Every business owner needs a go-to business glossary for when they come across a term that they can’t define. We’ve got you covered! Click on a letter or scroll down to find the definition you need.
Your Business Glossary, A-Z :
Your Business Glossary –> 0-9
30-Second Pitch
A brief spiel that a business owner uses to describes themselves and their company in a way that’s enticing to potential customers, partners and suppliers. The 30-Second Pitch should communicate who the business owner is, what they do and how their company differs from the competition.
Your Business Glossary –> A
Angel Investor
An investor who works with start-up businesses requiring a small cash infusion (than $500,000.) An angel investor helps launch the business, makes a large return and then hands the business off to a larger investment company such as a venture capitalist.
Your Business Glossary –> B
Believability
The idea that a company’s customers must believe that it can deliver what it promises.
Benefit
Something which a business’ customers deem of value that they get from purchasing it’s product or service.
Best-Case Scenario
The most favourable realistic outcome of a particular situation.
Brand
A business’ image, built through marketing initiatives, or the message conveyed to people about the business. Everything about a company involves a branding choice, including:
- Logo
- Marketing colours
- The clothes the owner wears
- The employees
- Voicemail message
Business Model
The way in which a business delivers its product or service to the customer. Different business models include:
- Online sales
- Direct mail sales
- Operating a physical location with a store front
- Selling from home
- Selling through a distributor.
Business Plan
A concrete outline of how an entrepreneur plans to develop and run a business. A business plan shouldn’t be be more than 20 pages long. However, if the entrepreneur isn’t using the business plan to secure investors, it could be as short as a single page.
Business to Business (see also Business-to-Consumer)
A type of business that delivers a product or service to another company rather than to the end user.
Business-to-Consumer (see Business-to-Business)
A type of business that delivers a product or service to the end user rather than to another company.
Your Business Glossary –> C
Capacity
The maximum volume of products or services that a company is capable of handling. Any company will eventually reach its equipment capacity, human capacity and/or space capacity, which will limit its overall capacity.
Cash Flow Management
The process of keeping track of cash as it enters the business as revenue and exits as expense.
Competitive Advantage
What a company does better than the competition. Competitive advantage should be unique to a company in that:
- The company excels at it
- Developing this specific advantage is a priority so that the business stays ahead of the competition
- The owners and management can (and do) easily communicate this strength to customers as something that makes the company unique.
Competitive Edge (see Competitive Advantage)
Consolidated Industry
Markets have a consolidated industry when they contain only a few competitors. Consolidated industry happens as when companies buy each other out or form alliances, or when many businesses close due to competition.
Continuous Improvement
A company philosophy designed to improve productivity on an ongoing basis. Management should support continuous improvement and make it a part of company culture, formalizing it in a process to ensure that everyone agrees with and shares improvement goals.
Contract-based Company (see also Transaction-based Company)
A business model in which customers commit to conducting business with an organization through a sales contract that lasts longer than one delivery of the product or service.
Core Business
A company’s core business is its main product or service. A company may have multiple revenue streams, but the owner should allocate the majority of its resources to supporting the core business.
Core Competency (see Core Business)
Corporate Culture (or Corporate Atmosphere)
Corporate culture, composed of the values and beliefs of a company, is reflected through the company’s organizational structure and the employees’ behaviour.
Customer Expectations
Customer expectations are made up of customers’ beliefs regarding what they will receive from purchasing a product or service. Often their expectations go far beyond the mere product or service itself, including provision of additional benefits such as customer service or warranty fulfillment.
Customer Touch-Points
Touch-points include every way in which a company interacts with a customer, including (but not limited to):
- Leaving a voicemail
- Providing a proposal
- Meeting face-to-face
- Submitting an invoice
D
Your Business Glossary –> E
Entrepreneur
Entrepreneurs are individuals who initiate a business. An entrepreneur often has the unique ability to develop great ideas, improve upon them and execute them.
Your Business Glossary –> F
Features
Features are a product or service’s distinctive characteristics. A feature brings a positive benefit to the customer.
Fixed Costs
Fixed costs remain constant regardless of how much of a product or service a business sells. For example, rent doesn’t change whether a business sells two or ten units of a product.
Flat Organizational Structure (see also Hierarchical Organization Structure)
A company with a flat organizational structure has a small level of middle management between employees at the top and employees that are customer-facing. Creativity and flexibility thrive within the flat organizational structure.
Flexibility
Flexible people have the capacity to change quickly when necessary. Small businesses can act with much more flexibility than larger ones, giving them a terrific advantage.
G
Your Business Glossary –> H
Hierarchical Organization Structure (see also Flat Organizational Structure)
Companies with a hierarchical organization structure have many middle-managers and several lines of communication between employees at the top and employees at the bottom. Companies that require complicated processes and systems tend to use this business structure.
Hockey Stick Growth
Hockey Stick Growth, the type of growth in which angel investors and venture capitalists are most interested, occurs when the growth rate of a business resembles a hockey stick shape when plotted on a graph. Growth starts slowly, characterized by slow sales and high costs, but quickly becomes exponential, rising steeply on the graph.
