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General Startup Business Language
B2B
Means you offering a “Business To Business” product or service to other companies.
B2C
Means you offer your products or services to other consumers "Business To Consumer".
BAIL Team
Setting Up Your BAIL Team
B- Banker
A- Accountant
I- Insurance Agent
Establishing your business team of advisers is crucial. Your “BAIL” team should consist of your banker, accountant, insurance agent, and business lawyer. This is the team that will "BAIL" you out if you get into a complicated situation.
B- Banker
When choosing where you want to bank, entrepreneurs should keep an open mind and shop around for a bank that fits their needs. Rather than going to your bank where you have your personal account already established, shop around like you would for a car loan.
How to Shop for a Banker:
1. Look at smaller banks and credit unions.
2. Ask for a commercial loan officer.: Do they have a lender that works primarily with small businesses and startups?
3. Ask the loan officer for personal experiences helping small businesses ask for a specific example of a small business that they have helped.
A- Accountant
When structuring your business, you may also want to speak with an accountant to discuss the different implications of the business entity type. You specifically want to talk to your accountant to consider the tax implications for your business and how to set up owner pay (payroll vs. owner draws) through your company, as different entities have different regulations.
• Dallas CPA Finder: Helps find CPAs in the Dallas area based on expertise segmentation.
I- Insurance Agent
Depending on the type of business, depends on what insurance policies you may be required to have or should consider adding. Most companies need some form of liability insurance, workers compensation if the business has employees, and you may need omission and errors insurance.
• Texas Department of Insurance: The Texas Department of Insurance regulates insurers and other companies that conduct insurance business in Texas and assists Texas-based insurance consumers.
•This checklist by the Hartford can help you to determine what type of business insurance may be needed for your business
L- Lawyer
Entrepreneurs should discuss with their attorneys the legal aspects of choosing their business entity to separate business and personal assets. Different types of legal entities are associated with varying levels of protection from a liability standpoint. You'll want to mitigate your risk and determine which legal structure is best. You may need assistance with contract agreements, non-disclosures, or other legal forms.
Bubble
A bubble describes a moment in an economic cycle. Bubbles burst, meaning that the moment will end and that end should be anticipated.
Business Advisor
Business Advisors provide guidance to companies in a variety of capacities. Business advisors might be investors, serial entrepreneurs, or seasoned experts in a specific field. The common theme is that they know a whole lot and can be hugely valuable to your company.
Churn Rate
The annual percentage rate at which customers stop subscribing to a service or employees leave a job.
Copyright
Used to protect your creative content.
Customer Discovery
Customer discovery doesn’t mean looking for customers, but rather identifying who the right customer is for your product while simultaneously finetuning your offering to suit their needs. At this stage you are testing assumptions and hypotheses to validate the customer you’ve identified and their “problem” or need.
Demographic
An expression that is frequently used in marketing to describe the age, gender, income, schooling and occupation of your ideal customers.
Disruptive Technology
Forces consumers to think differently and then adopt that technology as the new norm. Examples include Uber, Lyft, Airbnb.
Early Adopters
The first users of your product. They will typically be key influencers and active on social media. They will give you your most honest and sometimes overly direct feedback. If you can identify these people effectively and have them interacting with your startup from an early stage, you can get lots of free exposure.
Evangelist
Someone inside your organization who is your number one fan. They love your company so much that they often go above and beyond their expected role to help promote your company. If you find an evangelist, hire them!
IP
"Intellectual Property" covers patents, trademarks and copyrights. It is a good way to protect your “secret sauce”.
Iterate
Means to try something, refine it, try again and keep trying using small steps until successful.
Lean Startup
Launched with as little startup capital as possible while getting data that can be used to improve the product. Speed is the key factor here.
Licensing
A business arrangement where a company sells the right to use their IP to another company to use its brand (trademark), copyrights, or a specific technology, usually patented or protected by trade secrets.
Loss Leader
Pricing is using deliberately low pricing to gain market share. The key here is to tempt your users with the low price or free offer and once you have acquired them, focus on how you can get repeat business from them.
LTV / CAC Ratio (Lifetime Value / Cost to Acquire Customer)
This compares the lifetime value (LTV) of a customer to the cost to acquire them (CAC). A good explanation is given by Ande Lyons.
Market Penetration
A measure of how much a product or service is being used by customers compared to the total estimated market for that product or service. Market penetration also relates to the number of potential customers that have purchased a specific company's product instead of a competitor's product.
Market Research
The action or activity of gathering information about consumers' needs and preferences. This can mean many different things, often the most simple research is the best: find your potential customer, ask them if they'd buy your product/service and what they would pay for that service. When developing a business plan you may want to do historical research to support explaining why you have chosen to build the business. Template: Free template from Hubspot
Patents
Used to protect your design.
Product/Market Fit
If you’ve done the work of customer discovery you may end up determining there is a big enough market or demand for your product or service. Or, you could end up deciding your idea or product is not worth pursuing further.
SAM or Serviceable Available Market
The segment of the TAM targeted by your products and services which is within your geographical reach.
Scale
To grow or expand in a proportional and profitable way.
