Accelerator Accelerators (also called startup accelerators or seed accelerators) are programs that offer seed capital, mentoring and education to startup businesses. Membership is cohort-based and for a fixed term.
Accounting, Accrual-Based is when income and expenses are counted at the time they are actually transacted, not when funds change hands. In the event that payment is not made or the transaction is cancelled, additional accounting entries are made to write off the loss. Larger businesses choose accrual-based accounting in order to have a better sense of overall profitability.
When choosing between accrual or cash-based accounting, consult an accountant.
Accounting, Cash-Based is a method of accounting where income and expenses are entered into the books only at the time money changes hands. In an example of cash-based accounting, a sale may be made at the end of one month, but the payment isn’t made until the following month. The income only shows when the payment is made. Cash-based accounting gives a more accurate picture of the ability of a business to pay its bills.
Accounts Payable (A/P) is money owed by a company to its creditors. Commonly referred to as “payables”.
Accounts Receivable (A/R) is money owed to a company by its debtors. Commonly referred to as “receivables”.
Accounts Receivable Aging is a report that lists unpaid invoices by date ranges. A high level of A/R aging suggests an inability to collect invoices and can prevent a business from receiving a bank loan.
Accredited Investor Under securities laws, only accredited investors are permitted to invest in certain unregulated opportunities. In the U.S., an accredited investor must meet select criteria. They must have earned annual income of $200,000 (or $300,000 for married persons) OR have $1 million or more in investible assets, excluding the investor’s personal residence.
Affiliate Marketing is an arrangement where an advertiser pays a publisher (in online terms, a website or blog) commissions in exchange for the publisher providing leads or generating sales for the advertiser.
Agile is an approach to software development. It relies on self-organizing and cross-functional teams. Agile development advocates adaptive planning, evolutionary development, continual improvement, flexibility, and early delivery.
Algorithm is a series of if/then statements that decide what action should be taken by a computer program. It is a list of mathematical equations. Google and other search engines use algorithms to establish rules by which to sort through hundreds of billions of websites in order to rank them in order of usefulness.
Analytics is a freemium service offered by Google, Bing, Facebook and other social media that tracks and reports website traffic.
Angel Investors are wealthy individuals who provide startup capital. They normally receive equity or convertible debt in exchange. Generally, they are well-versed in the industry of the startups they are funding, and provide mentoring and connections as well as capital.
Annual Meeting Minutes All states require that corporations hold valid corporate meetings and keep minutes once annually. Meeting minutes are a written record that includes attendees, date and time the meeting was held, basic information covered and decisions that were made. S-corporations with only one owner are not exempt from this requirement. They too must hold an annual meeting. Generally, meeting minutes include naming of officers and directors, the number of officers and directors.
Privately owned S or C corporations are not required to disclose proprietary information such as financials. However, publicly traded corporations, in other words, corporations whose shares are for sale on a registered stock exchange, are required to publish financials.
Apostille is authentication necessary for international acceptance of documents that have been notarized. It protects the holders of notarized documents from the burden of authentication in another country that formerly, they had to get from foreign consulates. It replaced the “chain authentication” requirements that required verification from multiple authorities. Apostilles are issued by states and facilitate international acceptance of documents that include, but are not limited to adoption documents, affidavits, birth certificates, death certificates, diplomas, incorporation papers, marriage certificates, patents, school or college transcripts, or powers of attorney.
Assets are any resource owned or controlled by a business or other economic entity that can produce positive economic value. See Balance Sheet.
Automated Review Acquisition refers to automated processes that prompt a recent customer to leave a review for a business.
Balance Sheet is a financial statement that lists the assets, liabilities and equity of a business during a defined period (monthly, quarterly, annually). Equity is the “net worth” of the business. The balance sheet is the basis for evaluating the capital structure of the business.
Assets = Liabilities + Equity. -OR- Assets – Liabilities = Equity.
Bounce Rate is the percentage of visitors who left the site after viewing one page. A visitor went to one page and did not engage further or visit additional pages.
Buyer Persona is a semi-fictional representation of your ideal customer. It is based on real data about any existing customers you may have, and market research. Buyer personas should be created whether you are selling to consumer, business or government clients. “My ideal client is married with two children, earns over $75,000 in annual income, and lives within a 10-mile radius of my business.”
