There is a lot of vocabulary specific to the business world, and like it or not, as an entrepreneur you need to spend a little time learning the language. That doesn’t mean you need to pepper your speech with buzzwords, but do need to understand – and appropriately use – entrepreneurial terms.
Here’s a list to get you started.
These are investors who provide the capital for startups to get up and running. Angel investors can be individuals or they may operate as part of an angel group. The investment terms differ depending on the deal struck between the investor and startup, although the offer will usually involve either an equity stake or repayment of the loan plus interest.
A business plan is your roadmap to success. While it is a critical document for securing any necessary funding, creating a business plan is also one of the most beneficial things you can do to build a successful business and keep your focus on long-term goals as your business grows. Learn how to write a business plan.
Instead of drawing on internal resources or outsourcing to a third party, a company or individual may choose to crowdsource resources from a group of people – often via the internet. The resources can be anything from ideas and information to raising funds.
Put simply, early adopters are the first people to buy or use a new product, service or technology.
While this term essentially means employees, it can also describe an approach to human resources that sees employees as essential assets to successful business. Employers who consider their staff to be real assets are more likely to invest resources into their training and provide the remuneration required to hire and retain the best in the field.
A marketing term that refers to targeting your audience within a very specific geography, often close to home, where they work or shop. Also referred to in the digital world as geo-fencing, it involves creating a radius or boundary from a location like a store address and targeting consumers on their mobile device when they are within the set geography.
Incubators or accelerators are organizations that provide support for entrepreneurs and startups. They can be private companies or supported by local municipalities or universities. The types of services they provide can include training, business and opportunity assessment, and guidance through the startup process from business plan to market launch. Some may provide seed investment opportunities, while others may simply assist with angel investor matching.
Monetization describes the conversion of an asset into a source of revenue. A monetizing strategy seeks to create a revenue stream from a non-revenue generating asset.
Networking is building business relationships, which is critical for the success of most entrepreneurs. There are different forms of networking: networking up refers to seeking relationships with potential mentors, investors or thought leaders; lateral or horizontal networking is relationship building with your peers, while networking down describes expanding your network to up and comers.
When a company outsources, they are purchasing a service from another individual or business. Common services that are outsourced, particularly by startups and small businesses, include accounting and/or payroll, legal, marketing, customer call centers, and information technology.
When a unique product, process or technology is created, the inventor will usually apply for a patent before releasing it to the market or making the invention public. A patent, which is a license granted by the government, protects the property rights of the inventor. The right prohibits others from making, using or selling the patent protected invention for a set period of time.
A company’s profit margin is the amount by which sales revenue exceeds operational costs. A healthy profit margin is one of the key indicators of a successful business.
While “sales channel” is still a very common term, with so much marketing and consumer purchasing taking place online it’s likely you’ll hear the phrase “sales funnel” with even more regularity. A sales funnel describes the customer acquisition process from consumer awareness through to purchase. If you Google sales funnel you will find a number of different models, but they all explain the same general consumer process: Awareness (consumer becomes aware of the product or service), Interest/Evaluation (demonstrates interest by undertaking product and competitor research); Decision (decides to buy product or service); Action (completes purchase).
A trademark provides legal protection for your company or product brand. Companies must apply for trademarks and/or service marks with the appropriate government office, which in the United States is the Patent and Trademark Office. Trademarks can be applied to many aspects of a brand including name, taglines and slogans, logo designs, marks – even sounds (think the ticking stopwatch from the show 60 Minutes, the Taco Bell “bong” or the Pillsbury Doughboy’s giggle).
As the name implies, user experience refers to the interactions a consumer has with a company or its products and services. It can apply to the experience the customer has with the product itself or customer service, although it quite often describes the experience using a company’s website or app, in which case it is more specifically concerned with ease of use and consumer sentiment.
Venture capital is investment in an early-stage company or product with demonstrated high growth or high-growth potential. Because this type of investing usually carries more risk, it often requires the company to sell a percentage of its equity to the investor, and the investor will likely also have some say in the running of the business. In this case, the purchased stocks are owned by the venture capitalist until the company is sold or there is a liquidity event. Another form of venture capital investment is convertible debt, which you can read more about in this ultimate guide.
While this list is a good place to start, there are many hundreds of terms within the business and entrepreneurial vocabulary. For those seeking a more comprehensive listing, this dictionary by BDC is a fantastic resource.