Your Business Glossary –> I
Initial Public Offering (IPO)
Initial Public Offering is the first offering of stocks or shares of a business to the public for investment purposes.
Intangible
Services are often described as intangible, in that they provide customer value even though the customer can’t touch them.
Intellectual Property (see also Proprietary Information)
Proprietary or protected information owned by the company. Proprietary information:
- Has value
- Reveals a company’s competitive advantage
- Should be closely guarded
Protect intellectual property with a patent, copyright or trademark. A Lawyers advise on which would be most appropriate, based on the needs of the business.
Investor
An investor puts time and/or money into a business for a future return. An investor could be:
- One of the 3Fs (friends, family and fools)
- An angel investor
- A venture capitalist
- A bank
- An IPO (see Initial Public Offering)
Your Business Glossary –> J
Joint Venture
A joint venture involves a formal agreement between two parties to work together in a business endeavour, sharing the proceeds. A company often forms a joint venture when it enters a foreign market.
K
Your Business Glossary –> L
Learning Curve
The initial period in a new business when an entrepreneur becomes better at the business of which they’re now a part. The learning curve often refers to the administrative component of the business. Once someone learns how to perform a task the best way possible and spends time practicing, their speed and efficacy increases.
Leverage
A person leverages their resources when they use the resources that they have (money, time and people) to gain even more resources.
Likeability
High likeability is the most important aspect of relationship-building, as people do business with people they like.
Liquidity
Liquidity refers to the ability to keep cash on hand. High liquidity means that a business either already have cash available or that it’s able to convert assets to cash very quickly.
Low-Hanging Fruit
A colloquialism meaning to do something that provides a tremendous value but that’s easily achievable. If a business can only do one thing, “going for low-hanging fruit” would be the next step.
Your Business Glossary –> M
Margin
Margin refers to the amount of profit a business makes – the difference between how much it charges (either price per sale or total revenue) and how much it costs to deliver (costs per sale or total expenses.) Profit margins are often expressed as a percentage.
Market Share
Market share is the proportion of a company’s entire target market that would potentially purchase its product or service. The rest of the market would purchase from the competition. Market share is often expressed as a percentage.
Marketability
An assessment of whether customers will spend money on what the business is selling. Marketability depends on both the perceived need for the product or service and the perceived value beyond the price paid for it.
Marketing
A set of tools that businesses use to promote sales and to create an image for the company that stands out in its customers’ minds.
Marketing Campaign
A marketing campaign uses various communication tools to promote and support a consistent message about a business. Using more than one communication tool creates a higher probability of reaching the costumer.
Marketing Plan
A detailed outline of how a business intends to communicate with its potential customers. Marketing is not arbitrary. Do something marketing-related only if it is:
- Logical
- Makes sense to you
- Makes sense to people with whom you discuss it
A marketing plan outlines the logic and strategy behind communications with potential customers.
Mature Market
A mature market is a group of existing customers who have purchased a product or service over an extended period of time. Signs that a business is in a mature market include:
- Increasingly smaller margins
- New competitors
- A need to go to new target markets with customized offerings.
Mission
Something a business tries to achieve everyday. A mission is not a long-term goal, as the business and its staff should be capable of fulfilling the mission on a regular basis.
Your Business Glossary –> N
Need
The motivation behind a consumer’s purchase.
Networking
The act of interacting with people to make connections and build relationships. Networking helps businesses to:
- Seek out and assess the potential for new customers.
- Develop strategic partnerships
- Meet and find out more about quality suppliers, professional services to support the business, and potential mentors
The value of effective networking can’t be denied, as it lets business owners meet people who:
- Are happy to lend support in a variety of ways
- Can also benefit from the business owner’s specific skill set.
Small businesses supporting each other is a great dynamic for any entrepreneur!
New Entrants
Businesses that emerge in the market later in the game, usually after an entrepreneur has learned from a similar business or can see that there is profit to be made in a specific industry or market. New entrants face less of a learning curve and reduced risks compared to businesses that entered the market earlier.
Niche Market
A niche market is made up of smaller group of potential clients with more specific needs and/or preferences than in larger markets. Targeting a smaller group’s needs lets business owners more easily adapt their product or service.
Non-Disclosure Agreement
A legal document that prevents a third party from telling another party confidential information about a company. Companies use non-disclosure agreements right after they open or when a product is not otherwise legally protected.
Your Business Glossary –> O
Offering
The benefit a business can give its customers above and beyond its main product or service.
On-Boarding
The process by which a business introduces its customers to its product or service, or how it brings customers “on board” with the company. A well-rounded on-boarding experience leaves a positive impression on customers.
Opportunity Cost
What a business gains or loses by choosing one particular option over another. Consider time, money and resources when determining opportunity cost.
Your Business Glossary –> P
Payback Period
The amount of time required for an investment to create revenue equal to the original investment amount.
Penetration Pricing
A company uses penetration pricing when it enters a market with a new product or service at a low price point. The initial margin-per-sale is low but the low price lets the company capture a larger part of the market than with higher pricing.
