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 differs from the competition.
An investor who works with start-up businesses requiring a less than $500,000 cash infusion. An angel investor usually helps launch the business, 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 must believe that you can deliver what you promise.
Something which your customers deem of value that they get from purchasing your product or service.
The most favourable outcome of a particular situation, without being unrealistic.
Your business’ image, built through marketing initiatives; the impression that you portray to people about the type of business you have. Everything about your company portrays your brand. Brand 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 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. A business plan shouldn’t be be more than 20 pages long. 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)
A type of business that delivers a product or service to another company, rather than to the end user.
Business-to-Consumer (see Business-to-Business)
A type of business that delivers a product or service to the end user, rather than to another company.
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 capacity.
Cash Flow Management
The process of keeping track of cash as 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, in that:
- Your company should excel at it
- You should continue to develop this advantage to stay ahead of the competition
- You should easily communicate this strength to your customers as something that makes your company unique.
Competitive Edge (see Competitive Advantage)
Consolidated industry occurs when the market contains only a few competitors as a result of companies buying each other out or forming alliances, or many business closures due to competition.
A company philosophy designed to improve productivity on an ongoing basis. Management should support the process and make all company employees aware of it. The process should be formal to ensure that the improvement goals are agreed upon and shared.
Contract-based Company (see also Transaction-based Company)
A contract-based company is a business model in which customers commit to conducting business with an organization through a sales contract that lasts longer than one delivery of the product or service.
A company’s core business is its main product or service. A company may have multiple revenue streams, but the owner should allocate the majority of its resources to supporting the heart of the business.
Core Competency (see Core Business)
Corporate Culture (or Corporate Atmosphere)
Corporate culture, composed of the values and beliefs of a company, is reflected through the company’s organizational structure and the behaviour of its employees.
Customer expectations are made up of your customers’ beliefs regarding what they will receive from purchasing your product or service. Often their expectations go far beyond the mere product or service itself, including additional benefits such as customer service or warranty fulfillment.
Touch-points include every way in which a company interacts with a customer, such as:
- A proposal
- Meeting face-to-face
- An invoice.
Entrepreneurs are individuals who initiate a business. An entrepreneur often has the unique ability to develop great ideas, improve upon them and execute them.
Features are distinctive characteristics of a product or service. A feature often brings a positive benefit to the customer.
Fixed costs remain constant regardless of how many number of a business makes. For example, rent doesn’t change whether you sell two or ten units of a product.
Flat Organizational Structure (see also Hierarchical Organization Structure)
A company with a flat organizational structure has a very small level of middle management between the employees at the top and those that are customer-facing. Creativity and flexibility thrive within the flat organizational structure.
Flexible people have the capacity to change quickly when necessary. Small businesses can act with much more flexibility than larger ones, a core advantage.
Hierarchical Organization Structure (see also Flat Organizational Structure)
Companies with a hierarchical organization structure typically have many middle-managers and several lines of communication between the top and the bottom. Companies that require complicated processes and systems tend to use this structure.
Hockey Stick Growth
Hockey Stick Growth, the type of growth that angel investors and venture capitalists are most interested in, occurs when the growth rate of a business resembles a hockey stick shape when plotted on a graph. Growth starts slowly, characterized by slow sales and high costs, but quickly shifts to a rapid, exponential incline.
Initial Public Offering (IPO)
Initial Public Offering is the first offering of stocks or shares of a business to the public for investment purposes.
Services are often describes as intangible, in that they aren’t something that a customer can touch, but they provide the customer value.
Intellectual Property (see also Proprietary Information)
Intellectual property is proprietary or protected information owned by the company. Often this information:
- Is valuable
- Reveals a company’s competitive advantage
- Should be closely guarded
Protect your intellectual property with a patent, copyright or trademark. A lawyer can advise on which would be most appropriate for your particular needs.
An investor will put time and/or 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).
A formal agreement between two parties to work together in a business endeavour and share the proceeds, a joint venture is often formed when a company enters a foreign market.