CTA (Call to Action) is a button or any other device on a website or social media page that is designed to prompt an immediate response or encourage a sale. The CTA clearly articulates a step, such as “Sign Up”, “Buy Now”, “Contact Us”, “Learn More”, “Follow Us”, etc.
Cash Flow Statement shows the amount of cash that enters and leaves the business during a defined period (monthly, quarterly, annually). Unlike the income statement which only shows business activity, the cash flow statement shows all cash, which can come from sources such as investors, owners, and proceeds from loans.
CDN, or Content Delivery Network, or Content Distribution Network, is a network of data centers and proxy servers that is geographically distributed. This helps ensure high performance and availability.
Certificate of Good Standing is also known as a Certificate of Existence, Certificate of Fact, or Subsistence Certificate. This is used by a business entity as proof that they are incorporated and legally authorized to do business in a particular state. It is issued by a state if no outstanding fees, penalties or taxes are owed to that state. It may also be used to indicate that the company is compliant with requirements to file annual reports and maintain adequate registered agent service.
Certificates of Good Standing are issued by Alaska, Arizona, Delaware, Hawaii, Maryland, Massachusetts, Michigan, New Jersey, Utah, Virginia, Wisconsin, and the District of Columbia.
Certificate of Status Issued by a number of states, including Florida, to show that your company is active and has paid initial filing fees. In most states, it is optional. However, some banks or government agencies may require one as verification that a company is active. It may resemble a diploma in appearance.
Cloud computing is commonly referred to as “the cloud”, means running workloads remotely over the internet in a commercial provider’s data center, also known as the “public cloud” model.
CTR (Click Through Rate) is the ratio of users who click on a specific link to the number of total users who view a page, email, or advertisement. This is a key metric and is used to measure the success of marketing e-mails, landing pages, and social media.
Common Stock are shares of stock that entitle the owner to dividend payouts, as well as a vote on corporate matters such as election of directors.
Convertible Debt In investment terms, convertible debt (also known as a debenture) is money that has been lent to a business, but the contract allows for the lender to convert the loan into a pre-set number of shares of ownership in the business.
Consignment is an agreement to pay a supplier of goods after the goods are sold.
Corporation is a form of business entity that takes on its own identity. It can sue and be sued and enter into contracts. It is registered in one state and with the IRS via an Employer Identification Number, and has one or more owners. Corporations are the most formal and established of business registrations.
Corporation; C-Corporation is a corporation with 100 or more shareholders, can issue more than one class of shares, have shareholders who are not U.S. citizens or residents. They can be owned by other C-corporations, S-corporations, LLCs, partnerships, or trusts. Profits are “double-taxed”. In other words, the corporation pays income taxes, and then pays out net profits to shareholders in the form of dividends. Those dividends then become individually taxable to those shareholders.
Corporation; S-Corporation is a corporation with fewer than 100 shareholders. S-corporations are restricted from issuing more than one class of stock and cannot be owned by persons who are not U.S. citizens or residents. They cannot be owned by another S-corporation or C-corporation, a partnership, a trust, or an LLC. However, unlike C-corporations, their profits are only taxed once.
COGS (Cost of Goods Sold) is the direct cost of producing the goods that a company sells. It includes materials and labor required to produce the goods.
CPL (Cost Per Lead) is online advertising pricing. It is how much revenue a publishing site receives when he creates a lead for an advertiser.
CRM (Customer Relationship Management System) A CRM is a central location to store all available data on past, current, or potential customers. A CRM enables businesses to analyze data about customer history in order to optimize interactions with those customers. The goal of a company’s CRM use is to enhance customer retention and increase sales. CRMs are generally cloud-based.
Crowdfunding is a method of financing where under certain conditions, members of the public can participate in funding a business venture. It comes in two forms. One is donations and perks. For example, an individual who helps to fund a new product or a new production such as a movie could receive one of the first products, movie tickets, or other merchandise. Another form of participation is equity in the business under some circumstances. Accredited investors generally do not face restrictions on their ability to participate in crowdfunding, but non accredited investors do.