Serial Entrepreneur
Someone who launches a number of businesses either simultaneously or one after another.
SOM or Serviceable Obtainable Market
The portion of SAM that you can capture.
TAM or Total Available Market
The total market demand for a product or service.
Target Market
A target market is a group of customers with shared demographics who have been identified as the most likely buyers of a company's product or service. Identifying the target market is important for any company in the development and implementation of a successful marketing plan.
Tech-enabled
These companies are not the same as “tech companies” because the product or service is powered by another already existing platform or technology (i.e. the internet). Companies that don’t create new technology, but leverage existing technology to provide a platform or service.
Traction
Proof that your hypothesis is working. People are actually buying your product or using your service.
Trademarks
Used to protect your brand.
Value Proposition
What makes your business uniquely attractive. Also known as USPs (Unique Selling Points).
Financial Language
Angels
Individuals with a degree of personal wealth, who invest in early-stage companies. They usually come along at an earlier stage of the business, and since their risk is greater than other investors, they typically invest smaller dollar amounts. They are generally accredited investors, as determined by the SEC.
Balance Sheet
A statement of a company’s financial situation at a single point in time.
Bootstrapping
(One of the most common expressions in the startup world.) Bootstrapping is a term used in business to refer to the process of using only existing resources, such as personal savings, personal computing equipment, and garage space, to start and grow a company. This approach is in contrast to bringing on investors to provide capital, or taking on debt to fund a business’ expansion.
Bridge Loan
A short-term loan from investors to hold you over until the next round of funding or more capital can be secured.
Burn Rate
How fast you go through cash. The majority of startups lose money before they break even and then eventually make a profit.
Convertible Note
A convertible note - or convertible debt - is a kind of loan that can be issued towards a round of future funding. A convertible note has an interest rate and maturity date, like a loan. Both a SAFE (similar, but different) and Convertible Note are designed to convert to equity when the company raises more money (how much is negotiated).
Corporate VC (CVC)
This investment is coming from within a corporation, and it could also include industry insights and connections. Beyond equity, the CVCs may be looking for a collaboration agreement or they may see your company as an acquisition target.
Crowdfunding
Asking the public for funding (there are various websites that help with this). You may or may not offer equity in exchange. Disadvantages could include theft of your idea, loss of reputation if things go awry with your company, or the inability to crowdfund again in subsequent stages of investment.
Exit Strategy
How you plan to sell your company to give you and your investors a return on their investment. This ranges depending on the industry but a standard multiple with technology investments seems to be 10x.
Follow-on Funding
A repeat investment from a funder who previously provided capital, now at a later stage in the business.
Friends, Family and Fools (aka Bootstrapping)
This is mostly what it sounds like, it’s fairly common and tends to happen early on in a business venture. The “3 F’s” represent the earliest capital a new company may receive from those closest to them. The addition of “fools” refers to the high level of risk associated with this type of transaction.
Hockey Stick
An expression used by investors to describe the shape of the growth curve they want to see in businesses they invest in. They want to see their startups grow quickly and at least double sales every year.
Monetize
How you make money?
MVP
A minimum viable product is the simplest form of your product. This can be used to attract Beta users/early adopters or to pitch for funding.
Pre/Post Money Valuation
The value of a company before external investments or the latest round of funding/ the value of company after external investments or the latest round of funding.
Priced Round
This is an investment where the valuation of the company is determined as a negotiation between the company and the investor, and includes a price-per-share so it's clear how much of the company everyone owns.
Ramen Profitable
An expression frequently used by Paul Graham of Y Combinator, it means you are making just enough money to be able to pay for basic living expenses.
ROI (Return on Investment)
When an investor puts money into a company, he wants to know what he will get out. This is called the return on investment. The investor(s) will also want to know how long it will take to get their ROI?
Runway
Describes how long your cash will last and when you think it will run out.
SAFE Note
A non-debt convertible security. It will eventually convert into equity in a future investment round.
Seed Funding
The first official round of startup funding or equity funding (selling shares or ownership).
Series Funding
Series A Funding: The second stage of startup funding, but the first stage of venture capital financing.
Series B Funding: The second stage of venture capital financing. It sometimes features many of the same investors from the previous round, Series A, but may bring in additional prospects.
Series C, D, etc.: By the time a company reaches Series C funding, they may want to expand into another market (internationally, for example) or may be preparing themselves to go public or for an acquisition (i.e. an exit). For most companies, this is the final phase of funding.
Sweat Equity
When you give shares of your company to early employees or contractors in place of cash. This is very common in the startup world before funding arrives. If you take a chance with a scalable startup, your shares might become lucrative when the company sells.
Term Sheet
When an investor makes you an offer to invest in your company, the term sheet is a document that outlines what they will get for what they put in — including % ownership and voting rights.
Valuation
Describes what your company is being valued at. “Pre-money valuation” is the value before you take investors’ cash. “Post-money valuation” is that amount plus the investment put in.
Venture Capitalists or VCs
Private investors or investment firms that use money from pension plans, insurance companies, and wealthy people to place bets (capital) in exchange for equity in companies they believe have lots of growth potential, usually of (planned) unicorn proportions.