Business Glossary

Earnings Before Interest, Taxes, Depreciation, and Amortization. A key financial metric used to evaluate a company's operating performance and profitability.

The total amount of income generated by a business from its operations before any expenses are deducted. Also known as gross sales or turnover.

Revenue minus the cost of goods sold (COGS). It represents the profit a company makes after deducting the costs directly associated with producing its goods or services.

The movement of money in and out of a business. Positive cash flow indicates more money coming in than going out, while negative cash flow indicates the opposite.

The difference between a company's current assets and current liabilities. It measures a company's short-term financial health and operational efficiency.

The rate at which a company spends its cash reserves, typically measured monthly. Critical for startups and businesses monitoring their runway.

The yearly value of recurring revenue from subscriptions or contracts. A key metric for subscription-based businesses and SaaS companies.

The monthly value of recurring revenue from subscriptions. Provides a predictable revenue stream measurement for subscription businesses.

A legal document that outlines the rights, responsibilities, and obligations of shareholders in a company. It governs how the company is run and protects shareholders' interests.

A legal contract that prevents parties from sharing confidential information. Essential for protecting business secrets during negotiations or partnerships.

Creations of the mind, such as inventions, literary works, designs, symbols, names, and images used in commerce. Protected by patents, trademarks, and copyrights.

The comprehensive investigation and analysis of a business or investment opportunity before completing a transaction. Includes financial, legal, and operational review.

Legal documents filed with a government body to formally create a corporation. Also known as a certificate of incorporation or corporate charter.

A legal agreement between an employer and employee that outlines terms of employment including duties, compensation, benefits, and termination conditions.

Legal agreements that set the rules and guidelines for using a website, app, or service. They protect the business and inform users of their rights and responsibilities.

A third-party organization that becomes the legal employer of a company's workforce while the company maintains day-to-day management and control of employees.

The strategic process of identifying, attracting, and hiring skilled workers to meet organizational needs. Goes beyond recruitment to include long-term workforce planning.

The practice of hiring employees in different countries to take advantage of cost savings, specialized skills, or time zone coverage while maintaining quality.

Hiring employees within the same country as the company's headquarters. Often preferred for roles requiring local market knowledge or regulatory compliance.

The overall experience a job candidate has during the recruitment process, from initial application to final decision. Critical for employer branding.

The number of days between when a candidate applies for a job and when they accept a job offer. A key recruitment efficiency metric.

The total cost of hiring a new employee, including advertising, recruiter fees, interview costs, and onboarding expenses divided by the number of hires.

A person who helps establish a company alongside other founders. Co-founders typically share equity and responsibilities in building the business from the ground up.

The ownership stake that founders hold in their company. Usually distributed among founders based on their contribution, role, and commitment to the business.

The process by which an employee or founder earns the right to their equity or stock options over time. Protects companies from early departures.

A business approach where experienced operators partner with investors or business builders to run and scale companies, combining operational expertise with capital.

Equity given to founders or employees in exchange for their work and effort rather than cash investment. Common in startups where cash is limited.

A vesting schedule where no equity is earned until a specific period (usually one year) has passed, after which a large portion vests immediately.

A digital advertising model where advertisers pay each time someone clicks on their ad. Common in search engine and social media advertising.

The cost to acquire a new customer through marketing efforts. Calculated by dividing total marketing spend by the number of new customers acquired.

The practice of optimizing websites and content to rank higher in search engine results pages (SERPs) and increase organic traffic.

The process of attracting and converting prospects into potential customers who have expressed interest in your company's products or services.

The strategic process of positioning your brand in the mind of your customers relative to competitors. Defines how you want to be perceived in the market.

The percentage of visitors who complete a desired action (purchase, sign-up, download). A key metric for measuring marketing and website effectiveness.

The total revenue a business can expect from a single customer throughout their relationship. Critical for determining marketing spend and customer retention strategies.

A lead that has been deemed more likely to become a customer based on their engagement with marketing efforts and fit with ideal customer profile.

A company that remotely manages a customer's IT infrastructure and end-user systems. Provides ongoing support, monitoring, and maintenance services.

A software distribution model where applications are hosted by a service provider and made available to customers over the internet on a subscription basis.

The fundamental facilities and systems serving a business, including IT hardware, software, networks, and data centers that support operations.

The delivery of computing services including servers, storage, databases, networking, software, and analytics over the internet ('the cloud').

A set of protocols and tools that allows different software applications to communicate with each other. Enables integration between systems.

The practice of protecting systems, networks, and programs from digital attacks. Includes measures to prevent unauthorized access and data breaches.

Government incentives that allow companies to claim tax relief on qualifying research and development expenditure. Reduces tax liability and encourages innovation.

The legal organization of a business that determines tax obligations, liability, and operational requirements. Includes sole proprietorship, partnership, corporation, and LLC.

A tax imposed on the profits of corporations. In the UK, companies pay corporation tax on their profits from doing business, investments, and selling assets.

A consumption tax placed on products and services. In the UK, businesses must register for VAT if their turnover exceeds the threshold (currently £85,000).

Tax on the profit made from selling assets that have increased in value. Applies to business assets, investments, and property sales.

Measurable values that demonstrate how effectively a company is achieving key business objectives. Used to evaluate success and guide decision-making.

A goal-setting framework that helps organizations set challenging, ambitious goals with measurable results. Popularized by companies like Google.

A strategic plan that outlines how a company will reach target customers and achieve competitive advantage when launching a product or entering a new market.

A product with just enough features to attract early-adopter customers and validate a product idea early in the development cycle.

The degree to which a product satisfies strong market demand. Achieved when customers are willing to pay for, use, and recommend the product.

The ability of a business to grow and manage increased demand without compromising performance or losing revenue potential.

A framework that outlines how a company creates, delivers, and captures value. Describes the rationale of how an organization operates and makes money.

A statement that clearly identifies the benefits customers can expect from your products and services. Explains why customers should choose you over competitors.

The process of dividing a target market into smaller, more defined categories based on shared characteristics, needs, or behaviors.

The process of identifying and evaluating your competitors' strengths and weaknesses relative to your own business. Informs strategic planning.

Financing provided by investors to startup companies and small businesses with long-term growth potential. Usually involves giving up equity in exchange for funding.

An individual who provides capital for business startups, usually in exchange for convertible debt or ownership equity. Often former entrepreneurs themselves.

Different rounds of venture capital funding. Series A is typically the first significant round, followed by B, C, and later rounds as companies grow.

The process of determining the current worth of a company or asset. Critical for investment decisions, acquisitions, and equity transactions.

A plan for how business owners and investors will realize their investment returns, typically through acquisition, merger, or public offering (IPO).

A performance measure used to evaluate the efficiency of an investment. Calculated as (Gain from Investment - Cost of Investment) / Cost of Investment.

The process of purchasing another company to expand operations, gain market share, or acquire specific assets, capabilities, or technologies.

A combination of two companies into one larger company. Can be a merger of equals or one company absorbing another.

Investment funds that buy companies, improve their operations and financial performance, then sell them for a profit. Typically involves taking companies private.

Building a business using personal finances or operating revenue rather than external investment. Maintains full ownership but limits growth speed.

The amount of time a company can operate before running out of money, based on current cash reserves and burn rate. Critical metric for startups.