Current Assets are assets that can be used, converted to cash, exhausted or consumed in one year or less. They include cash, cash equivalents, inventory, accounts receivable, and other liquid assets.
Current Liabilities are a company’s short-term financial obligations due within one year or less. Examples are payroll, income taxes due, notes payable, and accounts payable (money owed to suppliers).
Current Ratio is current assets divided by current liabilities. It measures a company’s ability to pay its bills. The “Banker’s Rule” is that a healthy business should have a current ration of 2:1, which is $2 of current assets for every $1 of current liabilities.
Debt to Equity Ratio. A company’s balance sheet debt divided by shareholders’ equity. It is a measure of a company’s ability to pay creditors’ claims in the event of liquidation.
Demand Generation is the total marketing and public relations efforts that get clients excited about your products and services.
Depreciation is the reduction in the value of an asset over time due to wear and tear.
Domain or domain name helps visitors find your business online. It comes before .com, .net, .org, etc.
Dropshipping is a retail sales method in which the retailer does not keep products in stock that it sells. Under this method, the retailer makes a sale to a customer, often via an online storefront, and only then pays the manufacturer, keeping the difference in profit. The manufacturer, or other third party ships the product to the customer.
E-Commerce refers to electronic commercial transactions conducted on the Internet
E-Mail Marketing is a digital marketing strategy of contacting prospects and customers with the intent of turning prospects into customers and customers into repeat customers and supporters.
E-Mail Widgets allow users to see new messages in their inbox and perform management actions without needing to open a dedicated app.
Employer Identification Number/Taxpayer Identification Number Also known as an EIN or TIN. The terms mean the same and are used interchangeably. It is a unique nine-digit number assigned by the Internal Revenue Service to business entities operating in the United States for the purposes of identification.
Equity is ownership of assets that has debt or other liabilities attached to it. For accounting purposes, it is measured by subtracting liabilities from assets. The result is equity, or the “net worth” of the business. See Balance Sheet.
Error 404 indicates a file not found. This is usually the result of a broken link, or possibly an error on the part of the user, such as incorrectly typing a web address.
Factoring is a method of finance in which a business sells a receivable invoice to a factoring company (known as a factor). The factor purchases the invoice at a discount but collects the full amount of the invoice, keeping the difference. The factor is only concerned with the credit rating of the client that owes the invoice. This method of finance is often used by small businesses that may not qualify for traditional bank financing, but contract with large creditworthy entities such as governments or large corporations. It is a way to get paid immediately on an invoice that may not be due for 30 days or more.
Floor Planning is a business arrangement that allows a borrower to receive loans for retail goods. The loans are made against a specific piece of collateral. This is commonly used by car and RV dealers. The manufacturer ships the vehicles to the dealer. The dealer has the vehicle on display and available for sale, paying interest and principle on the vehicle to the manufacturer until the vehicle is sold. The loan is then paid off in full. Also known as “floor plan financing“.
Inbound Marketing refers to all of your efforts to attract clients by providing useful and relevant content. It is meant to add value at each step of the buying journey.
Income Statement is a financial statement showing profit and loss from business activity. It is a listing of revenues and expenses during a defined period (monthly, quarterly, annually) and shows how revenues translate into net income, or profit. Commonly known as a profit/loss (P/L) statement. The terms are used interchangeably.
Incubator An incubator is a facility dedicated to startups. It is equipped with desks, office space and equipment, and staffed with mentors. Membership is for a set number of years, members are selected via a committee, and in most cases pay below-market rates. Incubators often receive funding from universities, governments, nonprofits and corporations.
Insurance, Business Interruption. Your business can lose revenue for a variety of covered reasons. Natural disasters, fire, terrorism, or loss of a key manager can interrupt sales. Business interruption insurance can replace lost revenue for a set period of time.
Insurance, Commercial Property. This is insurance for protection of the physical assets of a business.
Insurance, Cyber Liability. Cyber insurance provides coverage in the event of data breach or cyber-attack.
Insurance, Employment Practices Liability. This is coverage in the event the business faces liability due to claims arising from sexual harassment, discrimination, or wrongful termination.
