A brief spiel describing yourself and your company in an enticing way to potential customers, partners and suppliers. Your 30-Second Pitch should communicate who you are, what you do and how your company is different from the competition.
An investor who works with start-up businesses requiring less than $500,000 cash infusion. This type of investor usually helps get the business idea off the ground, makes a large return and then hands the small business off to a larger investment company (such as a venture capitalist).
The idea that your customers need to believe that you can deliver what you promise.
What your customer derives from purchasing your product or service, something which they deem has value.
The most favourable outcome of a particular situation without being unrealistic.
The image of your business that you build through marketing initiatives; the impression that you portray to people about what type of business you have. Everything about your company portrays what your brand is. This can include your logo, the colours you choose to associate with your business, the clothes you wear, the people you hire, and even your voicemail message.
The way in which your business actually delivers its product or service to the customer, whether through the web, via direct mail, from a physical location with a store front, from your home or perhaps through a distributor. These are all different business models.
A concrete outline of how you will develop and run your business. This document should be less than 20 pages. If you’re not using it to secure investors, your business plan could even be a single page.
Business to Business (see also Business-to-Consumer)
Business to Consumer (see Business to Business)
A type of business that focuses on delivering a product or service to the end user, rather than to another company.
The maximum volume of products or services that your company is capable of handling. Eventually, you will reach your equipment capacity, human capacity or space capacity which will limit your company’s volume.
Cash Flow Management
The process of keeping track of cash is coming in and going out of the business, in the form of revenue and expenses.
Something your company does better than the competition. The competitive advantage should be inherent to your company; your company should excel at it, and you should continue to develop this advantage to stay ahead of the competition. You should also be communicating this strength to your customers as something that makes your company unique.
Competitive Edge (see Competitive Advantage)
This occurs when there are only a few competitors in a market as a result of companies buying each other out or forming alliances, or business closures due to competition.
A philosophy implemented by a company to improve productivity on an ongoing basis. All company employees should be aware of the process, and it should be supported by management. It should be a formal process to ensure that the improvement goals are agreed upon and shared.
Contract-based Company (see also Transaction-based Company)
A business model in which customers commit to conducting business with an organization through a sales contract that last longer than one delivery of the product or service.
The main product or service a business offers. Although you may have multiple revenue streams, the majority of your resources should be allocated to supporting the heart of the business.
Core Competency (see Core Business)
Corporate Culture (or Corporate Atmosphere)
The values and beliefs of a company as reflected through the organizational structure and the behaviour of employees.
What your customers believe they will receive from purchasing your product or service. Often this goes far beyond the mere product or service itself; there are additional benefits that the consumer anticipates, such as customer service or warranty fulfillment.
Every way in which a company interacts with a customer. Some examples of customer touch-points are your voicemail, a proposal, meeting face to face, or even your invoice.
An individual who initiates a business; an entrepreneur often has the unique ability to develop great ideas, improve upon them and execute them.
Distinctive characteristics of a product or service. A feature often results in a positive benefit to the customer.
These are costs that remain constant regardless of the number of sales. For example, rent is an expense that does not change whether you sell two units of a product or ten.
Flat Organizational Structure (see also Hierarchical Organization Structure)
This is a company with very little middle-management between the top and the customer-facing employees. This is a good structure when creativity and flexibility are required.
The capability to change quickly when necessary. This is a core advantage of a small business over a larger business.
Hierarchical Organization Structure (see also Flat Organizational Structure)
This is a company that typically consists of many middle-managers and there are several lines of communication between the top and the bottom. This is a good structure when complicated processes and systems are required.
Hockey Stick Growth
When the growth rate of a business resembles a hockey stick shape when plotted on a graph. Growth starts slowly, characterized by slow sales and high costs, but quickly shifts to a rapid, exponential incline. This is the type of growth that angel investors and venture capitalists are most interested in.
Initial Public Offering (IPO)
The first offering of stocks or shares of your business to the public for investment purposes.
This is a good word to describe a service. It isn’t something that a customer can touch, but it provides the customer value.
Intellectual Property (see also Proprietary Information)
This is any proprietary or protected information owned by the company. Often this information is valuable, typically revealing a company’s competitive advantage, and should be closely guarded. You can use a patent, copyright or trademark to protect this information.
Someone who will put time and money into your business for a future return. Investors could be one of the 3Fs (friends, family and fools), angel investors, venture capitalists, banks, or IPOs (see Initial Public Offering).
This is a formal agreement between two parties to work together in a business endeavour and to share the proceeds. Often joint ventures are formed when a company enters a foreign market.
The initial period in a new business, when an entrepreneur becomes better at the business that he or she is in (this can include the administrative component of the business). Once someone learns how to do something the best way possible and practices, they can do it quicker and better.
Using the resources that you have (money, time and people) to gain even more resources.
The most important aspect of relationship building: people do business with people they like.
The ability to keep cash on hand. You either already have cash available or you are able to convert assets to cash very quickly.
Doing something that provide a tremendous value but can be easily achieved. If you can only do one thing, this would be your next step.
The amount of profit you are making. This is the difference between how much you charge (either your price per sale or your total revenue) and how much it costs you to deliver (your costs per sale or your total expenses).
The proportion of your entire target market that would potentially purchase your product or service. The rest of the market would be purchasing from your competition.
Identifying whether customers will actually spend money on what you are selling. Marketability is dependent upon both the perceived need for your product or service, and the perceived value beyond the price paid for it.
Tools used to promote sales and create an image for your company that will stand out in your customers’ minds.
An initiative that combines various communication tools to promote and support a consistent message about your business. By using more than one communication tool, there is a higher probability of reaching your consumer.
