Entrepreneur Glossary
1099 Form
An IRS tax document that reports various types of non-employment income an individual or business received during the year from sources besides an employer, such as freelance payments, dividends, or interest earned. For example, a bank must issue a 1099-INT to a customer if they paid that person more than $10 in interest on their savings account in 2023.
13th-month Pay
An additional payment given to employees, typically equal to one month’s salary, often disbursed at the end of the year. For example, if an employee earns $60,000 annually, their 13th-month pay would be $5,000 ($60,000 divided by 12 months).
360 Video
A type of video recording where every direction is captured at once using an omnidirectional camera or a collection of cameras, allowing viewers to look around in all directions during playback. For example, a 360 Video of a concert would allow you to watch the performance as if you were standing in the middle of the venue, with the ability to turn and look at the stage, the audience, or any other angle of your choosing.
3D Printing
A three-dimensional object made by building it up layer by layer from a digital design. An example of this would be using a 3D printer to produce a custom prosthetic limb, tailored to fit an individual’s unique measurements.
401(K) Plan
A company-sponsored retirement account where employees can contribute a portion of their income, often with employers matching these contributions. For instance, if an employee earning $100,000 annually contributes 5% of their salary to their 401(k) plan, their employer may also contribute an additional $5,000, effectively boosting the employee’s retirement savings.
4K Video
Video with a horizontal resolution of approximately 4,000 pixels. A 4K video frame is typically 3840 x 2160 pixels, which is 4 times the resolution of standard 1080p high definition video.
504 Loan
A long-term, fixed-rate loan offered by the U.S. Small Business Administration to help small businesses finance major assets like equipment and real estate. A 504 loan requires 10% down from the borrower, with the remaining amount financed by a bank or credit union (typically 50%) and a Certified Development Company (typically 40%).
83(B) Election
An election that allows startup employees who receive restricted stock grants to elect to pay income tax on the stock’s value when first granted rather than when it vests. For example, an employee granted 1,000 shares of stock worth $1 per share could pay tax on $1,000 income now rather than on the future value when restrictions lift.
8K Video
Video with a horizontal resolution of approximately 8,000 pixels, typically 7680 x 4320 pixels which is 4 times the resolution of 4K video and 16 times the resolution of standard 1080p high definition video.
A/B Testing
An experiment showing two variants of a web page, ad, or other marketing asset to different user groups at the same time and measuring which one leads to better outcomes like more clicks or sales. For example, an ecommerce site could test version A of a product page headline against version B to see if one headline generates more purchases.
Accelerated Cost Recovery System (ACRS)
A tax depreciation method implemented in 1981 that allowed companies to depreciate assets over shorter time periods compared to asset useful lives, resulting in larger depreciation expenses and tax deductions in early years. For example, an asset that would normally be depreciated over 10 years could be fully depreciated in 5 years under ACRS.
Accounting
The process of recording, summarizing, analyzing, and reporting financial transactions of a business to provide accurate financial statements and information for management decision-making and external reporting. For example, a clothing retailer uses accounting to track sales and expenses in order to prepare financial statements to analyze profitability.
Accounting Cost
The recorded expenditure for goods and services used in the production process, such as the cost of raw materials and labor. For example, a manufacturer would include the invoice price of parts purchased from a supplier as an accounting cost.
Accounting Period
An accounting period is an established timeframe, such as a week, month, quarter, or year, during which a company’s financial transactions are recorded, aggregated, and analyzed to produce financial statements. For example, a company may use calendar quarters as its accounting periods to compile quarterly financial reports.
Accounts Payable
Money a company owes its suppliers and vendors for goods or services purchased on credit, recorded as a liability on the balance sheet until paid. For example, a retailer would have an accounts payable balance for inventory purchased from a wholesaler that has not yet been paid for.
Accounts Receivable
The amount of money owed to a company by its customers for goods or services delivered but not yet paid for, recorded as an asset on the balance sheet. For example, if a retailer sells merchandise to a customer on credit, the amount the customer owes is considered an account receivable until the bill is paid.
Accredited Investor
An individual or entity that meets certain income, net worth, governance status, or professional experience requirements set by regulators and is therefore eligible to participate in unregistered private securities offerings that have high risks but also the potential for significant returns. For example, an individual accredited investor may have earned income over $200,000 or net worth over $1 million and can invest in a private equity fund not registered with the SEC.
Accrual-Based Accounting
The recording of revenue when earned and expenses when incurred regardless of when cash is exchanged, following the matching principle to recognize related revenue and expenses in the same reporting period. For example, a company delivers services to a client but has not yet received payment, so it records the amount owed as accrued revenue.
Accrued Interest
The amount of interest that has accumulated on a loan or other financial instrument since the principal investment or since the last payment, but has not yet been paid out. For example, if an investor owns a bond that pays 5% annual interest semiannually, after 3 months they will have accrued 1.25% interest that has not yet been paid.
Accrued Liabilities and Expenses
Costs incurred by a company for goods and services received but not yet paid for, recorded as liabilities on the balance sheet until payment occurs. For example, a retailer that buys inventory on credit terms has an accrued liability for the cost of goods received until the supplier invoice is paid.
Accumulated Depreciation
The total amount of depreciation expense that has been allocated against an asset since it was acquired, recorded as a contra asset account that offsets the asset’s value on the balance sheet. For example, if a piece of equipment originally cost $100,000 and has been depreciated $30,000 over 5 years, its accumulated depreciation is $30,000.
Acid-Test Ratio
A comparison of the sum of a company’s cash, cash equivalents, and accounts receivable to its current liabilities to evaluate its ability to pay off short-term obligations without relying on inventory or other assets. For example, a company with $100,000 in cash and accounts receivable and $80,000 in current liabilities would have an acid-test ratio of 1.25, indicating it can cover its near-term obligations.
Acquisition
A business transaction in which one company purchases a controlling interest in another company, often by buying most or all of its shares or assets, to gain control and leverage the target company’s competitive strengths. For example, Amazon acquired Whole Foods in 2017 for $13.7 billion to expand into the grocery market.
Adjusted Premium
An insurance policy premium that is modified over time from its initial price based on pre-defined conditions in the policy contract, such as changes in risk, expenses, or market returns on investments. For example, a life insurance policy may have an adjustable premium that increases as a policyholder ages to reflect higher mortality risk.
Administrative Services Organization (ASO)
An arrangement where a company outsources administration of certain employee services like payroll, benefits, and HR tasks to a third-party provider but retains control and liability for plan funding, terms, and decisions. For example, an employer could partner with an ASO to manage health plan enrollment and claims processing but the employer still directly pays for the plan expenses.
Advance Payment
Money paid ahead of its normal due date for goods or services not yet received, providing the supplier assurance and working capital or as an early payment against a future liability. For example, a customer might pay a retailer the full amount for a custom item in advance to cover production costs before taking delivery.
Advisory Board
A group of external experts who provide strategic advice and insights to a company’s leadership team to aid in decision making, though they do not have formal governing authority. For example, a startup could establish an advisory board of seasoned entrepreneurs to advise the founders on key issues like fundraising, marketing, and product development.
Affiliate Marketing
An arrangement where an online publisher promotes a company’s products and earns a commission for sales generated through their marketing efforts, such as an influencer sharing affiliate links to an ecommerce store on their blog. For example, a YouTuber might promote a VPN service on their channel and receive a percentage of subscription fees from users who sign up via the YouTuber’s unique referral link.
Aggregate Limit
The maximum amount an insurance company will pay out in total for all covered claims over a set period, typically one year, as stipulated in the policy contract. For example, if a business has a $2 million annual aggregate limit on its liability policy and experiences $3 million in covered claims that year, the insurer will pay only $2 million.
Aggressive Timeline
An extremely tight project schedule with little room for delays, requiring dedicated effort and often overtime work to have any chance of meeting specified deadlines. For example, a software company may set an aggressive 3-month timeline for developing a complex app.
Agile
A set of software development methodologies emphasizing iterative development, collaboration, and flexibility to deliver products faster through cross-functional teams and continuous improvement. For example, an agile team delivers new software capabilities every 2 weeks in a cyclical process of planning, building, testing, feedback, and refinement.
Analyst Relations
The strategic communication and engagement between a company and industry analysts at independent research firms to provide insights that influence analyst perceptions, coverage, and recommendations. For example, a software firm might regularly brief a Gartner analyst on product updates so the analyst has current information to make informed evaluations.
Analytics
The systematic analysis of data to discover meaningful patterns and insights for data-driven decision making, such as a retailer using sales data analytics to optimize prices and inventory. For example, a bank may analyze past account transactions to identify spending patterns and tailor financial product offerings.
Angel Groups
Organized networks of angel investors who pool their capital to make investments in early-stage startups, providing funding as well as advice and access to the angels’ connections. For example, an entrepreneur could pitch their startup to an angel group and secure a $500,000 seed investment from the group’s members.
Angel Investor
A high-net-worth individual who provides capital, often in exchange for equity, to startups and small businesses in the early stages of development, providing funds as well as advice and connections to aid the business. For example, an entrepreneur pitching a technology startup could secure an investment of $250,000 from an angel investor interested in the idea.
Annual Franchise Tax
An annual fee imposed by some states on corporations and other business entities like LLCs for the privilege of being registered or organized in that state. For example, California charges most registered business entities an $800 minimum franchise tax each year.
Appraisal
An assessment, usually by an authorized, qualified person, of the market value of a property, business, antique, or other asset, conducted for purposes such as a sale, insurance, or taxation. For example, a homebuyer will typically get an appraisal from a licensed real estate appraiser to confirm the purchase price reflects the property’s actual market value before finalizing a mortgage.
Articles of Incorporation
The legal documents filed with a state government to establish a business as a corporation, outlining key details like the name, address, purpose, capital structure, and governance. For example, an entrepreneur starting a new retail business would file articles of incorporation with the state to register it as a corporation before opening.
