8 key entrepreneurship terms you should know

If you're new to the world of entrepreneurship and business innovation, then there's a good chance you're not clued in to the specialized lingo that's sometimes associated with the industry.
November 3, 2021

By: Marissa Principato (The Forge)

Scaling a business and scaling a building are entirely different things. One’s related to developing or growing a business to meet market demands; the other’s a feat reserved for scaffolders and superheroes.

So, let’s clear up any confusion you may have by going over eight common terms and concepts, courtesy of the Forge at McMaster.

Business model canvas

The Business Model Canvas (BMC) is a strategic management tool that’s used to quickly and easily define and communicate a business idea or concept. It’s a one-page document that works through the fundamental elements of a business or product to structure an idea in a coherent way.

The right side of the BMC focuses on the customer (external), while the left side of the canvas focuses on the business (internal). Both external and internal factors meet around the value proposition, which is the exchange of value between your business and your customers or clients. Try using the provided BMC example to practice defining and communicating your business idea.

Direct competition vs. indirect competition

Direct competition refers to any company that offers the same thing as you. However, indirect competition refers to a business whose products or services are different from yours but could potentially satisfy the same need and achieve the same goal.

In an indirect competition situation, the two competing businesses are indirect competitors. They contrast with direct competitors, who not only target the same customer group, but also sell the same thing.

When using the term “indirect competition,” we could be referring to the products or product providers.

  • Pizza Hut and Domino’s Pizza both sell pizzas. Therefore, they are direct competitors.
  • Domino’s and McDonald’s sell pizzas and hamburgers, respectively. However, they both target hungry customers who want quick service and a cheap price. Therefore, they are indirect competitors.

Entrepreneurial mindset

An entrepreneurial mindset is a specific set of beliefs, knowledge and thought processes that drive entrepreneurial behaviour.

Individuals with an entrepreneurial mindset tend to…

  • Believe in their ability to succeed and influence their own outcomes, empowering them to take ownership of their lives.
  • Have compelling goals that keep them future-focused and intrinsically motivated, driving them to be self-directed, action-oriented and highly engaged.
  • Have an optimistic interpretation of adverse events and view problems as potential opportunities, becoming highly resilient, resourceful, and solution-oriented even within highly uncertain, resource constrained environments;
  • Be lifelong knowledge seekers with a focus on micro-experiments as learning opportunities to test ideas and cultivate curiosity, creativity and critical thinking.
  • Display a high level of reliability, understanding that following through on simple solutions can lead to unexpected opportunities.
  • Have a humanistic outlook, being focused on others and understanding that one creates value by solving problems for others.
  • Surround themselves with an intentional community of positive influence and critical guidance.

Innovation vs. invention

Innovation and invention are closely linked, but the two terms are not interchangeable.

An invention is an entirely new creation. The process of business innovation can produce an invention, but the term is broader in scope, and it includes the application of an existing concept or practice in a new way or applying new technology to an existing product or process to improve upon it.

To better understand the difference, consider this — the telephone is an invention, but the smartphone is an innovation.


Innovation in relation to entrepreneurship occurs when an organization introduces new processes, services or products to affect positive change in their business. This can include improving existing methods or practices or starting from scratch.

Ultimately, the goal is to improve on existing products, services or processes, solve a problem or target new customers.

Problem statement

A problem is a statement about an area of concern, a condition to be improved, a difficulty to be eliminated or a troubling question that exists in theory or in practice that points to the need for meaningful understanding and deliberate investigation.

Problem statements describe current issues that need to be addressed and provide context for the specific problems. They can be described in a single statement followed by a real example to emphasize the issue.


Scalability is a characteristic of an organization, system, model or function that describes its capability to cope and perform under an increased or expanding workload or scope. A system that scales well will be able to manage increased market demands. A scalable company can maintain or improve profit margins while sales volume increases. A scalable firm can benefit from economies of scale and can quickly ramp up production.

Can our business increase revenue potential without having to increase costs and the amount of people we pay? If yes, it’s scalable.

  • Sleep Country is not a scalable business but Endy is.
  • Setting up a lemonade stand on your street is not scalable but being able to package the lemonade concentrate for sale is.
  • Selling soup in your own storefront is not scalable but packaging and canning this same recipe and partnering with retailers to sell it is.

Value proposition

The value proposition is foundational to any business or product.

A value proposition is a statement that answers why someone should do business with you. It should convince a potential customer why your service or product will be of more value to them than similar offerings from your competition. You know why your company is great, but do your potential customers know what sets your brand apart?

When creating a value proposition, it’s important to identify all the benefits your product or service offers. Describing what makes these benefits valuable in a quickly digestible way for the reader will help your value proposition make an impression. It’s also critical to identify your customer’s main problem your value proposition helps solve. By connecting this value to your buyer’s challenges, your value proposition will become clearer. This is what helps differentiate your brand as the best provider of this product or service.