Insurance, Excess Liability. In the case of a protracted legal battle associated with a liability claim, attorney’s fees and court costs can deplete funds from insurance proceeds. Excess liability provides additional protection for the business and owners in such cases.
Insurance, General Liability. This protects from injury or property damage suffered by someone on your premises. A recent quote for a deli-style restaurant in Chicago was $72 per month for up to $2 million in coverage
Insurance, Product Liability. If you produce a product that causes property damage or bodily injury, product liability insurance provides protection.
Insurance, Professional Liability. Like Errors and Omissions insurance, this is coverage in the event that a client suffers a loss due to error or omission on your part.
Insurance, Workers’ Compensation. Workers’ compensation covers employees in the event of injury on the job. It covers medical care, lost wages, and all other services necessary to help the employee return to the job. It is available in all 50 states, but laws requiring coverage vary from state to state.
Kanban (which is Japanese for billboard or signboard) is a lean method to manage and improve work across human systems. This approach aims to manage work by balancing demands with available capacity, and by improving the handling of system-level bottlenecks.
Kaizen is a Japanese term that means “change for the better”. It refers to a process of continuous improvement of business activities and involve all employees from the CEO to the assembly line workers.
Keywords are words or phrases that describe your products and services and are used by search engines to index and rank content from your website.
Labor Compliance Posters are mandated by state and federal employment law to be displayed in a conspicuous area frequented by all employees. Employers with one or more employees are required to display the posters which include, but are not limited to, the current minimum wage, as well as employee rights in the event of discrimination, injury, or pregnancy.
Landing Pages are lead generation tools that are built to respond to a specific CTA. For example, if a user clicks “Buy Now” from a social media site, search engine, or another website, the landing page is where they arrive.
Lead Generation is the process of identifying possible customers for your products or services.
Lead Magnet. Lead magnets are incentives that are offered in exchange for contact information such as e-mail addresses.
Leasehold Improvements are enhancements or renovations made by a renter. Leasehold improvements become the property of the landlord, or property owner.
Liabilities are defined as obligations owed; debts incurred as a result of past transactions. See Balance Sheet.
Licensing is an arrangement where a licensor grants the rights to intangible property (patents, formulas, copyrights, trademarks, designs, processes) to another entity for a specified period of time. That entity, known as a licensee, pays a royalty fee to the licensor. This is a common arrangement used by inventors to earn income from a manufacturer.
LLC (Limited Liability Company) is a hybrid business entity that in many cases combines features of corporations, partnerships and sole proprietors. Laws governing LLCs vary from state to state but in general, the LLC has to be missing two of the four characteristics of a corporation (limited liability, centralized management, continuity of life, and free transferability of ownership interest). Depending on the number of owners, LLCs provide flexibility in how they are taxed. They can choose to be taxed as sole proprietors (in the case of an LLC with one member), partnership, or S or C corporation. It is registered in one state and with the IRS via an Employer Identification Number, and has one or more owners.
Margin, Contribution. The Contribution Margin is how many dollars each unit sold contributes to the total gross margin. It is the selling price minus the variable cost per unit, and those dollars are now available to cover fixed costs. Contribution Margin = Sales Revenue – Variable Cost
Margin, Gross. The Gross Margin is sales revenue minus Cost of Goods Sold (COGS).
Marketing and Sales Funnels. These are the stages of a process that move a potential customer from awareness to a sale, and post-sale activity. They are pipelines of potential new business. Graphically speaking, this is like a funnel with a wide mouth and a small exit. At the top, or wide end are potential clients. As they investigate further and move through the buying journey, there are fewer of them. The sales funnel refers to the marketing and education activity required as potential clients move through the buying journey. The goal is an end result that produces sufficient sales.
Mezzanine Financing is capital provided by a lender who has the right to convert to an equity interest in the company in case of default, generally, after venture capital companies and other senior lenders are paid.
Organic Search (also organic search engine optimization) describes processes used to gain natural placement in search engine results pages. It is unpaid search engine optimization (SEO), occurring not as a result of paid advertising but of relevance to a search.
Optimization refers to all activities used to gain the highest and best placement in search engines.
Outbound Marketing refers to traditional marketing activities such as trade shows, cold-calling, or seminars. It is time-consuming, expensive, and generally has lower ROI (return on investment) than inbound marketing.