Articles of Organization
The legal documents filed with a state government to establish a business as a limited liability company (LLC), outlining key details like the name, address, members, management structure, and purpose of the LLC. For example, an entrepreneur starting a new retail business would file articles of organization with the state to formally register it as an LLC before opening.
Artificial Intelligence (AI)
Computer systems that perform tasks and make decisions that would normally require human intelligence and perception, such as visual perception, speech recognition, and language translation. For example, AI powers the computer vision that allows a car to navigate streets autonomously.
Asset Purchase
The acquisition of a business through buying some or all of its assets rather than purchasing its stock; for example, a company could decide to only purchase the equipment, inventory, customer lists, and real estate of another company while not acquiring its liabilities or legal entity structure.
Assumed Business Name
Also known as a DBA (doing business as). A trade name under which a business operates instead of its legal name, requiring registration with state or local government. For example, an individual owning a sole proprietorship named “John’s Plumbing” could register to do business as “JP Plumbing Services”.
Augmented Reality
Technology that overlays digital information and images onto the real-world environment as perceived through a device screen or AR glasses, enhancing the physical world with computer-generated sensory input like graphics, audio, video, and GPS data. For example, an AR mobile app can display interactive 3D models of furniture within a room when viewed through a phone camera.
Authoritative Copy
The single, unique, identifiable, and unalterable original version of a signed electronic document that is designated by the parties to a transaction as the controlling reference copy. For example, the vaulted e-signed contract held by a lender would be considered the authoritative copy that determines rights related to that agreement.
Automated Clearing House (ACH)
An electronic network that processes batches of credit and debit transactions between banks, allowing money to be transferred efficiently between accounts for purposes like payroll, bill payments, and online transfers. For example, when an employer uses direct deposit for employee paychecks, the money moves from the company’s bank account to the employees’ accounts via the ACH system.
Automated Document Generation
Software that automatically creates, formats, personalizes, and delivers documents by merging data with document templates. For example, a loan officer could use an automated document generation system to instantly produce customized loan contracts for applicants by drawing data from their application records.
Back Office
The administrative and support functions of a business, such as IT, accounting, HR, that assist the customer-facing front office but have no direct interactions with clients. For example, a bank’s back office handles processes like record-keeping, compliance reporting, settlements, and other behind-the-scenes work to support client-facing bankers.
Backsourcing
The process of bringing previously outsourced business operations, functions, or services back in-house, such as a company deciding to re-establish internal IT systems after having outsourced them to vendors. For example, a bank might backsource call center services to improve customer experience by regaining direct control over that touchpoint.
Bad Debt
Accounts receivable or outstanding loans that are deemed uncollectible, requiring the creditor to write them off as a loss or expense on its financial statements. For example, if a retailer has $50,000 in unpaid customer invoices that are 180 days past due date with no payments made, it would likely classify some or all of that amount as bad debt.
BAIL Team
A group of key professionals – a banker, accountant, insurance agent, and lawyer – that entrepreneurs assemble to provide expert guidance on critical financial, legal, operational, and risk management aspects when starting or running a business. For example, a small business owner could consult their BAIL team for advice on choosing a business banking relationship, managing finances, obtaining proper insurance coverage, and establishing legal entity structure.
Balance Sheet
A financial statement that summarizes a company’s assets, liabilities, and shareholders’ equity at a specific point in time to provide a snapshot of its financial position and health. For example, a balance sheet could show a retailer has $2 million in inventory assets, $1 million in accounts payable, and $5 million in total shareholders’ equity on December 31, 2023.
Bank Capital
The equity capital and disclosed reserves held by a bank to absorb losses, act as a buffer against risk, and provide funding for growth, measured in relation to total assets and risk-weighted assets. For example, regulators may require banks to maintain a total capital ratio of at least 8% of risk-weighted assets.
Benchmarking
The process of measuring and comparing an organization’s business processes, products, or services against strict standards, best-in-class examples, or industry leaders to evaluate performance and identify areas for improvement. For example, a manufacturer might benchmark production efficiency against high-performing factories to adopt best practices that increase output.
Bill of Sale
A legal document that records the transfer of ownership of an item, such as a vehicle, from a seller to a buyer in exchange for money or other compensation. For example, when selling a used car, the seller would provide the buyer a bill of sale as proof of purchase and to formally document that ownership of the car changed hands.
Bitcoin
A decentralized digital currency, created in 2009, that utilizes blockchain technology to enable peer-to-peer online transactions between users without the need for banks or other third parties. For example, a user can send bitcoin directly to a recipient’s digital wallet to pay for goods or services without any intermediary involvement.
Blockchain
A decentralized digital ledger that records transactions in blocks of data that are linked and secured using cryptography, enabling peer-to-peer transfer of assets like cryptocurrencies without an intermediary. For example, the Bitcoin network relies on blockchain technology to validate and record every bitcoin transaction that occurs.
Board of Directors
A group of individuals elected by a company’s shareholders to represent their interests and provide oversight, guidance, and strategic advice to management on behalf of investors. For example, a public company’s board is responsible for governance duties like selecting the CEO, setting executive compensation, evaluating organizational performance, and approving major corporate decisions.
Bootstrapping
Starting a business with minimal capital and relying instead on personal finances, sweat equity, operating revenue, or other creative financing solutions to fund operations and growth. For example, the founder of a startup could bootstrap the business by maxing out credit cards, foregoing salary, minimizing overhead, and plowing early profits back into the company to finance expansion.
Bottom of Funnel (BOFU)
The final stage in the marketing/sales funnel when a lead is close to making a purchase decision, requiring content focused on converting leads into sales such as pricing, promotions, demonstrations, and customer testimonials. For example, a free trial of a SaaS platform would be considered BOFU content aimed at turning highly qualified leads into paying customers.
Bottom-Dollar Scam
A fraudulent scheme that targets struggling individuals by falsely promising opportunities to earn substantial income through activities like stuffing envelopes, processing payments, or mortgage assistance. For example, a con artist may convince an unemployed person to pay an upfront fee to secure a high-paying work-from-home job that does not actually exist.
Bounce Rate
The percentage of website visitors who leave a page without any further interaction such as clicking links or scrolling, only viewing a single page during their session on the site. For example, if 100 users visited a website’s homepage and 10 left without engaging further, the homepage bounce rate would be 10%.
Brand
The distinctive identity of a specific product, service, or business, which consumers associate with particular benefits, values, and personality, as conveyed through names, logos, packaging, marketing, and customer experiences. For example, when you think of the Nike swoosh, you associate it with athletic performance, innovation, and competitive edge.
Branding
The process of creating a distinctive identity for a product, business, or service in the marketplace, primarily through identifying and consistently communicating its unique attributes, values, and personality through visuals, messaging, and customer experience. For example, when you see the Starbucks mermaid logo, you immediately recognize the brand and associate it with key qualities.
Budget
A financial plan that estimates expected income and expenses over a defined period of time, typically for an individual, family, organization, or government, to guide spending and saving decisions. For example, a monthly household budget balances projected income like salaries against fixed costs like rent plus variable expenses like groceries and entertainment.
Business and Personal Property Coverage Form (BPPCF)
An insurance policy that provides protection against damage to buildings one owns and personal property housed within, such as office equipment and inventory. For example, a BPPCF policy would cover a retailer in the event of a fire that destroys the building and merchandise.
Business Architecture
A blueprint that depicts an organization’s structure, key business processes, information flows, systems, and infrastructure and how they align to business strategy and goals. For example, a business architecture may map capabilities against business units and systems to identify gaps in supporting planned strategic initiatives.
Business Automation
The use of technology such as artificial intelligence, robotic process automation, and other software tools to streamline and automate repetitive, rules-based business processes and workflows to improve operational efficiency. For example, a retailer could implement automated inventory tracking and reordering processes to keep shelves stocked.
Business Banking
The financial products and services that banks and financial institutions offer specifically to business clients, including services like business loans and lines of credit, business checking and savings accounts, merchant services, payroll, and cash management solutions tailored to companies. For example, a retail business could leverage business banking to access capital financing, efficiently collect customer payments, and seamlessly manage cash flow.
Business Ethics
The moral principles and standards that guide behaviors and practices within a company, providing a basic level of trust between businesses and consumers. For example, a company adhering to business ethics would ensure truth in advertising, fair treatment of employees, and socially responsible supply chain management.
Business License
A legal permit issued by a government agency that authorizes a company or individual to legally operate a business, such as a state requiring local retail stores to hold a valid business license to conduct sales. For example, a contractor must obtain a business license from their county before providing services to clients in that region.
Business Process Management (BPM)
A disciplined approach to identify, analyze, improve, and automate business processes such as order fulfillment or customer service interactions to enhance efficiency, reduce costs, and achieve organizational goals. For example, a company could use BPM to optimize its supplier onboarding process by eliminating redundant approvals to accelerate procurement cycles.
Business to Business (B2B)
Commerce transactions conducted between businesses, such as between a manufacturer and wholesaler or wholesaler and retailer, rather than between a business and individual consumer. For example, a tire manufacturer sells directly to an auto maker for use on new vehicles versus selling individual tires at retail to the car-buying public.
Business to Customer (B2C)
Commerce transactions conducted between individual consumers and businesses directly selling products or services, often through ecommerce channels, rather than transactions between two businesses. For example, an online retailer selling merchandise via its website to individual shoppers operates on a B2C model.
Business to Government (B2G)
A business model where companies sell products, services, or information to government agencies at the federal, state, or local levels, such as an IT services firm contracting with a city government to provide computer support. For example, a construction company could secure a government contract to build a new highway.
Business Transformation
Making major, strategic changes across people, processes, and technology to fundamentally improve operational and financial performance as well as competitive positioning. For example, a retailer could pursue a business transformation to enable seamless omnichannel commerce through investments in supply chain integration, data analytics capabilities, and customer-centric organizational realignment.
