This glossary aims to provide an overview of essential terms to help you easily navigate the entrepreneurial landscape. It is taken from my latest book ” 50 Golden Rules : The Beginner’s Guide To Entrepreneurship”.
Here are some keywords and phrases you’ll come across, especially as you seek funding from Business Angels and Venture Capital firms.
Accelerator: A time-limited support program for start- ups that offers mentorship, education and resources to help them scale their businesses rapidly.
Angel Investor: A high-net-worth individual who invests in start-ups, often in exchange for equity or convertible debt.
Bootstrapping: Funding a business using personal savings or revenue generated from the company’s operations.
Break-even Point: The point at which a business’s revenues equal costs, resulting in neither profit nor loss.
Business Model: A company’s strategy for generating revenue and sustaining its operations, including its target market, value proposition and revenue streams.
Cash Flow: The movement of money in and out of a business, typically measured over a specific period. Churn Rate: The rate customers stop doing business with a company, usually expressed as a percentage.
Convertible Debt: A short-term loan that can be converted into equity later, usually upon a predetermined event, such as a funding round.
Crowdfunding: A method of raising capital by soliciting small contributions from many individuals, typically through online platforms.
Customer Acquisition Cost (CAC): Is the total cost of acquiring each new customer in terms of sales and marketing spend. Normally it is expressed over a defined time period.
Disruption: The process of introducing an innovative product, service, or business model that significantly alters how a market or industry operates.
Elevator Pitch: A concise, persuasive summary of a business idea that can be presented in the time it takes to ride an elevator.
Equity: Ownership in a company, typically represented by shares or stocks.
Exit Strategy: A plan for how an entrepreneur or investor will realise a return on their investment, such as through an acquisition or an initial public offering (IPO).
Freemium: A business model that offers essential services for free while charging for premium features or additional services.
Growth Hacking: A marketing approach focused on rapid experimentation and data-driven decision-making to optimise growth and user acquisition.
Intellectual Property (IP): Creations of the mind, such as inventions, designs and artistic works, protected by patents, copyrights, or trademarks.
Lean Start-up: A methodology for building businesses and products that emphasises rapid experimentation, customer feedback and iterative development.
Market Validation: The process of determining whether there is sufficient demand for a product or service before investing significant resources into its development.
Minimum Viable Product (MVP): A simplified version of a product or service that includes only its core features, allowing it to be tested with early adopters and refined based on their feedback.
Pivot: A strategic change in a company’s direction or focus, typically in response to market feedback or changing conditions.
Runway: The amount of time, normally expressed in months that a business forecasts it has before it runs out of cash.
Scaling: The process of growing a business by expanding its operations, customer base, or revenue streams.
Seed Capital: The initial funding used to launch a start- up, often provided by the founders, friends, family, or angel investors.
Series A, B, C, etc.: Various rounds of funding for a start- up, each typically involving a higher valuation and more significant investment than the previous one.
Start-up: A newly established business venture typically focused on addressing a specific market opportunity or problem through innovative products or services.
Term Sheet: A non-binding agreement outlining the key terms of an investment.
Total Addressable Market (TAM): The overall revenue opportunity for your product or service given that you have one hundred percent market share.
Traction: Demonstrable progress in a start-up’s growth, customer acquisition, or market penetration, often used to attract investors or partners.
Unique Selling Proposition (USP): The factor that sets a product or service apart from its competitors, making it more attractive to customers.
User Acquisition: The process of attracting and converting new users or customers to a product or service.
Valuation: The estimated worth of a business, typically determined by factors such as revenue, growth potential and market share.
Value Proposition: The unique combination of features, benefits and pricing a product or service offers to its target market.
Venture Capital (VC): A form of financing provided by firms or funds to start-ups and early-stage companies with high growth potential in exchange for equity.
Vesting: The process by which employees or founders gradually earn the right to own shares or stock options in a company over time.
Viral Coefficient: A measure of how effectively a product or service spreads through word-of-mouth, often calculated as the average number of new users generated by each existing user.
Working Capital: The difference between a company’s current assets and current liabilities, used to evaluate its liquidity and financial health.
