40 Business Strategy Management Terms Every Entrepreneur Should Know
40 Business Strategy / Management Terms Every Entrepreneur Should Know
As an entrepreneur, you need to be on your way to becoming an expert in your market. More importantly, you need to know your product inside out and upside down, the same goes for your business model and strategy.
With the rise of startups globally, new terminology has entered the business lexicon and it’s expanding everyday. Whether you’re in the early days of your startup, or planning a fundraise and getting investor-ready, or you may already be in talks with venture capitalists, these are terms you need to be familiar with.
Business Model
1. B2B: Business-to-business.
2. B2C: Business-to-consumer.
3. C2B: Consumer-to-business.
4. C2C: Customer-to-customer.
5. Circular Economy: an economic system that is regenerative by design, decouples growth from the consumption of finite resources.
6. Disruptive Tech: a business theory whereby a new technology creates a new market and value network, disrupting the established market and value network.
7. Gig Economy: a free market system that fills short-term positions from independent contractors.
8. Impact Investing: investing into companies with the intention to generate a beneficial and measurable social, environmental and financial impact.
9. Market Networks: focus on complex services that need active human interactions, eg. AngelList, Houzz, StyleSeat, Patreon, Poshmark…
10. Shared Economy: a socio-economic system built around the sharing of resources.
11. X-as-a-Service Model: ‘X’ stands for ‘anything’. Encompasses the 3 general cloud computing models, Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS).
Company Product and Revenue Stage
12. Idea Stage: no product or revenue.
13. Build Stage: Minimal Viable Product (MVP)t with early adopters but no revenue.
14. Launch Stage: working product with paying customers and some early metrics.
15. Early Stage: working product and revenue generating with repeatable/scalable customer acquisition.
16. Growth Stage: profitable, working on scaling and expansion.
Business Management
17. Board of Directors: the people calling the shots. Startup founders should be on the board, plus the VCs that fund them often get a seat too (especially the lead investor).
18. Advisory Board: a body that provides non-binding strategic advice to a business.
19. Employee Option Pool: the available stock that founders can award to employees in the form of options (i.e. the ability to buy shares at a set price). Options vest over time, so the employees accumulate them gradually as an incentive to remain at a growing company. If the Startup does well, the underlying stock will rise in value even as the strike price remains the same, and so the options will be more valuable.
20. Cliff: usually applies to vesting schedules (shares given to employees over time). Cliffs are a way for the CEO to fire employees or let them leave without giving them stock within a limited period of time (usually 1 year). Cliffs are also used on CEOs by investors to make sure the CEO sticks around after getting the cash.
21. Merger: two separate business entities combine to make one entity. Mergers can result in the new business entity having a competitive market advantage.
22. Scalable: a business with the ability to grow exponentially because the market and demand is big enough. Scaling refers to the period in the Startup journey when they accelerate growth based on positive measurable results.
23. Outsourcing: hiring a company or individual to perform a specific task, handle operations or provide services that are not done ‘in-house’ (by the company’s employees).
24. Launch: your big entrance to the market!
25. Merchant Account: merchant accounts are bank accounts that allow your business to accept payments by credit and debit card transactions. To convert credit card payments into cash, banks charge merchants an interchange fee, and other fees.
Business Strategy
26. Boot–Strapping: starting a business with your own money, aka self-funding. Startups that fund the development of their company without the help of venture capital firms or angel investment. Most likely will not be profitable at first, as money made is reinvested back into the Startup.
27. Burn Rate (aka Run Rate): how fast you are spending your cash.
28. Cash Position: a combination of actual cash on hand and highly liquid assets such as CDs, short-term government debt, and other cash equivalents.
29. Churn Rate: in a subscription-based business model, the churn rate is who many customers are lost after acquisition. The churn rate can affect your projected growth.
30. FMA (First Mover Advantage): being the first to market with a product or service. This is typically an advantage as it enables the company to establish their brand and acquire customer loyalty, before competitors enter the arena. The disadvantages of being the First Mover includes introducing a new product to an untapped market which involves convincing investors to put money into a market with no historical data.
31. Freemium: a business model where you give the basic product for free to customers, and then try to upsell them additional features.
32. Gamification: the process of adding game-like elements (points, perks, power ups, etc.) to other activities to drive engagement.
33. Hockey Stick: aka “inflection point”. Refers to a period of rapid growth (in revenue, sales, etc.) when graphed, resembles the shape of a hockey stick.
34. Iterate: you try something, you get it wrong, you try it again but slightly differently, with the aim of a better result.
35. Growth Hacking: strategies focused purely on growth with a small budget.
36. Lean Startup: similar to Growth Hacking. The core mission of a lean Startup is to prove the business concept as quickly and cheaply as possible.
37. Low Hanging Fruit: crucial for Startup success, this strategy enables Startups to set up their foundations solidly.
38. Pivot: when a business plan doesn’t work, the company changes things up.
39. Monetize: how you are, or intend to, make money.
40. Loss Leader Pricing: selling something at a loss as a form of marketing expense to bring in customers you expect repeat business from.