating loop.

Design thinking and customer-centrism

design-thinking
Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.

Revenue modeling as a validation tool

For that matter, revenue modeling is very important in building a sustainable business model. Revenue modeling is about building revenue streams which are in line with the long-term vision of the brand.

revenue-stream
A revenue stream is one of the foundational building blocks of a business model, and the economic value customers are willing to pay for the products and services offered. While a revenue stream is not a business model, it does influence how a business model works and delivers value.
Read the full guide on Revenue Streams
revenue-modeling
Revenue modeling is a process of incorporating a sustainable financial model for revenue generation within a business model design. Revenue modeling can help to understand what options make more sense in creating a digital business from scratch; alternatively, it can help in analyzing existing digital businesses and reverse engineer them.

Beyond core functions and into psycho-logic

Mastering a core value proposition is a key step and the glue which keeps the whole business model together. Value can be seen from several perspectives, and it’s not just about functionality. In many cases, that is about psychology, what Rory Sutherland calls psycho-logic.

value-proposition
A value proposition is about how you create value for customers. While many entrepreneurial theories draw from customers’ problems and pain points, a value can also be created via demand generation, which is about enabling people to identify with your brand, thus generating demand for your products and services.

Key Highlights

  • FourWeekMBA Business Glossary:
    • A guide to understanding key concepts for building valuable companies and sustainable business models.
  • Entrepreneurship and Problem-Solving:
    • Entrepreneurship involves solving real-world problems by creating products that people want and need.
    • Entrepreneurs use methodologies, systems, and experience to navigate challenges.
  • Bootstrapping for Growth:
    • Bootstrapping in business means using internal cash flows for growth.
    • Mastering key customer segments is crucial for successful bootstrapping.
  • Brand Equity for Long-Term Advantage:
    • Brand equity is the premium customers pay for perceived value.
    • Successful business model innovation can enhance brand equity.
  • Business Model Innovation and Competitive Edge:
  • Business Modeling as a Toolbox:
    • Business models help identify key building blocks of a company.
    • Models aid in understanding and borrowing from existing companies.
  • Business Design for Sustainability:
    • Business design is crucial for companies seeking sustainable success.
    • Experimentation and risk validation are central to business design.
  • Business Experimentation and Reality Checks:
    • Business experimentation keeps companies grounded and sustainable.
    • Organic and exponential growth is achievable through continuous testing.
  • Continuous Iteration and Market Feedback:
    • Building a sustainable model requires ongoing feedback loops.
    • Define problems, customers, solutions, and monetization strategies.
  • Customer-Centric Approach and Product-Market Fit:
    • Customer love drives organic growth and success.
    • Product-Market Fit signifies a good market and product alignment.
  • Customer Obsession and Design Thinking:
    • Customer obsession gathers insights from customer feedback.
    • Design thinking balances people’s needs, technology, and business goals.
  • Revenue Modeling for Validation:
    • Revenue modeling aligns revenue streams with the brand’s vision.
    • It’s a foundational element of a business model, influencing value delivery.
  • Understanding Psycho-Logic and Value Propositions:
    • Value propositions extend beyond functionality to psychology.
    • Value can be generated through demand generation and customer identification.

Read the full guide on Value Proposition Design

Related Linked Resources:

What is Entrepreneurship?

what-is-entrepreneurship
Entrepreneurship is a continuous quest for real-world problem-solving. The success of a business is measured by how well you helped people solve those problems. While entrepreneurs can rely on methodologies, systems, and processes, they also need to know when to revert to instinct and leverage on their experience.

What is a Business Model?

business-model
A business model is a framework for finding a systematic way to unlock long-term value for an organization while delivering value to customers and capturing value through monetization strategies. A business model is a holistic framework to understand, design, and test your business assumptions in the marketplace.

What is a Digital Business Model?

digital-business-models
A digital business model might be defined as a model that leverages digital technologies to improve several aspects of an organization. From how the company acquires customers, to what product/service it provides. A digital business model is such when digital technology helps enhance its value proposition.

What is a Tech Business Model?

tech-business-model
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.

What is Business Analysis?

business-analysis
Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

What is Agile Business Analysis?

agile-business-analysis
Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.

What is a Competitor Analysis?

competitor-analysis
It’s possible to identify the key players that overlap with a company’s business model with a competitor analysis. This overlapping can be analyzed in terms of key customers, technologies, distribution, and financial models. When all those elements are analyzed, it is possible to map all the facets of competition for a tech business model to understand better where a business stands in the marketplace and its possible future developments.

What is Design Thinking?

design-thinking
Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.

What is Business Model Innovation?

business-model-innovation
Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.

What is a Lean Startup?

lean-startup-canvas
The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.

What is an MVP?

minimum-viable-product
As pointed out by Eric Ries, a minimum viable product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort through a cycle of build, measure, learn; that is the foundation of the lean startup methodology.

What is Continuous Innovation?

continuous-innovation
That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.

What Is The Jobs-To-Be-Done Framework?

jobs-to-be-done
The jobs-to-be-done (JTBD) framework defines, categorizes, captures, and organizes consumer needs. The jobs-to-be-done framework is based on the premise that consumers buy products and services to get jobs done. While products tend to come and go, the consumer need to get jobs done endures indefinitely. This theory was popularized by Tony Ulwick, who also detailed his book Jobs To Be Done: Theory to Practice.

What is Growth Hacking?

growth-hacking
Growth hacking is a process of rapid experimentation, coupled with the understanding of the whole funnel, where marketing, product, data analysis, and engineering work together to achieve rapid growth. The growth hacking process goes through four key stages of analyzing, ideating, prioritizing and testing. 

FourWeekMBA Business Toolbox

Business Engineering

business-engineering-manifesto

Tech Business Model Template

business-model-template
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.

Web3 Business Model Template

vbde-framework
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.

Asymmetric Business Models

asymmetric-business-models
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Business Competition

business-competition
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.

Technological Modeling

technological-modeling
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.

Transitional Business Models

transitional-business-models
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.

Minimum Viable Audience

minimum-viable-audience
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.

Business Scaling

business-scaling
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.

Market Expansion Theory

market-expansion
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.

Speed-Reversibility

decision-making-matrix

Asymmetric Betting

asymmetric-bets

Growth Matrix

growth-strategies
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Revenue Streams Matrix

revenue-streams-model-matrix
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.

Revenue Modeling

revenue-model-patterns
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.

Pricing Strategies

pricing-strategies
A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.

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