We’ve compiled a glossary of common business terms and acronyms related to entrepreneurship and small businesses. Some of this business terminology may be familiar to you while some you may have only heard in passing without knowing what it meant. Whatever your experience level or familiarity with these business terms, our business terms glossary covers the most commonly used business terms and their definitions. So without further ado, here are some business terms every professional should know.
Advertising is a type of marketing for businesses that helps increase sales and raise awareness to your target audience. Marketing includes paid announcements, radio, television, PPC (pay per click), billboard ads, newspapers, posters and magazines. Current and future customers can form their own opinions on your brand from your marketing strategies, so it’s important to make a positive impact.
An angel investor is a wealthy person (they often work in business investment) who invests their money in organizations that are typically in the development stages. Angel investors not only contribute financially, but they invest their time, experience, advice, contacts and business vision into the company or startup. Many angel investors can invest online through equity crowdfunding or can organize themselves into angel groups.
Bartering is a system of exchange where goods and services are exchanged directly for other goods or services without the use of a monetary medium (money). There are many formal barter groups including BarterMachine and Barter Network Ltd. that network a large number of businesses looking to trade products and services.
Business acquisition occurs when one organization (the acquirer) buys a set amount or all shares in another company (the target) to take control and expand business. This term is often used with “merger”. However, the two processes are not the same. There are different types of business acquisitions including congeneric acquisitions, vertical and horizontal acquisitions, and conglomerate acquisitions.
Often confused with office business centers and virtual office services, business incubators provide workspaces for clients, business coaching courses and support services in the early stages of business development. In most cases, clients pay for business incubator programs as they help startups and entrepreneurs bring their ideas to life. Depending on your personal financial situation, some employment insurance benefits will help cover these costs – which is a great option for young people. Many business incubators specialize in a particular industry and work to bring other like-minded businesses together.
Consumer Direct Marketing
Consumer direct marketing is a type of marketing where producers or distributors market your products or services directly to consumers. Consumer direct marketing aims to persuade select groups of consumers to undertake specific actions like purchasing a product or service, placing an order, or visiting a store or website.
Copyright refers to the legal right of an owner’s intellectual property. Not only does this apply to musicians and producers, but also applies to businesses. In layman’s terms, copyright is the right to copy. It’s a type of legal protection available to creators as the ones with the exclusive right to reproduce or copy the work.
A corporation is a legal entity that is separate and distinct from its owners. It’s created by individuals, stockholders or shareholders for the purpose of operating for a profit. During the process of incorporation, an organization or group of people are authorized to act as a simple entity that is recognized by the law. Incorporation protects a business entity’s owners from being personally liable in the event of a lawsuit or legal claim. Corporations have the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes.
A coworking space is a type of remote office where many small to medium sized businesses, independent contractors and freelancers come to work. Coworking spaces offer many amenities you normally wouldn’t find in a traditional office space. Another key differentiator is businesses don’t need to sign a long-term lease to work at a coworking space – which can help save money in the long run.
An entrepreneur is someone who starts or owns a business in any sector. Entrepreneurs create or invest in one or more businesses, often pursuing commercially driven opportunities to bring new products or services to the market with limited resources and high risk.
A general partnership is a business arrangement where two or more individuals conducting business operations together agree to share all the assets, profits, legal and financial liabilities. In this organizational structure, each individual has unlimited liability and assumes full legal responsibility for all business debts.
An independent contractor is a self-employed individual or business entity contracted to perform work for or provide a service to another business. Independent contractors usually have to pay their own social security and medical taxes as they’re not accounted for by the business itself. In general, a lot of contractors are paid on a freelance basis. Operating as a freelancer has many benefits as workers can earn extra money outside of their regular job and they can focus on work that inspires them.
An intrapreneur is an employee that is tasked with coming up with an innovative idea or project within an organization to help move the needle. Because this type of project is done internally, a professional worker may not face the risks or reap the benefits of a typical entrepreneur. However, depending on the organization, they may have more access to resources in an established company.
A joint venture is when two or more companies come together to collaborate on a project or task. At the end of the venture, the companies involved will share profits, resources, debts and losses, and expenses.
Limited partnership is a business arrangement made up of two or more partners. The general partner oversees the business while limited partners do not partake in operations and decision-making. The general partner has an unlimited liability to debts and limited partners have limited liability for their investment.
Line of Credit
A line of credit (LOC) is a set amount of money that can be accessed at any point. The borrower can take out cash as needed until the limit has been reached. As professionals pay off the balance, it can be used again – making it similar to the concept of a credit card. The balance of a line of credit can be paid at any time when the funds are available. When you repay the balance, the credit limit will be replenished, allowing you to continue withdrawing from it until you reach the credit limit once more.
Marketing is a foundational business term and it’s the process of conducting market research and advertising campaigns with the intent of promoting and selling a product or service. Marketing includes a broad range of practices, including advertising, publicity, promotion, pricing and packaging.
A merger is an agreement and the joining of two companies. In a merger, two separate business entities combine resources to create an entirely new business with new ownership and management structure. These usually take place to reduce operation costs, expand into new markets or boost profits.
Multi-level Marketing (MLM)
Multi-level marketing (MLM) 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. Multi-level marketing may also be referred to as network marketing or referral marketing.
Network marketing is a business model where a distributor network is needed to build the business. Network marketing depends on person-to-person sales of a product or service through a network of distributors. Similar to multi-level marketing, individuals generate money through commissions from each sale they make as well as commissions from the sales made by recruits.
Networking is the exchange of information and ideas between people, businesses and groups. It helps form meaningful, mutually beneficial business relationships to increase your knowledge or awareness of news and trends in particular fields and to expand your business base. There are specific networking events held for all types of business sectors. It can be a great way for other professionals to interact and foster connections.
Outsourcing is when a business hires a professional or independent contractor outside of the organization to perform a task or lead a project. Companies will often go this route to help cut costs while accessing talent globally.
A patent is a type of intellectual property similar to copyright in which an individual or business entity is granted exclusive rights over an invention, product, design, or process. This property right is granted by a sovereign authority to an inventor to exclude others from making, using, or selling the invention for a set time in exchange for public disclosure of the invention when the patent is granted.
Considered to be the simplest business structure, a sole proprietorship is an unincorporated business owned and operated by a single individual. In this business model, the sole proprietor or owner is solely responsible for all business decisions, receives all of the profits, assumes all risks associated with the business and its operations, and claims all losses. Moreover, the sole proprietor does not have a separate legal status from the business, meaning they have unlimited liability for any losses or debts incurred (i.e. risks extend to their personal property and assets).
A trademark is another form of legal protection for intellectual property consisting of recognizable words, phrases, names, symbols, sounds, signs, designs and expressions. It’s how your audience recognizes your products or services and distinguishes them from competitors in your market.
A virtual office gives businesses a physical address and office services without signing a long-term lease. Employees can work anywhere in the world but still use a mailing address, phone answering services and access meeting rooms.
There are many more business terms that are used by entrepreneurs, but this business terms glossary covers some of the most common business terms used. There are some business terms that are more specific to certain industries or sectors of business than others that have not been included in this glossary of common business terms which may be helpful to know.
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