Partnership is a form of business entity combined of two or more owners. It is formed by a partnership agreement which is registered in the state where the partnership does business. Partners individually share the revenue, profits, expenses, losses, taxes and liabilities of the business.
Payment Gateway is a secure, encrypted provider of an e-commerce service that authorizes credit and debit card payments. This allows web-based businesses and individuals to securely accept credit or debit or other forms of electronic payment online. PayPal and Stripe are well-known examples of payment gateways.
PHP is Hypertext Preprocessor, which is general-purpose scripting language used in web development. It is widely used, free, and can be embedded into HTML.
Preferred Stock are shares of a company that take priority over common stock shares. Features of preferred stock include dividends which take priority over common stock dividends, and in a liquidation scenario, owners of preferred stock get paid before owners of common stock shares. Preferred stock can be converted to common stock.
PMP Certification is Project Management Professional certification; a designation given by the Project Management Institute (PMI) to professionals who meet certain education and experience criteria. Individuals who have completed the application and exam process are expected to be intimately familiar with common concepts, challenges and vocabulary of project management.
Profit/Loss (P/L) Statement is a financial statement showing profit and loss from business activity. It is a listing of revenues and expenses during a defined period (monthly, quarterly, annually) and shows how revenues translate into net income, or profit. Commonly known as an income statement; the terms are used interchangeably.
Pro-Forma means financial statements that are projections of future expenses and revenues, based on a company’s past experience and future plans.
Proxy Server is a part of a computer network; a server application or appliance that acts as an intermediary between clients and servers that provide resources that clients are seeking.
Public Relations is the craft of gaining media or public attention on the most favorable terms possible.
Plugin. Plugins are software components that add specific features to software. An example of a plugin would be a contact form appearing on a website, inviting users to submit contact information.
PPC (Pay per Click). PPC is an online advertising model in which a business pays for an advertisement to appear in search engine results, and pays a fee each time the ad is clicked.
Registered Agent s a business or individual designated to receive service of process when a business entity is a party in a legal action such as a lawsuit or summons. They are required to be at a physical address during normal business hours and the address is public record. They are also called statutory agents.
Reputation Monitoring and Management. Your online reputation is a combination of all information available about you online and searchable to the public. There are services available to alert you of changes that occur as new information about you becomes available online. The practice of reputation management is concerned with making positive information easy to find, while mitigating negative information.
Registered Agent. A registered agent is a responsible party located in the same state where a corporation or LLC is registered. In some states they are known as “statutory agents”. All states require that every corporation or LLC has a registered agent at a physical address, as opposed to a P.O. Box. The purpose of a registered agent is to be available during normal business hours to receive certified mail or service of process. Since process is considered served as soon as it is signed for, a reliable registered agent is essential.
SaaS (Software as a service) is a model in which a third-party hosts applications and makes them available to customers over the Internet. The application is based in the cloud. Examples include Salesforce and GoTo Meeting.
Sales Funnels SEO (Search Engine Optimization) is the total effort to increase quality and quantity of traffic to a website. The goal is organic (unpaid) search engine results. To understand it, picture a funnel with a large opening at the top and a small opening at the bottom. The top of the funnel contains prospective customers and visitors to a business. As prospects advance through the sales process, the less interested ones depart. The smaller bottom end of the funnel is completed sales.
SBA (U.S. Small Business Administration) is a United States government agency that provides support to small businesses and entrepreneurs.
SBA 504 Loans are provided for the purpose of purchasing real estate (20 year loan) or equipment (10 year loan). They are available for businesses with a net worth not exceeding $15 million. 50% of the funds come from lenders, 40% come from a community development corporation (CDC), while the remaining 10% comes from the borrower. The building must be at least 51% owner occupied, and that requirement rises to 60% if the building is new construction.
SBA 7(a) Loans are loans made by commercial banks, but guaranteed by the SBA. The maximum amount is $5 million, and they can be used for expansion, renovation, new construction, purchase or leases of buildings, leasehold improvements, equipment, fixtures, inventory, or a line of credit. They feature an SBA guarantee of 85% on principle of $150000 or less, and a 75% guarantee on loans greater than $150000. The down payment requirement from the borrower is generally less than standard commercial loans. They are “general purpose” loans; businesses have flexibility as to use of proceeds.