Buyer Persona
A semi-fictional, research-based profile depicting an ideal target customer for a product or service, defined by attributes like demographics, behaviors, values, and goals. For example, a buyer persona for a yoga studio might be “Amanda”, a 35-year-old working professional and mother of two looking for stress relief through yoga classes near her suburban home.
C Corporation
A legal business structure where the corporation is taxed separately from its owners, called shareholders, enabling shareholders to have limited liability but resulting in double taxation of profits. For example, a retail clothing business could incorporate as a C corporation to sell shares of company stock while shielding personal assets from potential business debts.
Cafeteria Plan
An employer-sponsored benefit program that allows employees to select from tax-advantaged insurance, health savings, dependent care, and other pretax flexible spending accounts, funded through voluntary payroll deductions. For example, an employee could use a cafeteria plan to pay health insurance premiums pretax and set aside pretax dollars in a flexible spending account for out-of-pocket medical expenses.
Capital
The financial assets – cash, investments, or other economic resources – that a company or individual has available to fund operations, start or grow a business, or generate additional income. For example, a startup could use venture capital funding from investors to purchase equipment, hire employees, and cover operating expenses as it launches its business.
Capital Call
A legal demand issued to investors who have committed capital to an investment fund to contribute a portion of their promised investment funds when needed for the fund to finance new deals or cover expenses. For example, a private equity firm could issue a capital call to limited partners, requiring them to remit 20% of their committed capital within 30 days to finance the acquisition of a new company.
Capital Contributions
The cash, assets, or other value provided to a business entity by owners, investors, or partners to increase their equity stake, as distinguished from investments made in exchange for stock shares. For example, the founding partners of a new LLC could make capital contributions of cash and equipment to help initially fund and launch the business.
Capital Gains Tax
Taxes imposed on the profits earned when an investor sells an asset like stocks, bonds, real estate, or other investment property for more than the purchase price; for example, if you buy 100 shares of a stock for $10 per share and later sell them for $15 per share, you would owe capital gains tax on the $500 profit.
Capitalization Table
A spreadsheet or table outlining a company’s ownership structure by listing all equity security holders, their ownership percentages, and key details like investment amounts – for example, a startup’s cap table would show its founders owning 80% of stock, venture investors owning 15%, and employee stock option holders owning 5%.
Captive Funds
Privately managed investment funds that are exclusively available to a restricted group of investors, usually employees of an organization or investors affiliated with the firm managing the captive fund, which provides investment management services solely for that select group. For example, a corporation could establish a captive fund for employees to invest portions of their 401k retirement savings.
Cash Flow
The net amount of cash and cash equivalents being transferred into and out of a business, representing how much liquid cash is generated, available, and used by the business during a defined period. For example, a retailer might have a positive cash flow for the month from collecting revenues from sales while paying less out for inventory, salaries, and other expenses.
Cash-Based Accounting
An accounting method that recognizes revenues and expenses only when cash is actually received or paid out, rather than when transactions occur or obligations arise, providing a snapshot of cash flow. For example, a retailer using cash-based accounting would record a sale when the payment clears rather than when the customer purchases an item.
Ceding Company
An insurance company that transfers or “cedes” all or part of its insurance risks to a reinsurance company to limit its liability, reduce capital requirements, and protect against catastrophic losses, while the reinsurer accepts the risks in exchange for part of the premiums. For example, an insurer with a large portfolio of coastal home policies may cede some hurricane risks to spread the financial impact.
Change Management
The systematic approach of transitioning individuals, teams, and organizations to a desired future state through methods that enable stakeholder adoption, engagement, and readiness for change. For example, a company merging with another can use change management techniques like leadership alignment, training, and two-way communication to facilitate an orderly integration.
Chapter 11
A form of bankruptcy that allows companies to reorganize their business affairs, debts, and assets to continue operating while working out a debt repayment plan under court supervision. For example, an airline company might file for Chapter 11 to restructure debts and contracts with creditors while still flying airplanes and serving passengers.
Chapter 7
A legal process that liquidates eligible debtors’ unprotected assets to pay creditors, discharging most remaining debts such as credit cards, medical bills, and personal loans. For example, an individual struggling with excessive credit card debt may file for Chapter 7 bankruptcy to sell some assets and clear away remaining unpaid card balances they cannot afford.
Chief Executive Office (CEO)
The highest-ranking executive in a company, ultimately responsible for all managerial decisions, overseeing operations and resources to pursue strategic initiatives set by the board of directors. For example, the CEO of a major automaker would set the vision and direction for the company, lead key initiatives around developing new technologies, and make decisions regarding production, marketing, financial matters, and other areas.
Churn
The rate at which customers stop doing business or end their relationship with a company over a given period of time, such as 5% of subscribers cancelling their monthly software service every month. Companies analyze churn rates to evaluate customer satisfaction, retention efforts, and overall business health.
Clawback
A contractual provision requiring an employee to return previously paid compensation to the employer under certain circumstances, such as a bank executive being obligated to repay a bonus if it was found that the bonus was calculated based on inaccurate financial statements. Clawback provisions are typically included in financial industry employment contracts to discourage misconduct and recoup funds when performance metrics driving payouts turn out to have been misstated.
Click Through Rate (CTR)
The ratio of users who click on a specific link, advertisement, or call-to-action compared to the number of total users who view or are served that link or advertisement expressed as a percentage. For example, if an ad campaign received 100 impressions and 5 people clicked on the ad, the resulting CTR would be 5%.
Clickwrap Transaction Platforms (CTP)
Purpose-built systems to help companies securely manage high volumes of online transactions by enabling customizable digital terms and conditions that users accept with a click rather than a signature. For example, an eCommerce retailer could use a CTP to present buyers with sales terms requiring a click to agree before each purchase.
Cloud Computing
On demand delivery of IT resources like compute, storage, applications, and services over the internet via cloud platforms, allowing users to access technology services without building out physical infrastructure. For example, companies can use public clouds from vendors like AWS instead of owning their own servers.
Collaboration
Two or more people working together cooperatively towards a common goal, such as authors collaborating on a book or scientists collaborating on research. For example, software developers may collaborate with designers and product managers to build a mobile app.
Commercialization
The process of introducing a new product or service into the marketplace through activities like production, marketing, sales and distribution with the aim of generating revenue and achieving widespread commercial adoption. For example, a bakery known for its popular cinnamon rolls could commercialize the product by packaging and selling it through local grocery stores to reach more customers.
Common Stock
Partial ownership in a corporation, entitling shareholders to voting rights, potential dividends from profits, and residual claims on corporate assets after creditors in case of liquidation. For example, an investor who purchases shares of Apple common stock becomes a partial owner of Apple Inc. with rights to vote on board directors and certain policies.
Competitive Intelligence (CI)
The systematic and ethical collection and analysis of information regarding competitors’ offerings, positioning, and market strategies to gain actionable insights for improving an organization’s competitive advantage and strategic decision making. For example, a retailer could leverage competitive intelligence to adjust its pricing and product assortments based on analyses of competitors’ online promotions and inventory levels.
Content Experience Platform (CXP)
A centralized system to create, manage and distribute content across channels while analyzing performance to optimize and personalize engaging omnichannel digital experiences for each user. For example, a CXP allows a retailer to deliver targeted product recommendations and promotions across its website, mobile app, emails, and in-store interactions based on individual shopper data and behaviors.
Content Management System (CMS)
Software that provides tools to create, edit, organize, and publish content on websites without needing to write code. For example, WordPress is a popular CMS used by bloggers and businesses to easily build websites and manage their content.
Content Marketing
A strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience in order to drive profitable customer action. For example, a home services company could use a blog, videos, and guides to provide homeowners with tips for DIY projects and home maintenance.
Conversion Rate Optimization (CRO)
The process of increasing the percentage of visitors to a website who take a desired action, like making a purchase or signing up for a mailing list, through methods like improving page design and content. For example, an e-commerce site could run A/B tests to optimize checkout pages resulting in more customers completing purchases.
Convertible Debt
A type of financing where a company borrows money that can later convert into an equity investment at the option of the investor, enabling startups to raise funds more quickly by postponing valuation negotiations until a subsequent round. For example, a startup could obtain convertible debt from an angel investor that would convert to equity shares when the startup pursues venture capital funding.
Copywriting
Clear, persuasive text like advertisements, websites, emails, or social media posts that convinces readers to take a specific action, such as making a purchase, signing up for a newsletter, or contacting a business. For example, an eCommerce company hires a copywriter to write product descriptions that highlight benefits and convince shoppers to add items to their online carts.
Core Competency
A distinctive capability, expertise, or strategic advantage that results from a unique set of skills or production techniques that a company masters and leverages to gain an edge over competitors. For example, Honda’s core competency in efficient engine design and manufacturing allows it to produce affordable, high-performance vehicles.
Corporate Governance
The system of rules, policies, and procedures used to direct and manage a company, balancing the interests of various stakeholders like shareholders, management, customers, and the community. For example, a company’s board of directors oversees corporate governance matters like executive compensation, audits, shareholder rights, and strategic decision making.
Cost Per Lead (CPL)
The average cost of generating a single sales lead through paid advertising or other marketing campaigns calculated by dividing total lead generation expenses by the number of leads acquired. For example, if a company spends $5,000 on ads that generate 50 sales leads, their cost per lead is $100.
Cost-Benefit Analysis
A systematic process of calculating and comparing the costs and benefits associated with an action to determine if the benefits outweigh the costs and by how much. For example, a company might use cost-benefit analysis to evaluate the purchase of new equipment by comparing increased productivity benefits against the machine’s cost.
Cost-Cutting Initiatives
Strategic measures taken by a company to reduce expenses and maximize profits without compromising quality or output, such as by streamlining operations, eliminating waste, leveraging technology, and improving efficiency. For example, a manufacturer could pursue cost-cutting by investing in automation to reduce labor costs while maintaining production levels.
