Young entrepreneurs are not made overnight. It takes a great deal of thought, planning, time, and energy to walk that path of entrepreneurship. Along the way, you’re likely to hear some common business terms thrown around.
Whether you’re networking with potential investors, writing up a business plan, practicing a sales pitch, building your website, or simply imagining what it looks like to own a business, there are terms and phrases you’ll need to know.
Some of these might seem obvious. Others may be new to you. You certainly don’t need to memorize this whole list, but you’ll go much farther on your path to young entrepreneurship if you are at least familiar with them.
These terms will not only help you get your small business off the ground, but they’ll help you be able to answer questions and sound professional to investors, customers, or competition judges. When you sound like you know what you’re talking about, everyone involved in your startup will take you seriously.
Accounts payable (AP): The bills and expenses you owe. For example, if you hire someone to build an app for your business, their bill is part of your accounts payable.
Accounts receivable (AR): The amount of money owed to you. For example, if you provide a service for another business, you invoice them from accounts payable.
Adventure capital: Money you need at the very start of your entrepreneurial journey. This investment is primarily for businesses that have not been tested yet, and the investors are willing to take more of a risk.
Assets: Whatever your business owns, such as cash profits and inventory.
B2B and B2C: B2B stands for business-to-business. This means your business helps other businesses, such as providing an app or graphic design service. B2C stands for business-to-customer. This means your business deals directly with customers. This can be confusing, so click here to learn more.
Back end: The parts of your website that customers don’t see, such as the coding or admin page.
Balance sheet: A record you keep of your assets vs your liability. In other words, the total of what your business is worth versus what you pay.
Bootstrapping: When you use your own money, rather than money from investors, to start your business.
Business plan: The roadmap you create before starting your business, which might include timelines, goals, and budgets. Most investors like to see a business plan before they give you money.
Cash flow: How your money moves in and out of your business. Basically, a record of your accounts payable versus your accounts receivable.
Cost of goods sold/cost of sales: For those young entrepreneurs creating and selling products, your CoGS/CoS is how much money you spend to buy your materials, create your product, and then sell your product.
Doing Business As (DBA): “Doing Business As.” When you name your company anything other than your name, this is DBA. You would use this to open bank accounts or credit cards for your business.
Expenses: The cost of running your business, such as advertising, web hosting, product development, or salaries for employees.
Fixed costs: Money spent by your business that probably won’t fluctuate over time, such as web hosting or how much you pay for transportation.
Front end: The opposite of your back end, meaning the part of your business that customers see and interact with.
Guerilla marketing: Marketing that just sort of happens, like social media posts or media coverage. You don’t pay for guerilla marketing. With any luck, this type of marketing will go viral.
Intrapreneurship: When you already work for a company and they let you become an entrepreneur within the organization. Basically, your employer covers the costs of bringing your entrepreneurial ideas to life, and you follow this path to benefit your employer. (And yourself!)
Inventory: The products you have which are ready to sell.
Labor: The cost of producing the goods you sell. If you are making and selling your products, this should include what your time and effort are worth.
Liabilities: The opposite of your assets. Your liabilities are what you owe to others, such as suppliers or investors.
Limited Liability Company (LLC): When you or you and your partners own a company but are not on the hook for the debt.
Marketing Plan: The part of your business plan that focuses on how you will price, advertise, and sell your product or services.
Net profit: How much money you made after paying all the costs of running your company.
Net loss: When you are paying out more money to run your company than you are making from sales. The opposite of net profit.
Outsourcing: Paying another person or company to handle part of your business for you, such as someone to design a logo or post on social media.
Overhead: Any expenses you pay to run your business that are not part of the manufacturing process or labor, like rent or electric bills.
Partnership: An agreement between two or more people to run a business together. Compare to an LLC if you are thinking of incorporating your business.
Return on Investment (ROI): How much profit your business made compared to how much money has been invested in it. You can figure out your ROI by dividing your net profits by how much money has been invested.
Sole proprietorship: You are the only owner of your business. Your business has your name on it, not a separate business name.
Traffic: How many visitors your website receives.
Venture capital: Startup money. Can come from yourself or venture capitalists.
Keep in mind that this is by no means an exhaustive list of every term that gets thrown around in business. But we think it’s a good starting point for serious young entrepreneurs. Without getting too technical or confusing, this list represents some of the most common terms you’ll hear as you navigate the world of business.
A lot of these terms have similar meanings. It’s a good idea for you to know, even at a basic level, the difference between, say, ROI and net profits. You’ll be less confused, your investors will have a clearer idea of what you’re doing, and everyone will be happier because you’re all on the same page.
The Kantner Foundation offers college scholarships to young Florida entrepreneurs. Ready to learn more? Click here to see if you are eligible!