Positioning Statement (see 30-Second Pitch)
Price Skimming
A company uses price skimming when it enters a market with a new product or service at a high price. The intent is to maximize profit at the beginning of a product life cycle and decrease the price over time as competition enters the market.
Price War
In a price war, two competing companies repeatedly undercut each other’s prices. Price wars are dangerous for a small business, which may not have the cash flow to compete against a larger, more established company.
Processes
Standard, systematic and objective ways to explain how to do something. Expanding companies use processes to give step-by-step instructions to new employees. More generally, companies use processes to analyze and optimize their operations.
Product Life Cycle
A product has a life cycle with distinct phases:
- Introducing the product to the market
- If the product is successful, rapid business growth
- Product becomes mainstream and encounters steep competition
- Sales significantly decrease as a new product takes its place
A company could at several points within these phases decide to reinvent the product and restart the product life cycle. However, the product team should know where in the cycle the product currently is, as there are advantages and drawbacks in each phase to initiating a restart.
Profit (see Margin)
Proprietary Information (see also Intellectual Property)
Proprietary information is exactly like intellectual property, but without the protection of a patent. Protecting proprietary information and corporate secrecy requires an NDAs (non-disclosure agreements). Business owners should also protect themselves generally by including a proprietary information statement in company email that ensures that any part of any proposal or item left with a customer (or potential customer) remains confidential.
Q
Your Business Glossary –> R
Red Tape
Red tape refers to all of the procedures, policies and government regulations that entrepreneurs and their staff face in daily business and interactions with other parties that seem excessive or hindering. Examples include, but are certainly not limited to:
- Taxes
- Customs
- Paperwork
Return
The percentage of profit an investor makes on top of their initial investment in a business. Calculate return by dividing the initial investment amount by the profit.
Revenue
The amount of money coming into the business before costs.
Revenue Stream
A way in which a company brings in money. Most companies run a few different revenue streams at the same time.
Your Business Glossary –> S
Sales Cycle (or Sales Process)
Most companies have a sales process. They approach sales assuming that potential customers who go on to buy something and become customers go through distinct phases. They:
- Become aware of the product and the company
- Take time to understand the offering and become increasingly interested in the company
- Become ready to purchase.
The sales staff should be ready to support the consumer at each phase.
Sales Process (or Sales Cycle) See Sales Cycle
Scalability
Scalability refers to how easy it is to expand a business’ existing infrastructure to service as many customers as possible in a limited amount of time.
Social Networking
Marketers that use social networking use online tools to reach out to potential customers, generating sales based on existing ties and relationships and on new connections that they generate. Common social networking websites include Facebook, Twitter, LinkedIn and YouTube.
Strategic Alliance
Strategic alliances form when companies create a mission together or agree to work together based on holding common values that allow them to assist each other.
Strategy
A logical idea or plan to reach a goal.
Sustainable Business
A business that will continue to thrive and make money over time.
Synergy
The idea that two things combined equal more than they are worth separately. Examples from the business sphere include:
- Two different companies that work well together add value to each other’s business when they work together
- An employee working in two separate departments of a company gains more insight into how the company works than an employee that works in only one department.
Your Business Glossary –> T
Tagline
A phrase that is associated with a business, letting people know what to expect from it. A tagline is one of the more common marketing tools
Tangible
Tangible things can be touched. A business-created tangible might be a physical product that customers can take away with them. Customers feel more confident in a business when they can physically touch what they’re paying for. They place more value on the product.
Target Audience
The group of people that a business hopes to reach with its communications and marketing. A target audience is different than a target market, which is the group from whom a business hopes to generate sales.
Target Market (see also Niche Market)
The group of people from whom a business hopes to generate sales. By definition, the target market is small, and shouldn’t be confused with the target audience.
Transaction-based Company (see also Contract-based Company)
A company from which customers buy only once. The sale doesn’t tie the customer into the company, as they are not obligated to continue doing business with the company.
Your Business Glossary –> U
Unique Selling Feature (see Competitive Advantage)
Your Business Glossary –> V
Value Proposition (see Competitive Advantage)
Values
The morals and beliefs identified as important for a business. Values are ingrained in the company’s processes and procedures.
Venture Capitalist
An investor who normally invests in between $1-million and $5-million in a company. Venture capitalists are involved with companies in the final stages of commercialization or through rapid growth phases requiring more cash. They expect a high rate of return in a short time.
Visibility
Visibility refers to marketing initiatives undertaken with a goal to get everyone, especially the target market, to notice a business.
Vision
A long-term business goal (five years or longer) that motivates and drives everyone involved.
Your Business Glossary – W
Willingness to Pay (see also Value)
Word-of-Mouth
Word-of-mouth marketing is the result of a well-planned and well-executed marketing strategy where people spread awareness of a business by talking about it. Getting business by word-of-mouth tends happens when a business has happy customers that spread the word about their positive experiences.
Work-Life Balance
Entrepreneurs maintain a good work-life balance by prioritizing what is important in their business and personal life and managing each with minimal interference to the other.
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