Crowdfunding
Raising money for a new business venture or project by soliciting small dollar contributions from a large number of people, typically via internet platforms; for example, a startup could launch a Kickstarter campaign offering t-shirts or free products in exchange for donations to help fund the development of their new wearable technology product.
Crowdsourcing
The practice of obtaining services, ideas, content, or funding by soliciting contributions from a large group of people, especially an online community, rather than from traditional employees or suppliers. For example, Wikipedia relies on crowdsourcing since articles are written and edited by Internet users from around the world instead of a dedicated writing staff.
Cryptocurrency
A digital asset that functions as a medium of exchange, using cryptography to secure transactions and control the creation of additional currency units; for example, Bitcoin relies on decentralized blockchain ledgers to verify transfers of coins between users.
Customer Acquisition Cost (CAC)
The total average cost a company incurs to acquire a new customer, calculated by dividing all sales and marketing expenses over a period by the number of new customers obtained during that time. For example, if a company spent $30,000 last month on sales and marketing and acquired 1,500 new customers, their CAC would be $20 ($30,000/1,500).
Customer Journey Mapping (CJM)
The process of visually depicting every touchpoint along a customer’s interaction with a product, service or brand over time and across channels to uncover pain points and opportunities to improve engagement. For example, an eCommerce company could create a CJM to analyze the path shoppers take from initial website visit to making a purchase.
Customer Relationship Management (CRM)
The strategies, technologies, and processes companies use to manage current and potential customer interactions through the collection, storage, and analysis of customer data to improve business relationships. For example, a retailer could use a CRM system to track purchase history and online behaviors to provide personalized recommendations and offers to customers.
Cybersecurity
The technologies, processes, and practices designed to protect networks, devices, programs and data from attack, damage or unauthorized access, such as installing antivirus software to prevent malware infections that steal user data and credentials. For example, multi-factor authentication helps prevent unauthorized users from accessing an online account by requiring an additional login step beyond just a password.
Deal Flow
The rate at which potential investment opportunities and proposals are presented to a firm or investor for consideration; for example, a venture capital firm may receive hundreds of startup business plans per month, representing its deal flow from which it will select and fund the most promising prospects.
Debt Financing
When a firm raises capital by selling fixed-income securities like bonds or taking out loans that must be repaid over time with interest, enabling access to capital without giving up ownership stakes. For example, a company may issue corporate bonds to investors to fund the expansion of a new production facility.
Decision Management
The discipline of using data, predictive models, and business rules to optimize and automate high-volume operational decisions within business processes to improve efficiencies and drive better outcomes. For example, an insurance company could leverage decision management to automatically process low-risk claims while routing complex claims to agents for manual review.
Deep Learning
A type of machine learning that trains artificial neural networks, algorithms inspired by the human brain, to perform tasks like image recognition, natural language processing, and prediction by exposing multilayered models to vast amounts of data. For example, deep learning enables driverless cars to recognize traffic signs and respond appropriately.
Defeasance
A contractual provision that allows a borrower to be released from a collateralized loan obligation by replacing the collateral, usually real estate or other property, with government bonds whose payments cover remaining principal and interest. For example, a commercial real estate investor can use the defeasance clause in their mortgage agreement to sell a property by substituting Treasury securities for the property as loan collateral.
Demographics
Statistical data and characteristics such as age, gender, income, race, and location that describe a population. For example, a marketing firm could analyze customer demographics like age brackets and household income levels to define target audiences for a product.
Digital Marketing
The use of digital technologies and media such as websites, social media, emails, apps and ads to promote and sell products and services to consumers. For example, an online retailer can create targeted ads on social platforms to drive traffic to its ecommerce site.
Digital Transaction Management (DTM)
Cloud-based platforms that enable organizations to digitally create, sign, share, manage and store documents and data related to transactions between parties. For example, a DTM system could allow an insurance company to provide policy documents to customers online for digital signature.
Direct Marketing
Promotional methods like email, mail, texts, and calls that communicate directly with target customers to generate a specific response or transaction without a third-party intermediary. For example, an online retailer could send existing customers an email with coupon codes and product recommendations based on past purchases.
Disregarded Entity
A single-owner business, like a limited liability company (LLC) with one member, that the IRS does not treat as a separate taxable entity from its owner, allowing income and deductions to be reported directly on the owner’s tax return. For example, a freelancer could form an LLC that would be classified by the IRS as a disregarded entity, so the freelancer does not need to file a separate business tax return.
Dividends
Periodic cash or stock payments distributed to shareholders of a profitable company representing their portion of earnings, such as a corporation paying quarterly dividends of $1 per share. Dividends provide income to shareholders from company profits, though they are not guaranteed payouts.
Downsizing
The permanent reduction of a company’s workforce through eliminating positions, terminating employees, offering buyouts, or closing facilities/divisions to cut costs and improve efficiency. For example, a manufacturer facing declining revenues may downsize by closing a production plant and laying off a portion of factory workers.
E-2 Visa
A nonimmigrant visa allowing citizens of treaty countries to reside in the U.S. for up to 5 years to oversee and develop a substantial business investment they have made, such as a UK investor spending over $100,000 to open a restaurant franchise in America and needing to direct its operations.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
A company’s earnings before accounting for interest, taxes, depreciation, and amortization expenses, used as an indicator of operating profitability and cash flow generation. For example, if a company has $2 million in net income, $500,000 in interest and tax expenses, and $1 million in depreciation and amortization, its EBITDA would be $3.5 million.
eCommerce
The buying and selling of goods and services over the internet, such as customers purchasing products from an online retailer and having them shipped directly to their home. For example, Amazon.com allows consumers to buy everything from books to lawn furniture through its website and mobile app.
Elevator Pitch
A brief, persuasive speech lasting 30-60 seconds that quickly summarizes a product, service, organization, or person, typically given to potential investors or partners to spark interest for follow-up; for example, an entrepreneur could give an elevator pitch to a venture capitalist describing their company’s offerings and growth potential in the time it takes to ride an elevator.
Email Service Provider
A company offering technology platforms and services to help organizations manage email marketing campaigns, including designing templates, building subscriber lists, sending bulk emails, and tracking performance. For example, Mailchimp allows businesses to create and send marketing emails to customer lists while providing data on open and click rates.
Employer Identification Number (EIN)
A unique nine-digit number assigned by the IRS to business entities for identification and tax reporting purposes; for example, companies use their EIN to file business tax returns, open bank accounts, apply for licenses, and manage payroll.
End-To-End Process
The complete series of activities, tasks and workflows required to deliver a product, service or solution from initiation to completion, such as a manufacturer handling raw materials procurement through production to final delivery of goods to the end customer. For example, an insurance provider’s end-to-end claims process spans taking initial loss reports through issuing payments.
Enterprise Architecture
A strategic planning practice focused on aligning technology systems and business processes with an organization’s objectives and strategy to improve efficiency, drive growth, manage complexity, and enable innovation. For example, an EA roadmap could guide a retailer undergoing digital transformation by connecting initiatives around customer data analytics, omnichannel experiences, and cloud adoption to core goals around improving customer loyalty and operational agility over 3 years.
Enterprise Resource Planning
An integrated software system used by organizations to manage day-to-day business activities such as accounting, procurement, project management, and supply chain operations through automated processes and shared data on a centralized platform. For example, a manufacturing company could implement an ERP system to connect data across its finance, inventory, production, and sales departments to improve efficiency and reporting.
Entrepreneur
An individual who creates and runs an innovative business, identifying opportunities and taking risks like using their own money or resources to capitalize on them to provide new products or services for potential profit. For example, Steve Jobs co-founded Apple in his parents’ garage to sell Wozniak’s personal computer design and grew it into the world’s most valuable publicly-traded company.
Equity Financing
Raising investment capital by selling partial ownership stakes in a business to investors in exchange for funding, such as a startup selling shares in itself to venture capitalists who provide growth financing without taking on debt. Equity investors become part owners and often take an active interest while assuming the risk of potential losses.
Evergreen
Products, services, or activities that have sustained relevance, usage, and profitability over the long term rather than being tied to temporary trends or events. For example, consumer staples like food and household products can be considered evergreen businesses given the constant demand from customers regardless of economic conditions.
Every Door Direct Mail (EDDM)
A service offered by the U.S. Postal Service that enables organizations to reach every home and business within a targeted area by mailing postcards, letters, brochures, or flyers without needing mailing lists or individual addresses. For example, a local restaurant could use EDDM to mail menus to all households in nearby zip codes to attract new customers.
Exit Strategy
A contingency plan executed by a business owner, investor, or other stakeholder spelling out how and when they intend to liquidate their position or ownership share in an asset, such as selling a business to a buyer. For example, an entrepreneur could plan an exit strategy to sell their startup through an initial public offering (IPO) once it reaches a certain valuation milestone.
Fair Market Value
The estimated price that an asset would sell for in an open and competitive market between a willing buyer and seller, both knowledgeable about the asset, acting in their own best interests, and not under any pressure to buy or sell. For example, the fair market value of a house could be determined by comparing recent selling prices of similar homes in the same area to arrive at a reasonable market price.
Fictitious Name
A made-up business name that is different than the legal name of the business entity, individual owner, or partners, used for conducting commercial activities, and requires registration with state or local authorities. For example, John Smith as a sole proprietor could register to do business as “Smith’s Automotive” rather than using his personal name.
Fintech
Software, applications, and technologies that improve and automate financial services delivery by providing innovative digital solutions for payments, investing, fundraising, loans, and other offerings. For example, mobile payment services like Venmo offer peer-to-peer money transfers without traditional banking intermediaries.
Fiscal Year
A 12-month accounting period used by companies and governments for financial reporting, budgeting, and tax purposes, not necessarily starting January 1; for example, the U.S. federal government’s fiscal year runs from October 1 to September 30.