A detailed outline of how you are going to communicate with your potential customers. Marketing is not arbitrary; you should only do something marketing-related if it is logical and makes sense to you (and anyone that you talk to about it). A marketing plan is simply that, a way of outlining the logic and strategy of your communications with potential customers.
A group of existing customers who have been purchasing your product or service for an extended period of time. You know that you are in a mature market if your margins are getting smaller, you have new competitors, and you are finding you have to go have new target markets with customized offerings.
Something your business tries to achieve everyday. This is not a long-term goal because you are capable of fulfilling your mission on a regular basis.
The motivation behind a consumer’s purchase.
The act of interacting with people to make connections and build relationships. You can learn and understand whether there is an opportunity for your business through this interaction. Aside from new customers, networking can result in strategic partnerships, quality suppliers, professional services to support your business, a mentor, or the fulfillment of innumerable other needs.
A business that emerges in the market later in the game, usually after an entrepreneur has learned from a similar business or can see that there is profit to be made in a particular industry or market. New entrants face less of a learning curve and avoid the risks faced by other businesses that entered the market first.
A smaller, more specific group of potential clients. By targeting a smaller group’s needs, you can adapt your product or service more easily.
A legal document to prevent a third party from telling another party information about your company that is confidential. This is often used when a product is not legally protected otherwise or when a company is in its infancy.
The benefit you are able to give your customers above and beyond your initial product or service.
How you introduce your customers to your product or service, how you bring customers “on board” with your company. A well-rounded experience will leave a positive impression.
What you will gain or lose when choosing one particular option over another. This could be time, money or resources.
The amount of time it takes for an investment to create revenue equal to the original investment amount.
Entering a market with a new product or service at a low price point. The initial margin per sale will be low but you can capture a larger part of the market.
Positioning Statement (see 30-Second Pitch)
Entering a market with a new product or service at a high price, with the intent of decreasing the price over time as the competition enters the market. This is a strategy to maximize profit at the beginning of a product life cycle.
This occurs when two competing companies repeatedly undercut each other’s prices. Price wars are dangerous for a small business, which may not have the cash flow to compete against a larger, more established company.
A standard, systematic and objective way to explain how something is done. Processes can be helpful for an expanding company to give step-by-step instructions to new employees or to allow a company to analyze whether they are doing things in an optimal fashion.
The phases of a product’s life:
- 1. Introduction of product to the market
- 2. If successful, rapid business growth
- 3. Product becomes mainstream with steep competition
- 4. Significant decrease in sales as a new product takes its place
There are opportunities to re-invent a product and start this cycle all over again but it is important to identify where in the cycle your product currently is and to take advantage of that stage.
Profit (see Margin)
Proprietary Information (see also Intellectual Property)
This is exactly like intellectual property except you don’t have a patent to protect you. NDAs (non-disclosure agreements) and corporate secrecy are required to protect this information. A general protection feature is to have a proprietary information statement included in emails; this will ensure that part of any proposal or item you leave with a customer (or potential customer) will remain confidential.
All of the procedures, policies and government regulations that you face in your daily business and interactions with other parties that seem excessive or hindering. Taxes, customs, paperwork are all great examples.
The percentage of profit you are making on top of your initial investment in a business. To calculate this, divide the initial investment amount by the profit realized.
The amount of money coming into the business exclusive of the costs.
The different ways your company can make money.
Sales Cycle (or Sales Process)
The stages or phases of a sale:
- 1. Consumer becomes aware of the product and the company
- 2. Consumer takes time to understand the offering and build interest in the company
- 3. Consumer is ready to purchase.
Sales Process (or Sales Cycle)
Using the existing infrastructure of your business to service as many customers as possible in a limited amount of time.
Using online tools that connect people in order to generate sales based on existing ties and relationships. Some common social networking websites include Facebook, MySpace, LinkedIn and YouTube.
When two companies create a mission together or have found common values which allow them to assist each other.
A logical idea or plan to reach your goal.
A business that will continue to thrive and make money over time.
When two things combined equal more than they are worth separately, they possess synergy. Two different companies that work well together can add value to each other’s business. Similarly, an employee working in two separate departments of a company will gain better insight than an employee that works in one department.
A marketing tool, a phrase that is associated with your business so people know what to expect from you.
Something you can touch, a physical product that your customers can take away with them. Confidence is built and value is reinforced when customers can physically touch what they are purchasing.
A group of people you are aiming to reach in your communications and marketing. This is different from a target market: the target audience is all those whom you want your message to reach.
Target Market (see also Niche Market)
A group of people you are aiming to generate sales from. This should not be everyone.
Transaction-based Company (see also Contract-based Company)
A transaction-based company is one where there is a single sale from a customer. You don’t tie the customer into your company and they are not obligated to continue doing business with you.
Unique Selling Feature (see Competitive Advantage)
Value Proposition (see Competitive Advantage)
The morals and beliefs you think are important for your business. These will be ingrained in your processes and procedures.
An investor who normally provides investment in your company between $1-million and $5-million. Venture capitalists are typically highly involved with the company in the final stages of commercialization or through a rapid growth phase where cash is required. They expect a high rate of return in a short period of time.
All of the marketing initiatives you undertake in order to get everyone, especially your target market, to notice you.
A five-year, if not longer, goal for your business that is motivating and driving you.
Willingness to Pay (see also Value)
Word of Mouth
The result of a well-planned and well-executed marketing strategy wherein people are spreading awareness of your business by talking about it. This tends to be the result of happy customers who share their positive experiences with their friends and family.
Prioritizing what is important in your business and personal life and managing each with minimal interference to the other.