If you’re an aspiring entrepreneur or you’ve just started out with your own business, then it’s important to familiarise yourself with all of the key entrepreneurship terms.
Understand the difference between angel investors and other investors, and get to grips with the startup language. This is the essential dictionary of entrepreneur vocabulary and terms you need to know about.
Essential entrepreneur vocabulary
These are just a few of the most important entrepreneurial terms that you need to be familiar with when you’re entering the startup world. Spend some time reading through them and understanding the entrepreneurship terminology so you can engage in productive conversations with investors, donors, and supporters.
An organisation or project that promotes and supports faster growth of small businesses.
This is when one business or company takes ownership of another business. It’s often used alongside the term merger, which is when two companies are combined into one stronger company.
Attracting attention to a product or business through paid announcements in print (newspapers, magazines), broadcast, or digital media.
Someone who provides financial backing for a startup or entrepreneur, usually in exchange for ownership equity in the company. There are lots of websites that connect startups with angel investors such as Angel Investment Network.
This is an important entrepreneurship term to know in the early stages of your business as they often help move startups from the self-funded stage to a point where the business is able to attract venture capital. Angel investors are also known as private investors, seed investors, or an angel funder.
Estimating or judging the value of something. In business, an appraisal is a formal estimate of the value of something on the open market.
Associate or partner
Two people that start a business together; they’re each other’s associates or partners.
An organisation that’s dedicated to supporting new business ventures, through providing workspace, coaching, and support services in the early stages.
Estimating the worth of a business and all of its assets.
One of the most basic entrepreneurship terms that you need to be familiar with is a business model — a description of how a business will be able to create and deliver value, and make a profit. There are hundreds of different business models, but some of the most popular ones for entrepreneurs include subscription, freemium, direct-to-consumer, advertising, and affiliate based.
The wealth or assets available to invest in a project or business.
Protection for published and unpublished literary, artistic, scientific, or musical work. It gives someone exclusive legal rights to use and reproduce them.
You would copyright material that your business creates so that others can’t make money from using them.
An organisation (a group of people or a company) that is authorised to act as a separate legal entity. It has its own rights and liabilities distinct from those of its members. This means that it shields individuals from personal liability for any losses a corporation may experience.
Raising money online through lots of small donations from the general public instead of a large amount from investors. There are many different crowdfunding sites you can use such as Kickstarter, GoFundMe, and Indiegogo.
The process of investigation, research, and obtaining all relevant documents that should be done before entering into an agreement or contract with another party.
A short, direct message from one person to another to outline an idea, often business-related.
In entrepreneurial terms, a startup founder should be able to summarise their essential business idea in a short 20-30 second pitch. By perfecting your elevator pitch you can quickly and concisely convey what your business does and why it matters to potential investors, customers, or supporters.
This is an essential term that you’re probably familiar with, but what is an entrepreneur?
It’s used to describe an individual who starts a new business venture. As well as starting the business, entrepreneurs usually take on most of the risk by investing their own money or finding investors who believe that it’s a viable idea.
This refers to a new company that lacks experience and is struggling to get started with their business plans.
A type of organisational structure where each general partner shares in the administration, profits, and losses of the business.
A person who puts their money into a project or business, expecting to eventually receive profits from their investment.
Securing funding for your startup is key to its success — entrepreneurs will often need investors to provide the money to put their ideas into action.
Someone who undertakes ventures like an entrepreneur but is working within a large corporate environment.
A commercial enterprise that is undertaken jointly by two or more parties, where they share ownership, returns and risks. It’s different from a strategic alliance because a specific legal entity is created.
Limited Liability Company (LLC)
This is a US-specific type of company which is a legal entity that’s not taxable itself and distributes the profits between its owners. Personal assets are shielded from business debt, however, like in a corporation.
Similar to a general partnership, but there must be at least one general partner and one limited partner.
Day-to-day operations are controlled by general partners, and the business is funded by limited partners who are legally responsible for any losses based on the amount of their investment.
Line of credit
Instead of taking out a loan for a certain set amount, you can use as much or as little of the credit as you need and you’ll only pay interest on what you’ve borrowed.
Starting your business or releasing your business or your products.
Gathering and analysing information to understand how consumers in a certain market behave. This is an important part of coming up with a successful business plan.
The nature and degree of competition from businesses operating in the same industry. There are four different market structures: perfect competition, monopolistic competition, monopoly, and oligopoly.
The process of dividing a market into smaller subgroups that are defined by certain characteristics. Market segmentation is an important part of understanding your audience so that you can target the right people with the right marketing.
Increasing your community of professional connections to form business relationships, increase your knowledge, or expand your customer base.
Entrepreneurs will often attend industry events to try and meet and build relationships with potential investors, supporters, and other entrepreneurs that they might be able to learn from.
Obtaining good or resources from somewhere or someone outside of your company.
For example, you might design your products within your business but outsource the actual manufacturing. Or you might use a freelance graphic designer and outsource all the design work that you need doing.
The financial gain you make from your business — money that’s leftover after all the expenses of running the business have been deducted from the income.
Authorisation or license granted to an inventor that prevents others from making, using, or selling their invention for a certain amount of time.
Proof of Concept
An understanding of whether or not an idea, product, or service is feasible and has potential.
Public Relations (PR)
Deliberately promoting a specific image for your business by managing the release and spread of information. An important entrepreneurship term to understand because PR is often key to establishing and growing brand awareness.
A term to describe a side project or business that you work on part-time, usually while you’re still working a full-time job.
A newly established business. A company or project that’s undertaken by an entrepreneur (usually one to three people) that they seek to establish and develop into a viable, scalable business.
A relationship between two companies that helps both companies reach their goals.
For example, if your business venture designs and produces kitchens, you might form a strategic alliance with a builder that you recommend to install your kitchens — and in turn, they would recommend you to supply kitchens to their customers. You are both supporting each other’s business.
Making choices and decisions that don’t have a certain outcome. Taking risks is a big part of entrepreneurship — you won’t be able to know the definite outcome of a lot of the decisions you have to make about setting up and growing your business.
The specific group of customers that you are trying to reach or target. Another key entrepreneurial term because you need to have a clear idea of what market you are selling to in order for your startup to succeed. This will help you to come up with buyer personas that inform your marketing plans.
A symbol, words, or a phrase that is officially registered to a company so that no one else can use it. This is an important part of developing and establishing a company’s brand because it ensures no one can copy your branding.
A project or business idea that could involve a lot of risks.
Capital that’s invested in a project or business with significant risk and there’s a good chance that the investor won’t see any profits.
A document that states the current and future objectives of the organisation to reflect its values and beliefs.
Getting to grips with these key entrepreneur terms will help you communicate your ideas, and understand exactly what steps you need to be taking with your new business.