Fixed Costs
Business expenses that remain unchanged irrespective of the company’s production or sales levels, such as rent, insurance premiums, loan interest, and salaries. For example, a manufacturer must continue paying the lease on its factory space even if it halts production for a period of time.
Foreign Tax Credit
A dollar-for-dollar reduction in U.S. income tax liability available to taxpayers who paid income tax to a foreign country, in order to avoid double taxation on foreign earnings. For example, if a U.S. citizen residing in the UK paid $500 in British income taxes, they could claim a $500 credit on their U.S. return to offset taxes owed to the IRS on the same $500 of income.
Form 2553
An IRS form filed by a corporation or LLC seeking to elect S corporation status for federal income tax purposes, which enables pass-through taxation; for example, an LLC taxed as a partnership could file Form 2553 so that its income gets reported directly on the owners’ tax returns rather than the entity paying taxes itself.
Franchise
A business model where an existing company (the franchisor) grants independent operators (the franchisees) the rights to market and sell its products or services in exchange for fees, royalties, and conforming to the franchisor’s standards. For example, McDonald’s allows franchisees to use its brand name, food products, and proprietary processes to open and run McDonald’s restaurants in approved locations.
Freelancing
Professional work done independently on a per-job or temporary basis across various clients rather than being permanently employed by one company or organization. For example, a freelance writer may write articles for multiple magazines and websites as opposed to working exclusively for one publication.
Gamification
The use of game design elements like scoring, rewards, leaderboards, and badges in non-game environments such as websites, mobile apps, marketing campaigns, training programs, and work processes to drive participation, engagement, loyalty, and desired behaviors. For example, an ecommerce retailer could add gamification features like points and virtual badges to its website to encourage customers to write more product reviews.
General Data Protection Regulation (GDPR)
A European privacy law governing how companies protect EU citizens’ personal data, such as names, emails, locations, IP addresses, or cultural and health details, and requires organizational transparency, lawful data processing, and robust security. For example, companies must detail their data usage policies, get affirmative consent to collect data, and allow users to access their stored personal information.
Gig Economy
A labor market fueled by flexible, temporary, or freelance jobs, often involving connecting workers with clients or customers via digital platforms like apps or websites. For example, rideshare drivers get matched with passengers through a company’s mobile app and get paid per ride.
Golden Handcuffs
Financial incentives like bonuses, stock options, pensions, or other benefits used by employers to discourage valued employees from leaving their jobs. For example, a tech firm could grant an engineer restricted stock units over 4 years to incentivize them to remain at the company throughout that period to realize the full value.
Golden Parachute
A lucrative compensation package awarded to top executives if they are terminated due to a merger or acquisition, providing benefits like substantial cash severance, bonuses, stock options, and pensions. For example, a CEO’s employment contract could guarantee a multi-million dollar payout if the executive is fired after a takeover.
Grandfather Clause
A provision that allows an individual or entity to be exempt from a new law or regulation because of circumstances that existed before the law or regulation took effect. For example, older power plants may be grandfathered in under new environmental regulations, allowing them to continue operating without adding costly new pollution controls that newer plants must install.
Gross Domestic Product (GDP)
The total market value of all final goods and services produced within a country over a given time period; for example, U.S. GDP grew at an annualized rate of 2.9% in the third quarter of 2022 reflecting increased consumer spending and business investment.
Gross Income
The total amount of all incomes earned by an individual or business from all sources, such as wages, salaries, tips, capital gains, interest payments, dividends, etc., before deducting taxes or expenses. For example, an employee’s gross income would be the total pay before withholding of taxes and other deductions listed on their pay stub.
H-1B Visa
A temporary nonimmigrant work visa that allows US employers to hire foreign professionals to work in specialty occupations in the US, such as IT, engineering, or accounting roles, for an initial period of up to 3 years with the possibility of extending to a total of 6 years. H1B visa holders may apply for permanent residency status while working in the US.
Hold Harmless Clause
A contractual provision releasing one party from legal liability arising from an agreement, such as bodily injury or property damage; for example, a rental car company may include a hold harmless clause requiring renters to agree not to hold the company responsible for any damages.
Inbound Marketing
Strategies and tactics focused on creating valuable content and experiences that attract customers by aligning with their needs rather than interrupting them with intrusive ads. For example, a company could publish educational blog posts, infographics, and videos that answer common customer questions to establish itself as a helpful expert and gain organic website traffic.
Incentive Compensation Management
The strategies, processes, and technologies used to design, implement, analyze, and optimize performance-based variable pay programs aimed at aligning employee behaviors with business goals. For example, a sales compensation platform helps companies administer customized commission structures motivating reps to boost revenues.
Incremental Cost Of Capital
The additional cost a company incurs when raising one more unit of debt or equity financing, calculated as the weighted average cost of that marginal funding and used to evaluate if new investments are justified. For example, if raising another $100,000 in capital for a project would cost a company 5% annually, the $5,000 represents the incremental cost of that extra capital.
Incubator
A program that provides startups and entrepreneurs with workspace, funding, mentoring, and other support services to help them validate, develop, and launch their business idea into a viable company. For example, a biotech startup could join a life sciences incubator to access lab equipment, business training, potential investors, and other resources to help commercialize a new medical device.
Independent Contractor
A self-employed worker who provides services to firms under contract rather than as a traditional employee, such as a freelance graphic designer working for multiple clients at their own discretion. Independent contractors control their schedule and tasks but must handle their own taxes, expenses, and benefits.
Indirect Sales
A business model where products or services are sold through intermediaries like affiliates, resellers, distributors or sales agents rather than the company selling directly to end consumers. For example, a software company could greatly expand sales by partnering with resellers targeting different industries and geographies versus solely relying on its own limited in-house sales team.
Infographic
A visual image such as a chart or diagram used to represent information or data, often combining minimal text with graphic elements like icons, maps, and illustrations to convey the message clearly and quickly. For example, an infographic could explain the costs of household items over time using a line graph overlaid on a dollar bill image.
Initial Public Offering (IPO)
The first time a private company sells shares of stock to the public on a stock exchange to raise capital and become publicly traded; for example, Facebook raised $16 billion through its IPO in 2012 by listing shares on the Nasdaq exchange at $38 per share.
Innovation Management
The strategies, processes, and systems used to nurture creativity, generate and prioritize ideas, develop new products/services, and implement them successfully to drive business growth and strategic renewal. For example, a consumer goods company could leverage an innovation management platform to crowdsource new product ideas from customers and employees, select the most promising, and manage their development into successful market launches.
Inside Sales
Selling products and services remotely through channels like phone, email, messaging, and video conferences rather than through field sales teams meeting face-to-face with customers. For example, a software company’s inside sales representatives may qualify leads and close deals with prospects completely over the phone and internet.
Inside-Out Thinking
Making decisions and developing offerings based primarily on its internal capabilities, processes, and intuition rather than external customer needs, resulting in potential disconnects from market demands. For example, a company launches a new product relying on internal data and assumptions about customer preferences rather than direct customer input.
Insourcing
Using a company’s internal resources, employees, and departments to carry out projects and tasks rather than outsourcing them to external third parties. For example, a manufacturer may decide to insource its previously outsourced customer service call center functions by hiring an in-house team.
Intellectual Property
Creations of the human mind protected by law, such as inventions, literary works, artistic works, symbols, names, images, designs, computer code, and confidential information; for example, a company’s proprietary technology or brand name would be considered intellectual property owned by that business.
Joint Venture
A temporary business partnership established by two or more companies to collaborate on a specific project or achieve a strategic goal by combining complementary resources and expertise and sharing ownership, costs, risks, and rewards. For example, two technology firms could form a joint venture to co-develop a new product, leveraging each other’s R&D, manufacturing, and marketing capabilities.
Key Man Clause
A contractual provision stating that an investment firm cannot make new investments if certain key executives named in the clause die, leave the firm, or are otherwise unable to fulfill their duties, unless and until suitable replacements are found. For example, a venture capital fund agreement may contain a key man clause halting new investments if the lead general partner departs.
Key Performance Indicator (KPI)
A measurable value used by organizations to track performance against strategic goals and objectives, such as a retailer monitoring sales per square foot to gauge store productivity. KPIs quantify progress towards targets, enable data-driven decisions, and help focus efforts on what matters most.
Lead Scoring
Assigning numerical values to potential customers based on characteristics like demographics, behaviors and interactions to gauge their sales readiness and prioritize follow-ups by marketing and sales teams. For example, an ecommerce site could score leads by giving more points for repeat visits, reading product reviews, and opening promotional emails.
Learning Management System (LMS)
A software application used by organizations to create, deliver, track, and manage online training programs, courses, and learning content for employees, students, or customers. For example, a company could use an LMS to onboard new hires by assigning training modules and monitoring course completion.
Letter of Intent (LOI)
A written document outlining the basic terms of an agreement under negotiation between two or more parties, serving as a non-binding proposal to enter into a formal contract. For example, a business seeking to acquire another company may submit a letter of intent proposing key deal points like purchase price and closing date for the seller to consider.
Licensing Agreement
A legal contract granting permission for one party (the licensee) to use intellectual property or assets owned by another party (the licensor) under specified terms in return for an agreed payment or royalty fee. For example, an inventor could license a manufacturing company to produce and sell their patented product in exchange for a 5% royalty on all sales.
Licensing Fee
Money paid by one party (the licensee) to another party (the licensor) for the right to legally access, use, or leverage assets such as intellectual property, products, or services owned by the licensor for commercial purposes over an agreed term. For example, a manufacturer pays the owner of a patented technology a fee for the license to use that protected process in its production lines.
Lifetime Value (LTV)
The total revenue expected from an entire customer relationship, calculated by multiplying the average value of purchases by the average retention time or number of repeat transactions over the lifespan of typical customer engagement. For example, an online retailer could determine that the average customer spends $300 annually on its site and remains active for 5 years, putting their customer LTV at $1,500.
