Brian Ghilliotti

BES 218
Entrepreneurial Studies
Week Six
Definitions
assumptions sheet- an explanation of the most critical assumptions on which financial
statements are based.
board of advisors - panel of experts asked by a firms management to provide counsel and
advise on an ongoing basis.
board of directors - pane of individuals elected by corporations shareholders to oversee
management of the firm.
organizational chart - a graphic representation of how authority and responsibility are
distributed within the firm.
sources and uses of funds statement - document that lays out how much funding a firm
need, where it will come from, and how the money will be used.
pro forma financial statements- similar to historical statements an established firm prepares,
but they look forward instead of backwards.
ratio analysis - a mathematical method used by firms to make sense of historical past
performance.
product prototype - first physical manifestation of a product/service.
virtual prototype - computer generated image of a product/service.
contribution margin- amount per unit of sale that is left for covering a firms fixed costs and
establishing profit.
variable cots - vary with sales
fixed costs - remain constant during periods of production or non-production.
operating leverage - analysis of fixed vs variable costs.
marketing strategy - overall approach of marketing goods and services.
cost of goods sold- materials and direct labor needed to produce product.
competitor analysis- detailed analysis of firms competitors.
market segmentation- process of dividing consumer markets into various segments and
chasing which segment the firm feel the most competitive in.

market analysis- breaks industries into general segments and then considers which of these
segments will be the most profitable to target.
milestone- noteworthy or historical event for a firm.
position- how appealing a product or service is in comparison to others within its respective
market. For example, station wagons vs F350 pick up trucks.
tagline- phrase a business uses to reinforce its position in the market place. For example, you
could sell a station wagon with an advertisement: You really need to use all that gas to get to
the dump?
mission statement- defines why a company exists and what it aspires to become.
business plan- 25-35 page document that describes what a business plans to accomplish and
how it intends to accomplish it.
executive summary- short overview of the entire business plan.
summary business plan- ten to fifteen page document that is written for businesses in their
early development.
full business plan- a 25-35 page document that spells out a companys operations in much
more detail than a summary business plan.
operational business plan- a blueprint for a companys operations, usually drafted for internal
publication, runs between 40 to 100 pages long.