A learning curve is the initial period in a new business when an entrepreneur becomes better at the business of which they’re now a part. The learning curve can refer to the administrative component of the business. Once someone learns how to do something the best way possible and practices, they do it with increasing speed and efficacy.
A person leverages their resources when they use the resources that they have (money, time and people) to gain even more resources.
Likeability is the most important aspect of relationship building, as people do business with people they like.
Liquidity refers to the ability to keep cash on hand. High liquidity means you either already have cash available or you are able to convert assets to cash very quickly.
A colloquialism meaning to do something that provides a tremendous value but that’s easily achievable. If you can only do one thing, “going for low-hanging fruit” would be your next step.
Margin refers to the amount of profit you are making – 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.) Profit margins are often expressed as a percentage.
Your market share is the proportion of your entire target market that would potentially purchase your product or service. The rest of the market would purchase from your competition. Market share is often expressed as a percentage.
An assessment of whether customers will spend money on what you are selling, marketability depends on both the perceived need for your product or service and the perceived value beyond the price paid for it.
Marketing is a set of tools used to promote sales and to create an image for your company that will stand out in your customers’ minds.
A marketing campaign combines various communication tools to promote and support a consistent message about your business. Using more than one communication tool creates a higher probability of reaching your consumer.
A detailed outline of how you intend to communicate with your potential customers. Marketing is not arbitrary. Do something marketing-related only if it is:
- Makes sense to you
- Makes sense to people with whom you discuss it
A marketing plan outlines the logic and strategy behind your communications with potential customers.
A mature market is a group of existing customers who have purchased your product or service over an extended period of time. Signs that you’re in a mature market include:
- Increasingly smaller margins
- New competitors
- A need to go to new target markets with customized offerings.
Something your business tries to achieve everyday – not a long-term goal, as 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. Networking with people helps you assess:
- Seek out and assess the potential for new customers.
- Develop strategic partnerships
- Meet and find out more about quality suppliers, professional services to support your business, potential mentors
The value of effective networking can’t be denied, as you can meet all sorts of people who are happy to support your business in a variety of ways, as well as people who can benefit from your specific skill set. Small businesses supporting each other is a great dynamic for any entrepreneur!
Businesses that are new entrants emerge in the market later in the game, usually after an entrepreneur has learned from a similar business or can see that there is profit to be made in a specific industry or market. New entrants face a less of a learning curve and reduced risks compared to businesses that entered the market earlier.
A niche market is made up of smaller group of potential clients with more specific needs and/or preferences than the larger markets. Targeting a smaller group’s needs lets you more easily adapt your product or service.
A non-disclosure agreement is a legal document that prevents a third party from telling another party confidential information about your company. Companies use non-disclosure agreements right after they open or when a product is not otherwise legally protected.
The benefit you can give your customers above and beyond your main product or service.
The process by which you introduce your customers to your product or service, or how you bring customers “on board” with your company. A well-rounded on-boarding experience leaves a positive impression on your customers.
What you gain or lose by choosing one particular option over another. Consider time, money and resources when determining opportunity cost.
The payback period is the amount of time required for an investment to create revenue equal to the original investment amount.
A company uses penetration pricing when it enters a market with a new product or service at a low price point. The initial margin per sale is low but the low price lets the company capture a larger part of the market than with higher pricing.
Positioning Statement (see 30-Second Pitch)
A company uses price skimming when it enters a market with a new product or service at a high price. The intent is maximize profit at the beginning of a product life cycle and decrease the price over time as the competition enters the market.
In a price war, two competing companies repeatedly undercut each other’s prices. Price wars are dangerous for a small business, which may not have the cash flow to compete against a larger, more established company.
Processes are standard, systematic and objective ways to explain how to do something. Expanding companies use processes to give step-by-step instructions to new employees. More generally, companies use processes to analyze and optimize their operations.