Limited Liability Company (LLC)
A business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited personal liability protection of a corporation, such as an IT consulting firm organized as an LLC to limit the owners’ personal assets at risk. LLC owners, called members, report business profits and losses on their personal tax returns.
Lock-up Period
A predetermined amount of time, typically 90-180 days, following an initial public offering where major shareholders like company executives are restricted from redeeming or selling their shares to avoid flooding the market. For example, a company could impose a 180-day lock-up period preventing insiders from selling any shares after going public to allow orderly trading.
Machine Learning (ML)
A field of artificial intelligence enabling computers to learn and improve at tasks like making predictions, classifications, or detections by analyzing data instead of relying on rules-based programming. For example, machine learning powers the product recommendations you see on an ecommerce site based on your browsing history and purchases.
Market Penetration
The degree to which a product or service has permeated a potential market, measured as the percentage of target customers purchasing the offering compared to the total estimated market size. For example, an online retailer could have a 10% market penetration if 1 million customers have bought its products out of a total addressable ecommerce market of 10 million online shoppers.
Market Research
The systematic gathering, recording, and analyzing of data related to customer needs, market size and trends, competitors, and overall industry conditions to help companies make more informed business decisions. For example, an appliance manufacturer surveys consumers and runs focus groups to better understand desired product features before developing a new refrigerator model.
Marketing Automation
Software tools and platforms that automate repetitive marketing tasks like email campaigns, social media posting, website personalization, and customer re-engagement workflows to streamline processes and boost effectiveness. For example, an ecommerce retailer could set up automated email sequences to re-target website visitors with related product recommendations.
Media Kit
A pre-packaged set of promotional materials like company overviews, executive bios, product specs, images, and contact details provided to journalists, influencers, and partners to inform coverage and collaborations. For example, a startup creates a media kit to pitch their new mobile app to technology bloggers who might write reviews.
Metrics
Quantifiable measures used to track and assess performance, progress, and outcomes across various business functions and processes to drive decisions and improvements. For example, an ecommerce retailer may use metrics like conversion rate, average order value, and customer acquisition cost to optimize its sales and marketing efforts.
Middle of Funnel (MOFU)
The middle stage of the marketing/sales funnel where potential customers evaluate solutions and consider purchases after initial awareness, addressed through educational content like webinars, case studies, and targeted emails. For example, an electronics company provides product specification sheets and demo videos to site visitors comparing laptop models.
Mission Statement
A brief description, usually one sentence, that defines a company’s purpose, objectives, and approach to reach those goals through its products or services. For example, a nonprofit could have a mission statement to “provide educational resources and healthcare services to underprivileged youths.”
Monetize
To generate income from a product, asset, or activity, such as a website owner placing ads on their site to earn money from the traffic and content. For example, influencers on Instagram may monetize their large followings by promoting sponsored products to their followers.
Natural Language Processing (NLP)
The ability of computer systems to understand, interpret, and manipulate human language text or speech to perform tasks like translation, sentiment analysis, or summarization. For example, NLP powers the machine translation feature that automatically translates a Spanish web page into English when you visit it.
Nearshoring
Outsourcing business operations, services, or production to a nearby country, often sharing a border, to leverage geographic and cultural proximity while accessing qualified talent at reduced costs. For example, a U.S. company could nearshore call center functions to Canada or software development to Mexico.
Net 30
A payment term commonly used in business transactions referring to full payment due within 30 calendar days from the invoice date; for example, if a supplier issues an invoice to a customer on March 1st with net 30 terms, payment must be made in full by March 31st.
Net 60
A payment term allowing customers 60 calendar days from the invoice date to pay their bill in full without penalties or interest charges. For example, a vendor ships goods to a retailer on March 1 and sends an invoice with net 60 terms, meaning the retailer must pay the invoice by April 30.
Net Income
A company’s total earnings or profit after deducting all expenses, interest, depreciation, taxes, and other costs incurred in a given time period, representing the final income available to common shareholders. For example, if a company has $100 million in revenues but $80 million in costs, its net income is $20 million.
Net Promoter Score (NPS)
A customer loyalty metric that measures the likelihood existing customers would recommend a company, product, or service on a 0-10 scale, calculated by subtracting the percentage of detractors (0-6 rating) from the percentage of promoters (9-10 rating). For example, if 60% give a 9 or 10 rating and 20% give a rating of 6 or below, the NPS would be 60 – 20 = 40.
Network Marketing
A business model that relies on independent sales representatives personally promoting and selling products directly to consumers through their social networks and recruiting new representatives to do the same in return for a commission on their team’s sales. For example, an individual becomes an independent sales rep for a cosmetics company, buys products at wholesale prices, sells to friends and family, and builds a team of reps doing the same to earn extra income.
Niche Market
A small, specialized segment of a larger market, targeted to customers with unique needs, interests, or characteristics using a tailored offering and marketing strategy. For example, a pet supply retailer could specialize solely in products for exotic pets like snakes, lizards, and spiders.
Nondisclosure Agreement
A legally binding contract preventing sensitive information, like trade secrets or proprietary data, from being revealed publicly, with violations leading to legal penalties; for example, an employee may sign an NDA not to disclose product designs or customer lists from the company they work for.
North American Industry Classification System (NAICS)
A six-digit hierarchical coding scheme developed jointly by the US, Canada, and Mexico to uniformly classify business establishments into industries for statistical analysis, with codes assigned based on similarity of production processes. For example, automobile manufacturing plants would be designated under NAICS code 336111 for car and light truck manufacturing.
Open Source
Software or other products with source code that anyone can freely access, modify, enhance, and distribute; for example, Linux is an open source operating system supported by a global community of volunteer developers collaborating to improve it.
Operating Agreement
A legally binding contract adopted by the members of a limited liability company (LLC) governing its financial and functional decisions including ownership percentages, distribution of profits and losses, voting rights, and manager and member responsibilities. For example, an LLC’s operating agreement could specify 3 members with 40%, 35%, and 25% ownership stakes and designate the member with the largest stake as the managing member responsible for day-to-day operations.
Opportunity Cost
The potential benefit forgone from choosing one alternative over another when resources are limited; for example, a student studying for an exam has an opportunity cost of not being able to work or go to a movie.
Opportunity Zone
An economically distressed area designated by the government where new investments, under certain conditions, may receive preferential tax treatment to spur economic growth and job creation. For example, capital gains invested in an Opportunity Zone within 180 days can defer paying taxes on those gains until 2026 or later.
Outside Sales
Sales activities conducted by sales representatives who travel and meet with prospective customers face-to-face externally rather than making sales calls remotely from a formal office setting. For example, a pharmaceutical sales rep conducts outside sales by visiting physicians’ offices to pitch new drug products.
Outsourcing
Contracting an external third party provider to perform non-core business functions or services, such as IT support, manufacturing, or customer service. For example, a retailer could outsource order fulfillment and shipping to a specialized logistics company.
Overhead Costs
Ongoing operational expenses not directly tied to producing products or services, such as rent, utilities, accounting fees, taxes, office supplies, insurance, and salaries for support roles. For example, a manufacturer would classify factory supervisor salaries and warehouse rental payments as overhead costs.
Pass-Through Entity
A business structure like a partnership, S-corporation or limited liability company (LLC) that passes all income and losses to the owners to be taxed at personal tax rates rather than business rates, avoiding double taxation. For example, an LLC would pass all $100,000 of profit in a year through to the owners to report on their personal tax returns.
Patent
A time-limited, legally enforced right granted by a government to an inventor to exclusively make, use, or sell an invention, in exchange for public disclosure of how the invention works. For example, Alexander Graham Bell obtained a patent in 1876 for the telephone, which gave him exclusive rights to commercialize this new form of communication during the patent’s term.
Pay Per Click (PPC)
A digital advertising model where advertisers pay a fee to publishers like search engines or websites every time users click on their ads, allowing businesses to appear prominently in search results and target customers actively looking for related products or services. For example, a retailer bids to display product ads when users search for related keywords on Google, paying a few cents each time someone clicks their ad.
Payroll Deduction Plan
The systematic withholding of money from an employee’s paycheck, either voluntarily for benefits or as required by law for taxes and other obligations, that is remitted to appropriate third parties. For example, an employer automatically deducts federal income taxes, health insurance premiums that employees have elected, and court-ordered child support from workers’ gross wages.
Performance Review
A formal evaluation where an employee’s manager provides feedback on their work, contributions, and areas for improvement over a recent period to further development. For example, an annual review would discuss a sales rep’s performance against targets, new business won, and collaboration with team members over the past year.
Petty Cash
A small amount of cash kept on hand by a business to conveniently pay for minor purchases and expenses under a specified limit, such as office supplies, parking fees, or meal reimbursements. For example, a retail store keeps $100 in a locked petty cash box for employees to buy small items like coffee and snacks without using checks or credit cards.
Platform as a Service (PaaS)
A cloud computing model that provides users with hardware, software, servers, storage, and other services to help develop, run, and manage applications without having to build the infrastructure themselves. For example, AWS Elastic Beanstalk offers preconfigured bundles of virtual machines, storage, databases, and containers to deploy web apps.
Pre-money
The worth of a company before receiving outside financing or going public, used to determine ownership stakes; for example, an investor buying 20% of a startup with a $1 million pre-money valuation would contribute $250,000 to establish a $1.25 million post-money valuation.
Predatory Pricing
A company deliberately selling goods or services below cost to undercut competitors and force them out of the market in order to reduce competition and gain greater market share that allows the company to then raise prices later and recoup losses. For example, a retailer could price all products in a category below costs for years to bankrupt competitors before raising prices to monopoly levels.
Predictive Analytics
Statistical models and data mining techniques to analyze current and historical data to make predictions about future outcomes and trends to inform business strategy. For example, a retailer could use predictive analytics to forecast customer demand for products and optimize inventory levels accordingly.
