Ready to take the leap into entrepreneurship? Running your own business is tough enough but trying to understand the lingo is an added headache. Knowing some key business terms can make it easier to navigate the business world. Not only that but it can you speak confidently with investors, lenders and others to build strong business relationships.
Here are our top 20 common business words you should know:
- Accelerator: A program to help newer startup businesses rapidly move toward specific milestones to grow. Businesses should already have a plan or strategy in place.
- Angel Investors: An individual who invests in business ventures for ownership. They provide capital for startups that need funding to grow, and in return, they usually receive some percentage of ownership.
- Business Model: The company’s or entrepreneur’s plan for making a profit. It usually identifies what product or services will be sold, audiences that will be targeted and potential expenses that will occur.
- Business Model Canvas: A business model canvas (BMC) is a template meant to define the business idea or concept in a very structured manner. It helps owners visualize the building blocks of the business.
- Business Valuation: The estimated value of a business when exchanging ownership (shares or units in a company) for capital.
- Copyright: The legal right of the owner of intellectual property.
- Crowdfunding: Have you heard of Kickstarter? This is a crowdfunding tool. It raises money from smaller donations for everyday citizens, rather than larger investors or individuals. It solicits investment from a “crowd” to pool smaller amounts of capital into larger sums.
- Due Diligence: The investigation of the potential investment by a buyer or investor prior to signing a contract or receiving securities. Due diligence is a risk management tool so buyers can make an informed decision by reviewing any potential problems or liabilities.
- Elevator Pitch: This is a brief speech that outlines the business product, service or project. You can usually drop the word “elevator” and just say “pitch.” It should take the amount of time it takes for an elevator to go from the top to bottom floor.
- Incubator: Business incubators help entrepreneurs and early-stage businesses by providing workspaces, mentorship, education and networking access to investors. By doing so, it allows companies and ideas to take shape and grow.
- Joint Venture: This is a business arrangement when two or more businesses or parties join to accomplish a specific task. In some cases, both parties are sharing profits and losses, otherwise, it is a common connection to a specific goal or milestone.
- Liabilities: Liabilities are usually something a person or company owes. All businesses must take on liabilities to operate and grow.
- Patent: A government authority or license granted to an inventor to exclude others from making, using, offering for sale, or selling the invention for a limited time in exchange for public disclosure of the invention when granted the patent.
- Proof of concept: Proof of concept (POC) is an understanding of the idea, product or service created and sold is actually feasible and has potential.
- Small Business Administration (SBA): The U.S. agency dedicated to small businesses to provide counseling, capital, expertise and more.
- Sole Proprietorship: A business owned and operated by one person.
- Trademark: A form of legal protection for words, names, symbols, sounds, or colors that distinguish goods and services. Trademarks, unlike patents, can be renewed forever if they are being used in business. For example, the golden arches of McDonald’s® is a registered trademark. The Nike® logo is another example!
- Unicorn: A unicorn is a privately held startup company that reaches a valuation of over $1 billion from venture capital firms. AirBnB is an example of a unicorn company.
- Value Proposition: A value proposition is the promise of value of a given product or service, including features and benefits. Basically, why should the ideal customer buy from you and not the competition?
- Venture Capital (VC): Venture capital is a person, or group of people, who manages the capital from limited partners in a fund, with the intention of deploying that fund into startup companies in exchange for ownership. Venture capitalists are the partners who manage the investment process and make decisions on which companies they will invest.
There are obviously even more business vocabulary terms beyond the ones listed above, but these are a good jumping-off point into the business world. Knowing these terms and staying updated can create more productive discussions about business needs and help you figure out what to focus on as you move toward your goal.
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