We compiled a list of common words and acronyms related to entrepreneurship and small business. Some you may know and others you may have heard, but did not know what they mean.
Advertising. A paid public method of gaining attention to a product or business by paid announcements on radio, TV, print or electronic media such as internet PPC (pay per click). Advertising is not to be confused with marketing, public relations or SEO (Search Engine Optimization). There are entire websites devoted to just advertising terms and vocabulary.
Angel Investors. An angel investor (also known as a business angel, informal investor, angel funder, or private investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity while they are trying to find a more sustantial investment in a business. A small but increasing number of angel investors are now investing online through equity crowdfunding, or are organizing themselves into angel groups.
Barter. Barter is a system of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. There are many formal barter groups that network a large number of businesses looking to make non-money exchanges. That aside, there are still many who still just do informal barters.
Business Acquisition. This is the term used when you take ownership of another business in order to expand your business or diversify your business holdings. This word if frequently used in conjunction with the word merger, as in mergers and acquisitions.
Business Incubator. Often confused with office business centres, these organizations do provide workspace, but clients have to pay for business coaching courses and support services in the early-stage of their businesses. These additional costs are normally covered by Employment Insurance benefits to get entrepreneurs to start businesses, instead of returning to the workforce.
Consumer Direct Marketing. A form of Network Marketing in which the distributors are all also consumers (often in the form of Multi-Level Marketing companies). They must also buy the product for their personal use. The term “consumer direct marketing” is generally considered a deceptive term because it simply calls those who sell and promote products and services “consumers” instead of “distributors.”
Copyright. Copyright, a term that is more associated with writers and music producers, is a form of protection for published and unpublished literary, scientific and artistic works that a business may create to associate with or promote their product or brand.
Corporation. A corporation (basically a LLC) is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses. That is, a corporation has the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes.
Due Diligence. Due diligence is an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. Due diligence is done to collect other information which may influence the outcome of a transaction.
Entrepreneur. A person who organizes, operates and assumes the risk for a business venture. An Entrepreneur is someone who exercises initiative by organizing a venture to take benefit of an opportunity and, as the decision maker, decides what, how, and how much of a good or service will be produced.
General Partnership. An organizational structure in which each general partner shares in the administration, profits and losses of the operation. A general partnership is an arrangement by which partners conducting a business jointly have unlimited liability – which means their personal assets are liable to the partnership’s obligations.
Independent Contractor. An independent contractor is a person who has an independent trade, business, or profession in which he or she offers their services to the public or to other businesses. The person contracting for their services usually has the right to direct only the work, and not the means and methods of accomplishing it.
Intrapreneur. An intrapreneur is one who takes on entrepreneur-like ventures within a large corporate environment. An intrapreneur or inside entrepreneur is typically a manager within a large firm, who uses entrepreneurial skills without incurring the risks associated with those activities. Intrapreneurs are usually employees within a company who are assigned to work on a special idea or project, and they are instructed to develop the project much like an entrepreneur would. Unlike entrepreneurs, intrapreneurs usually have the resources and capabilities of the firm at their disposal.
Joint Venture. A joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. It is important to note that a joint venture differs from a strategic alliance because it is a legal entity created by two or more businesses joining together to conduct a specific business enterprise with both parties sharing profits and losses. It differs from a strategic alliance in that there is a specific legal entity created.
Limited Partnership. A limited partnership business arrangement is one in which the day-to-day operations of a small business are controlled by one or more general partners, but funded by limited or silent partners who are legally responsible for losses based on the amount of their investment.
Line of Credit. A line of credit is similar to a business loan, except that the borrower only pays interest on the amount actually used. Much like a credit card, the business makes periodic payments against the outstanding balance. The balance of a line of credit can be payed down at any time when they funds are available and the business wants to save money on interest charges.
Marketing. There are volumes of books written on marketing, but simplest explanation is that it is the process of researching, promoting brands, selling and distributing a product or service. Marketing can cover a broad range of practices – including advertising, publicity, promotion, pricing, and even the packaging of goods or services.
Merger. Mergers are transactions in which the ownership of companies or business organizations are transferred or combined. A true merger in the legal sense occurs when both businesses dissolve and move their assets and liabilities into a newly created entity.
Multi-level Marketing (MLM). Multi-level marketing is a strategy that some direct sales companies use to encourage their existing distributors to recruit new distributors by paying the existing distributors a percentage of their recruits’ sales. The recruits are known as a distributor’s “downline.” Remember, these are businesses in which a person receives proceeds not only from their own sales, but from the sales made by people they have signed up, and potentially people those people have signed up in turn, and so on. Many people just work on developing their downlines as opposed to product sales, because it it more profitable.
Network Marketing. A business in which a distributor network is needed to build the business. Usually, such businesses tend to be MLM’s.
Networking. The process of developing business contacts to form business relationships, increase your knowledge and expand your business base. These are considered networking activities.
Office Business Centres. Office business centres (often called shared offices or service offices) is an office or office building that is fully equipped and managed. These are facilities where several businesses share common space with a variety of infrastructure necessities built into the centre. This means that the business does not have to build walls, wire internet, set up telephone systems or even purchase office furniture. All they need to do is choose an office and move in.
Outsourcing. The act of outsourcing is the acquisition of standard operational services from another business. Outsourced services typically including accounting, payroll, telemarketing, IT support, advertising and more.
Patent. A patent is an exclusive right granted for an invention, such as a product or a process. This is a property right granted to an inventor to exclude others from making, using, offering for sale, or selling the invention for a limited time in exchange for public disclosure of the invention when the patent is granted.
Sole Proprietorship. A business owned and operated by one person. This person assumes all risk associated with the business and its operations. In terms of taxes, he or she can file a joint personal and business return.
Strategic Alliance. A strategic alliance is a term given to ongoing relationship between two or more businesses in which they combine efforts for a specific purpose or project.
Trademark. A trademark is another form of legal protection for intellectual properties. They are more about words, names, symbols, sounds or colours that distinguish brand, goods and services. Unlike patents that that have a limited time span, trademarks can be renewed forever as long as they are being used.
There are many more terms and common acronyms that are used by entrepreneurs, but some are more used in specific industries or sectors of business. When starting out, entrepreneurs should research terms that are used in the areas of business in which they are participating.