Press Release
An official statement delivered to media outlets announcing something newsworthy about a company, such as a new product launch, executive appointment, or event, aiming to garner media coverage; for example, a software company could issue a press release announcing the release of a major app update.
Private Equity
Capital investment in private companies not listed on public exchanges by investment firms that pool money from institutional investors and accredited individuals to acquire equity stakes and eventually sell them at a profit. For example, a private equity firm might leverage a $500 million fund to buy a controlling share in a software company, improve operations over 5 years, then exit via a sale or IPO.
Product Market Fit
When a product effectively serves a market segment such that it sees high demand from a sizable base of customers as evidenced by rapid adoption and growth. For example, the iPhone took off explosively thanks to strong product market fit between its novel capabilities as a smartphone and the needs of mainstream consumers.
Product Marketing
Promoting a product through positioning, messaging, packaging, and channels to articulate its value, differentiate it from competitors, and drive adoption within a target market. For example, a software company’s product marketing team creates collateral explaining the product’s capabilities and trains the sales team on effectively pitching it to customers.
Profit & Loss Statement (P&L)
Summary of a company’s revenues, costs, and expenses over a specified period to provide insights into profitability, showing top line sales performance and the operating costs incurred to generate those sales. For example, a retailer’s P&L statement could reveal that while annual revenue grew 5%, expenses grew 8% resulting in declining profit margins.
Prospectus
A formal legal document providing details about an investment offering to the public that is required by and filed with the Securities and Exchange Commission (SEC) before issuing securities. For example, an initial public offering (IPO) prospectus would contain background on the company, financials, risks, and details of the securities issuance to help investors make informed decisions.
Public Domain
Creative works not protected by copyright, trademarks, patents or other intellectual property laws, allowing free use by all without need for permission; for example, Shakespeare’s plays entered the public domain once their copyright terms expired.
Public Relations
The strategic communication process organizations use to build positive relationships with the public by obtaining favorable media coverage, managing brand reputation, and influencing customer perceptions. For example, a company might hire a PR firm to generate press coverage about the launch of a new product.
Quality Assurance
The systematic processes implemented throughout the design, development, production, and service of products and services to ensure they meet quality standards and customer requirements. For example, a software company could employ code reviews, automated testing, and user acceptance testing to validate software quality before release.
Quality Control
The operational techniques and activities used throughout the design, development, and manufacturing processes to help ensure that products meet quality requirements and standards. For example, an electronics manufacturer inspects circuit boards under magnification and runs diagnostic tests to catch defects before shipment.
Rebate
A partial refund or credit offered to a customer by a seller after a purchase has been made, used as a sales promotion to incentivize buying activity and customer loyalty. For example, a car dealer could offer a $2,000 manufacturer rebate to reduce the final price if a customer buys a certain model vehicle.
Remote Staffing
Hiring employees to work remotely, often from home or a coworking space, rather than having them work onsite, facilitated by a staffing agency or the company itself. For example, a software startup could use a remote staffing agency to recruit and hire engineers around the world to work on coding projects while collaborating virtually.
Request For Proposal (RFP)
A business document announcing a project to solicit detailed bids from potential vendors who provide the requested goods or services. For example, a government agency could issue an RFP outlining the requirements to develop a custom software application and receive proposals from qualified IT consulting firms interested in handling the project.
Research and Development (R&D)
The creative, systematic activities undertaken to increase knowledge and devise new applications of available knowledge, for example a biotech firm conducting experiments to develop a new drug.
Responsive Design
A web development approach where website layouts automatically adapt to different screen sizes and orientations by using fluid grids, flexible images, and CSS media queries to provide an optimal viewing and interaction experience across devices. For example, a responsive news article dynamically resizes text, columns, photos, and videos to fit desktop, tablet, and mobile displays.
Retainer
An advance payment made to secure the availability and services of a professional like a lawyer, consultant, or service provider when needed. For example, a law firm may require clients to pay an upfront retainer that is held in a trust account and billed against as legal services are performed.
Retrenchment
The process of significantly reducing costs and staff through measures like layoffs and asset sales in order to restore organizational profitability and refocus on core operations. For example, a manufacturer facing declining sales and losses may retrench by closing several factories and consolidating production capacity.
Return on Investment (ROI)
A performance measure used to evaluate the profitability of an investment by calculating the percent return on money invested, for example if a $1,000 investment yields $100 profit in a year, the ROI is 10%.
Revenue Intelligence
Leveraging AI and data analytics to provide sales teams actionable insights that identify risks and opportunities within the sales pipeline to help hit revenue targets. For example, revenue intelligence could alert sales reps to prioritize certain high-potential deals that are projected to close within the quarter to make quota.
Right of First Refusal
A contractual provision giving its holder the first opportunity to purchase something, like real estate, on the same terms offered by a third party buyer if the owner decides to sell, allowing the holder to match or pass on the deal before the owner can sell to the other buyer. For example, a commercial tenant could negotiate a right of first refusal clause in their lease to buy the property from the landlord if another buyer makes an offer the landlord wants to accept.
Risk Management
The process of identifying, assessing, and controlling threats to an organization’s capital, assets, and profits to mitigate negative impacts. It involves techniques like risk avoidance, risk acceptance, risk transfer through insurance, risk spreading, loss prevention, etc. to address various financial, operational, strategic, compliance, and other risks a company faces.
Royalty Fee
A recurring payment made by one party to another to license intellectual property or assets, calculated as a percentage of sales or a fixed fee per unit; for example, an author may earn royalty fees from a publisher based on book sales, or a songwriter collects royalties whenever their song gets played on the radio.
S Corporation
A business structure that elects to pass income, losses, deductions, and credits through to shareholders to be taxed at personal rates rather than corporate rates, avoiding double taxation; for example, a small retail shop could incorporate as an S corp so the owner reports all $100,000 of the business’s annual profit on their personal tax return.
Safety Stock
The extra inventory a company keeps on hand to mitigate the risk of stockouts caused by uncertainties like fluctuating demand, supply delays, or forecast inaccuracies. For example, a retailer might hold 2 weeks of additional inventory as safety stock for a popular product to prevent running out even with demand spikes or shipping delays.
Sales cycle
The structured sequence of predictable stages that a sales team takes potential customers through to convert them from prospects to buyers, such as prospecting, qualifying leads, presenting solutions, handling objections, and closing deals. For example, a company’s sales cycle could involve identifying leads, scheduling discovery calls, providing demos, negotiating contracts, and onboarding new clients over a 2 month timeframe.
Sales Enablement Platform (SEP)
A software solution that equips sales teams with resources like content, training, and coaching to help sales reps effectively engage prospective buyers and close more deals. For example, an SEP could provide customized sales playbooks, objection handling guidance, competitor intel, and product demos to align marketing and sales.
Sales Funnel
The customer journey that guides prospects through awareness, consideration, decision, and purchase stages to become buyers; for example, an eCommerce site could attract visitors through ads, convert them to email subscribers, nurture leads through content, and close sales through promotions.
Sales Intelligence
Technologies and data that provide sales teams with insights into prospects, customers, and the market to enhance decision-making and selling strategy throughout the pipeline. For example, sales intelligence could analyze buyer intent signals and firmographic data to help sales reps identify high-potential accounts to prioritize.
Scalable
The ability of a system, process, organization, or other entity to expand, grow, or adjust to increased demands while maintaining or improving performance, service, profitability, or other key success metrics. For example, an online retailer with a scalable e-commerce platform can easily handle a surge in holiday orders without delays or extra costs.
Seed Money
The initial capital used to start a business, often provided by the founders themselves or investors in exchange for equity; for example, an entrepreneur could bootstrap an ecommerce startup using $10,000 of personal savings as seed funding to pay for initial product development and website costs before seeking larger investments.
SEO
Improving rankings in search engine results pages through optimizations to content, technical infrastructure, backlinks, and authority. For example, an eCommerce company could optimize product pages for relevant keywords and ensure fast load speeds to rank higher in results for “buy widgets online”.
Series A
A startup’s first significant round of venture capital financing, coming after seed funding, to further grow and scale a proven business model and product; for example, Uber raised $11 million in Series A funding in 2011 to expand operations into new cities and scale up staff.
Series B
The second round of major venture capital financing for an established high-growth startup to scale up operations and fuel rapid expansion, coming after the initial Series A round; for example, Uber raised $37 million in Series B funding in 2011 to accelerate growth by entering new cities.
Series C
The third round of major venture capital financing for an established, high-growth startup to help accelerate expansion, usually through entering new markets, acquiring companies, or further product development. For example, Cloudflare raised $110 million in its 2017 Series C round to expand internationally and boost its security offerings.
Series D
The fourth round of major venture capital financing for an established, high-growth startup to accelerate expansion through entering new markets, acquiring companies, or further developing products and services. For example, Uber raised $1.2 billion in Series D funding in 2015 to aggressively invest in autonomous vehicles and global operations.
Service Level Agreement
A contract between a service provider and customer outlining the services, quality standards, responsibilities, and guarantees regarding availability, performance, and issue resolution. For example, an IT services company may have an SLA stipulating 99.9% uptime for a client’s computer systems and a 2-hour response time to address technical problems.
Service Provider
A company, individual, or organization that provides a service to customers or clients, often under a written contract or service agreement; for example, an internet service provider offers home WiFi through a monthly subscription service contract.
Shareholder
An individual, company, or institution that legally owns at least one share of a company’s stock, which provides voting rights and a financial stake, such as dividend payments or capital gains. For example, an investor who owns 100 shares of a mutual fund is a shareholder entitled to vote on issues like board elections and profit distributions.
Shareholder Agreement
A binding contract between a company’s shareholders defining their rights and obligations, such as transfer restrictions, voting procedures, and dispute resolution processes. For example, a shareholder agreement could require shareholders to allow the company first chance to buy their shares before selling to an outside party.