SBA Non 7(a) Microloans are $50,000 or less. They can be used to purchase machinery, equipment, fixtures, leasehold improvements, working capital, or to finance receivables. They cannot be used to refinance existing debt. They are easier to get than other loans and usually have a requirement that the borrower receive technical assistance.
SBDC (Small Business Development Center) SBDCs are specifically chartered to provide consulting and training to owners of startups and small businesses at no cost or low cost. They are funded primarily by states and the U.S. Small Business Administration and hosted by universities and county governments.
Scrum Master refers to a team leader responsible for promoting and supporting Scrum. Scrum is an agile framework for developing, delivering, and sustaining complex products, with an initial emphasis on software development, although it has been used in other fields including research, sales, marketing and advanced technologies.
Search Engine Optimization (SEO) Strategy that increases quality and quantity of traffic to a website through use of keywords, links, and overall relevance in searches. All search engines have videos, articles, or other content ranked according to what the search engines consider most relevant to users.
Seed Capital is the initial round of financing provided to form a startup. Generally, it comes from “The F’s” which means founders, family, and friends.
Series A,B,C Funding refers to progressive rounds of funding. They come after the seed round (see Seed Capital). As a startup meets certain milestones of revenue and traction, a Series A round could be used to start paying salaries of founders and employees. A Series B round might cover additional research and development for a promising product or service. A Series C round could prepare the company for an initial public offering or acquisition.
Six Sigma is a set of management techniques intended to improve business processes by greatly reducing the probability that an error or defect will occur. It refers to the “sixth sigma”, where the Greek letter sigma refers to the sixth standard deviation. This is near statistical perfection; manufacturing defects reduced to a level of no more than 3.4 occurrences per million units or events. Six Sigma is a series of improvements applied to a system; a method to work faster with fewer mistakes.
SMM (Social Media Marketing) is Internet marketing that uses social media as a marketing tool. The goal is to create content that users will share.
SMS is Short Message Service, which is a formal term for text messaging.
Sole Proprietorship is the simplest business entity. It is one owner and the business is not registered as a partnership, LLC, or corporation. The owner has complete control but also liability. Business losses and expenses are deductible to the owner personally while profits are taxable for the owner personally.
SQL is Structured Query Language; a domain-specific language used in programming that allows a user to access and manipulate databases.
SSL (http). HTTP is Hyper Text Transfer Protocol, which is an application protocol for information systems that are collaborative and distributive. HTTPS is http secure. The data between your website and the browser is encrypted and secure. It is used to protect confidential information such as banking or online shopping. SSL (Secure Sockets Layer) is one of the methods used to establish the encrypted link.
STMP is Simple Mail Transfer Protocol. It is a communication protocol for e-mail transmission. It is a designated server and it’s purpose is to send, receive, and/or relay outgoing mail between senders and receivers.
Stock Shares are individual units of ownership of a corporation.
Tripwire Marketing A marketing tactic in which a customer is offered a low-cost item in order that they can be upsold later. It is a way to turn a lead into a customer with little pain for the customer.
Vesting is a way to incrementally release equity that an employee that has been awarded equity. An example would be a partner who was awarded 10 percent of a company. A vesting schedule ensures that the partner cannot quit after a short time and keep the 10 percent of the company. Generally, the equity is released little by little over the course of several years.
Venture Capital Venture capital is a form of startup funding. Generally, venture capitalists have minimum investment thresholds and restrict investment to specific fields, such as scientific, technical or medical startups. They look specifically for high-growth industries and companies and receive a stake in companies they invest in.
VPN means Virtual Private Network. A virtual private network extends a private network across a public network and enables users to send and receive data across shared or public networks as if their computing devices were directly connected to the private network. It is technology that enables a team to work together securely in a variety of public locations.
Website Widget is technology that enables you to combine things simply. An example is a calendar on a website.
Widget. A software widget is a website component and is made for one or more different software platforms. See Website Widget.
Y-Combinator A California-based accelerator. Startups selected for the program receive connections, advice and seed capital in exchange for equity.