Responding to Challenges

Key Terms

burn rate
rate at which cash outflow exceeds cash inflow

buyback clause
legal agreement regarding an exit by a founding team member prior to the harvesting of the venture

code of conduct
formal statement that provides guidance on how ethical conduct is demonstrated

company culture
shared beliefs, values and assumptions held by people regarding how to behave or conduct themselves within the context of fitting into an organization

Delphi method
group decision-making process that includes a diverse group of people who are located at different locations and willing to respond to a series of questionnaires to assist in providing ideas, information or solutions to a defined question or problem

escalation of commitment
tendency to continue with a predetermined action based on the past efforts and contributions to the project rather than an analysis of the current realities that disclose a new solution or approach is necessary

fail-safe point
identified point that triggers the entrepreneur to consider what actions are needed to bring the venture back to a healthy position and whether this action is reasonable and feasible

founders' agreement
written document that addresses contractual topics such as division of equity, compensation, contributions to the venture, and commitments to the venture with timelines included

Gannt chart
bar chart used to organize and plan sequential steps in a process

hindsight bias
belief that, in retrospect, the outcome was predictable when the outcome wasn't predictable due to various uncontrollable factors

hubris
overinflated belief in oneself

lifestyle business
business that provides incomes similar to other forms of employment

Nominal Group technique
group decision-making process that requests multiple rounds of responses and discussions of response

noncompete agreement
formal agreement that the person signing the document will not work for another organization that is a direct competitor of their current employer during employment and usually for a specified length of time after employment ends

nondisclosure agreement
formal agreement that the person signing the document will not sharing proprietary information with outside sources

planning fallacy
creation of a plan that is too optimistic and not aligned with conservative assumptions

serial entrepreneur
entrepreneur who becomes involved in starting multiple entrepreneurial ventures

social capital
goodwill that is created through helping someone else

status quo bias
pattern of relying on previous actions and results as the accepted pattern and outcome with a bias against change or new information or new results