Product Life Cycle
A product has a life cycle with distinct phases:
- Introduction of product to the market
- If successful, rapid business growth
- Product becomes mainstream with steep competition
- Significant decrease in sales as a new product takes its place
A company could at several points somewhere within these phases decide to re-invent the product and re-start the product life cycle. However, the product team should know where in the cycle the product currently is, as there are advantages and drawbacks in each phase to initiating a re-start.
Profit (see Margin)
Proprietary Information (see also Intellectual Property)
Proprietary information is exactly like intellectual property, but without the protection of a patent. NDAs (non-disclosure agreements) and corporate secrecy are required to protect proprietary information. Protect yourself generally by including a proprietary information statement included in your emails that ensures that part of any proposal or item you leave with a customer (or potential customer) will remain confidential.
Red tape refers to all of the procedures, policies and government regulations that entrepreneurs and their staff face in daily business and interactions with other parties that seem excessive or hindering. Examples include, but are certainly not limited to:
The return is the percentage of profit an investor makes on top of their initial investment in a business. Calculate return by dividing the initial investment amount by the profit.
Revenue is the amount of money coming into the business, before costs.
A revenue stream is a way in which a company brings in money. Most companies have a few different revenue streams running at the same time.
Sales Cycle (or Sales Process)
Most companies have a sales process, or view that potential customers who go on to buy something and become customers go through distinct phases:
- Consumer becomes aware of the product and the company
- Consumer takes time to understand the offering and become increasingly interested in the company
- Consumer is ready to purchase.
The sales staff should be ready to support the consumer at each phase.
Sales Process (or Sales Cycle) See Sales Cycle
Scalability refers to easy it is to expand a business’ existing infrastructure to service as many customers as possible in a limited amount of time.
Marketers that use social networking use online tools to reach out to potential customers, generating sales based on existing ties and relationships and on new connections that they generate. Common social networking websites include Facebook, MySpace, LinkedIn and YouTube.
Strategic alliances form when companies create a mission together or agree to work together based on holding common values which allow them to assist each other.
A logical idea or plan to reach a goal.
A business that will continue to thrive and make money over time.
Synergy is the idea that two things combined equal more than they are worth separately. Examples from the business sphere include:
- Two different companies that work well together add value to each other’s business when they work together
- An employee working in two separate departments of a company gains more insight into how the company works than an employee that works in only one department.
One of the more common marketing tools, a tagline is a phrase that is associated with a business, letting people know what to expect from it.
Tangible things can be touched. A business-created tangible might be a physical product that customers can take away with them. Customers feel more confident in a business when they can physically touch what they’re paying for, and place more value on the product.
The target audience is the group of people that a business hopes to reach with its communications and marketing. A target audience is different than a target market, which is the group from whom a business hopes to generate sales.
Target Market (see also Niche Market)
The group of people from whom a business hopes to generate sales. By definition, the target market is small, and shouldn’t be confused with the target audience.
Transaction-based Company (see also Contract-based Company)
A transaction-based company is one from which customers buy only once. The sales safe doesn’t tie the customer into the company, as they are not obligated to continue doing business with the company.
Unique Selling Feature (see Competitive Advantage)
Value Proposition (see Competitive Advantage)
Values are the morals and beliefs identified as important for a business. Values are ingrained in the company’s processes and procedures.
An investor who normally invests in between $1-million and $5-million in a company, venture capitalists are involved with companies in the final stages of commercialization or through rapid growth phases requiring where cash. They expect a high rate of return in a short time.
Visibility refers to marketing initiatives undertaken with a goal to get everyone, especially the target market, to notice a business.
A vision is a long-term business goal (five years or longer) that motivates and drives everyone involved.
Willingness to Pay (see also Value)
Word of Mouth
Word of mouth is the result of a well-planned and well-executed marketing strategy where people spread awareness of a business by talking about it. Getting business by word of mouth tends to be because a business has happy customers sharing their positive experiences.
Prioritizing what is important in your business and personal life and managing each with minimal interference to the other.