Small Business Administration (SBA)
A U.S. government agency established in 1953 that provides support to entrepreneurs and small businesses through access to capital, disaster relief, government contracting assistance, and other resources like mentorship and training programs. For example, the SBA runs a loan guarantee program that incentivizes lenders to extend credit to small business owners who may not qualify for conventional loans.
Small Business Development Center (SBDC)
Free business advising, training, resources, and research to help entrepreneurs start and grow small businesses, offered through partnerships between the SBA and local colleges or economic development groups. For example, an SBDC could help an aspiring entrepreneur conduct market research, formulate a business plan, apply for funding, and launch a new retail shop.
Small Business Innovation Research Program (SBIR)
A U.S. government program that provides research and development funding through competitive awards to qualified small businesses working on innovations with commercial potential that meet federal research needs. For example, a startup could apply for an SBIR grant to develop an educational software aligned with Department of Education priorities.
Small-to-Medium Business (SMB)
An independent company with fewer than 500 employees and under $50 million in annual revenue for small or between 100-999 staff and $50 million-$1 billion in revenue for medium-sized. For example, an SMB could be a local construction firm with 50 employees and $20 million in annual sales.
Smart Contract
A self-executing computer program stored on a blockchain that automatically performs actions when certain conditions are met, like facilitating, executing, and enforcing the terms of an agreement between parties. For example, a smart contract could automatically release cryptocurrency funds to a seller when a digital asset is transferred to a buyer.
Social Media Marketing (SMM)
The use of social media platforms like Facebook and Twitter to promote a brand, connect with customers, increase website traffic, boost sales, and build a community of followers. For example, a clothing retailer could post photos of new arrivals on Instagram to generate interest and drive online purchases.
Social Selling
The process of building relationships with potential customers through social media platforms in order to drive brand awareness, engagement, and sales rather than relying solely on conventional sales tactics. For example, a sales rep could share valuable content on LinkedIn that gets discovered by a prospect researching a problem the company’s product solves, sparking further interactions that nurture a relationship.
Software as a Service (SaaS)
A software licensing model in which cloud providers host applications and make them available to users over the internet rather than having the software installed locally on each user’s device. For example, common SaaS applications like Gmail, Slack, and Dropbox are accessed via the web instead of taking up hard drive space on users’ computers.
Sole Proprietorship
An unincorporated business owned and operated by one individual, with no legal distinction between the business and the owner who assumes all assets, debts, profits, losses, and liabilities. For example, a freelance graphic designer running their own design business independently would be considered a sole proprietorship.
Standard Industrial Classification (SIC)
A numerical scheme devised in 1937 by the U.S. government to categorize business establishments by industry using a four-digit code for statistical analysis and regulatory oversight purposes; for example, automobile manufacturers would be classified under SIC code 3711 for motor vehicle and car bodies.
Startup
A fledgling company founded by entrepreneur(s) to develop an innovative product or service and bring it to market, aiming for fast growth and scaling up operations under conditions of uncertainty. For example, Airbnb began as a startup offering short-term home rentals before growing into a major hospitality service.
Statement of Information
An annual filing with the state providing current details on a company’s directors, addresses, and business activities to update official records, required of corporations in California and some other states. For example, California requires LLCs and corporations to submit a Statement of Information form within 90 days of registering and then annually or biennially to remain compliant.
Statement of Work (SOW)
A document outlining the scope, objectives, timeline, costs, and roles and responsibilities for a specific project or engagement between two parties, usually a client and vendor. For example, a software development company could draft a statement of work detailing the timeline, costs, features, and acceptance criteria for building a custom mobile app for a client.
Strengths, Weaknesses, Opportunities & Threats (SWOT)
A strategic planning framework that assesses internal strengths and weaknesses as well as external opportunities and threats to inform business decisions and maximize competitive advantage. For example, a company might leverage market opportunities that align with organizational strengths while devising plans to overcome internal weaknesses and combat external threats.
Sweat Equity
The increased value, ownership interest, or equity stake gained in a business venture as a result of hard work and effort contributed by the owners rather than monetary investment. For example, startup founders may put in long hours developing an MVP in exchange for shares of the company, building sweat equity value from their labor.
Tag Along Rights
Allowing minority shareholders the option to join in the sale of a majority shareholder’s stake in a company and get the same terms and price per share that the majority shareholder receives. For example, if a majority owner sells their 60% stake for $5 per share, tag along rights give minority owners the chance to sell their 40% stake at the same $5 per share price if they choose.
Talent Management
The strategic practices for attracting, developing, motivating, and retaining a high-performing, engaged workforce to drive organizational success. For example, companies could provide leadership training programs, offer competitive benefits, and promote work-life balance to nurture employee growth and performance.
Target Market
A specific, well-defined segment of consumers who are most likely to want or need the goods or services offered by a company, identified through market research based on shared demographics, behaviors, needs, or other attributes. For example, a shoe company selling specialized running shoes could target serious runners and marathon participants who require specific footwear performance features.
Team Building
Implementing initiatives aimed at helping work groups evolve into more cohesive, collaborative units by facilitating trust, communication, goal alignment, and role clarity among team members. For example, a manager could organize a team building retreat focused on conflict resolution skills to improve relationships and workflow between departments.
Term Sheet
A written document outlining the key terms and conditions of a business deal prior to definitive legal agreements, such as an investment amount, share price, investor rights, and governance provisions. For example, a startup could receive a term sheet from a venture capital firm proposing a $5 million Series A investment at a $20 million valuation with a board seat and pro rata rights.
Top of Funnel (TOFU)
The initial stage of the marketing/sales funnel when prospects first become aware of a product or company, requiring educational content to attract interest and convert visitors into leads. For example, a TOFU blog post might explain the benefits of using a particular SaaS platform without directly selling the product.
Total Addressable Market (TAM)
The total estimated revenue opportunity available for a product or service if 100% market share was achieved, used to assess the size of the market that a company could potentially tap into. For example, the TAM for all mobile phone services globally is estimated at over $500 billion per year.
Trademark
A recognizable sign, symbol, word, or design that identifies the source of a particular good or service and legally distinguishes it from others. For example, the Nike swoosh and Apple’s apple shape logo identify the companies’ goods and indicate their source.
Unique Selling Proposition
The unique benefit a company’s product or service offers that sets it apart from competitors. For example, Volvo focuses its USP on safety, designing cars with a variety of advanced protective features not found in other vehicles.
User Experience (UX)
A person’s interactions and perceptions of using a product, system or service which includes its utility, ease of use, and efficiency from the user’s perspective. For example, an ecommerce website with intuitive navigation, relevant product information, and a seamless checkout process provides a positive user experience.
User Interface (UI)
The visual elements and interactive components of a digital product, application, or website that users engage with such as buttons, icons, and menu bars. For example, the UI of a mobile banking app would include elements like login screens, account dashboards, and transaction menus.
Valuation
The process of estimating a company’s fair market value using quantitative methods that analyze its financial data, competitive landscape, assets, and future earnings potential. For example, an investor evaluating a potential acquisition target would assess historical performance, calibrate growth assumptions, and model discounted cash flows to determine an offer price.
Value-Added Service
Supplementary, non-core offerings that enhance or complement a company’s primary products and services to improve customer experience, satisfaction, and perceived value. For example, an electronics retailer could offer free delivery and setup of home appliances as an additional value-added service on top of the appliance sales.
Variable Costs
Expenses that change in proportion with the volume of goods or services produced, such as raw materials, labor, utilities, distribution; for example, a manufacturer may see costs for components and wages rise as production increases each month or fall if manufacturing output declines.
Venture Capital
Financing provided by investors to startup companies and small businesses with strong growth potential in exchange for equity or an ownership stake, often involving substantial risk. For example, a venture capital firm could provide a technology startup with $2 million in seed funding to develop and commercialize a new software platform in return for a 25% stake in the company.
Vesting Schedule
A set timeframe dictating when an employee earns or gains full ownership of company-awarded assets like stock options or employer retirement plan contributions, usually gradually over 3-5 years to retain talent. For example, an employee with a 5-year graded vesting schedule would be 20% vested after 1 year up to 100% vested after 5 years of service.
Vision Statement
An inspirational declaration of an organization’s purpose and aspirations for the future, guiding strategic decisions to realize an ideal future state. For example, IKEA’s vision focuses on “creating a better everyday life for the many people” through affordable, sustainable home furnishings.
W2 Form
An annual IRS tax document that employers must send to employees and the Social Security Administration by January 31 to report wages paid and taxes withheld in the prior year; for example, the W2 shows an employee’s income, federal and state taxes withheld, Social Security and Medicare taxes paid, and other information needed to complete their tax return.
Wantrepreneur
An aspiring entrepreneur who dreams about starting their own business but lacks the drive, determination, or follow-through to actually turn ideas into action. For example, wantrepreneurs may constantly talk up business plans but then make excuses or get discouraged rather than doing the real work to get a company off the ground.
Wash-Out Round
A startup financing event where a new investor acquires a controlling stake, significantly diluting existing shareholders, often to rescue a struggling company from failure. For example, a startup unable to meet growth milestones could accept emergency funding from a new investor in exchange for 70% ownership, washing out early employees and investors.
Working Capital
The cash and liquid assets a company needs to fund day-to-day operations, calculated as current assets minus current liabilities. For example, a manufacturer with $300,000 in current assets and $200,000 in current liabilities has $100,000 in working capital available to pay employees, suppliers, and short-term debts.
Yield
The income or return earned from an investment over a specified time period, expressed as a percentage based on the investment’s cost, current market value, or face value. For example, a stock purchased at $50 per share which generates $2 per share in annual dividends has a dividend yield of 4% ($2/$50).
Zero-Based Budgeting
A budgeting technique requiring each expense be analyzed and justified based on needs and objectives instead of using the prior year budget as a baseline, starting budgets from scratch. For example, a company could evaluate all costs like payroll, facilities, travel, and marketing to align spending directly with current strategic priorities.