78 Business Terms Small Business Owners Should Know

Learning the language of business can feel overwhelming. There are a lot of different terms covering many different areas of business — from finance to operations. However, understanding key terms can play an important part in your success when it comes to strategy, operations and growth for small business owners. Here are some essential business terms you may want to know.

Business Terms for Strategy & Operations

1. Benchmarking. Benchmarking is a way to test and compare your business performance against a certain standard. You can compare against things such as a competitor’s metrics, industry performance or your numbers from last year.
2. Best practice. Best practices are methods recognized in your industry as the most efficient and effective ways to complete a business process. Adopting these practices can lead to improved performance and a competitive advantage.
3. Board of directors. The board of directors is a group of individuals selected to oversee the activities and strategic direction of a company, organization or business. They can make major decisions, represent shareholders and ensure the company adheres to its mission and vision.
4. Business plan. A business plan is a formal document that outlines a company’s goals, strategies, target market and financial forecasts. It can be helpful when securing funding and guiding the business’s direction.
5. Company culture. Company culture refers to the shared values, beliefs and behaviors within an organization. A good business culture attracts talent, fosters employee satisfaction and drives productivity.
6. CRM (Customer Relationship Management). A CRM typically refers to a software that helps your business manage relationships with customers and potential customers. It often houses customer data like contact information and preferences. Plus, it can help you keep track of your interactions with them.
7. Deliverable. A deliverable is the output of a project. It could refer to things like a report, a product, a service or marketing material.
8. Economies of scale. Economies of scale happen when your business is running effectively. Production goes up — while fixed costs remain the same — reducing the cost per unit and saving you money.
9. Growth hacking. Growth hacking is a set of unconventional strategies a new business can attempt in order to grow rapidly. It can involve experimenting with marketing, product development and sales tactics.
10. Incentivize. To incentivize means to offer some sort of reward or benefit to encourage customers to take specific actions — such as offering a free gift or membership when purchasing a product or service.
11. KPI (Key Performance Indicator). KPIs are measurable values that can indicate how well a project, or your business, is performing. This could include metrics such as sales growth, customer retention or conversions from a marketing campaign.
12. Metric. A metric is a way to count or measure a specific aspect of business performance. Metrics provide insights into various aspects of a company’s operations and can drive strategic decisions.
13. Monetize. Monetizing is a way of generating revenue from a product or service. Sales, subscriptions or memberships are a way to monetize your business offerings.
14. Outsourcing. Outsourcing involves hiring a third-party company or individual to perform tasks or produce products that would otherwise be done in-house. For example, a small business may hire a freelance marketer to create an advertisement for them.
15. R&D (Research and Development). R&D involves activities that businesses undertake to innovate and introduce new products or services. For example, a coffee shop may do some market research to predict which latte flavors will be popular next fall.
16. Risk management. Risk management involves identifying, assessing and prioritizing risks to minimize the impact of negative events on a business. It can help prevent potential losses.
17. Scalable. Scalability refers to a business’s ability to grow without compromising performance. If your business is looking to grow, you should ensure your processes are scalable and able to handle increased demand.
18. SaaS (Software as a Service). Software as a service is a way to access software through the internet. Instead of paying for software outright, you may pay a membership fee or subscription to access the software.
19. Stakeholder. A stakeholder is an individual or group who has an interest in the success or failure of a business or project. This could include employees, managers, investors and customers.
20. Sustainability. The United Nations defines sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” It’s often related to environmentally friendly practices and corporate social responsibility, but can also describe long-lasting processes and practices
21. SWOT (Strengths, Weaknesses, Opportunities, Threats). SWOT analysis is a strategic planning tool used to identify a company’s strengths and weaknesses and opportunities and threats. It helps inform decision-making and strategy development.

Business Terms for Marketing & Sales

22. A/B testing. A/B testing, or split testing, involves comparing two versions of something such as a web page, email or advertisement to determine which performs better. It’s an essential tool for optimizing marketing efforts.
23. Analytics. Analytics is a systemized way of looking at different data sets. It allows you to uncover patterns and trends. In marketing, analytics can offer special insights into the performance of your campaigns.
24. Affiliate marketing. Affiliate marketing is a marketing strategy where “affiliates” of a business can earn a commission by promoting a product or service.
25. Brand. Your brand is your business identity. It includes things like logos, messaging, the way you interact with your customers and more. A strong brand can help you stand out from your competitors and gain customer loyalty.
26. Buyer persona. A buyer persona, also called a customer persona, is a fictional representation of your ideal customer. It’s often based on market research and real data. It can help a business tailor their marketing efforts to target a specific audience.
27. Conversion rate. A conversion rate is the percentage of users who complete a specific action — such as signing up for a newsletter or making a purchase.
28. CTR (Click-Through Rate). CTR refers to the percentage of users who click on a link, button, ad or other digital call-to-action.
29. Customer experience. Customer experience encompasses every interaction a customer has with a business. This can include the in-store experience, interacting with your website, calling in for support and more.
30. Customer retention. Customer retention measures a business’s ability to keep existing customers over a period of time.
31. Demographics. Demographics refer to characteristics of a population. It can include characteristics like age, gender, household size, geographical area and more. Demographic data can be useful for tailoring your marketing efforts.
32. Digital marketing. Digital marketing encompasses the different marketing efforts that happen in the online space such as social media marketing, search engine advertising, your websites and more.
33. Email marketing. Email marketing is a type of digital marketing. It involves sending emails to promote a product or engage an audience. It can be an effective way to nurture leads and maintain customer relationships.
34. Market research. Market research involves collecting and analyzing data on things like potential customers, competitors and industry trends to help identify opportunities.
35. Marketing strategy. A marketing strategy is a plan that outlines a business’s goals and the marketing tactics they will use to achieve them.
36. Niche market. A niche market is a specific segment of a larger market or audience. It’s usually characterized by unique needs or interests.
37. PPC (Pay-Per-Click). Pay-per-click is a type of online advertising where businesses pay each time their ad is clicked on. It can be a cost-effective way to advertise online.
38. Sales funnel. The sales funnel is a way to think about a customer’s journey visually. At the top of the funnel they’re becoming aware of your business, in the middle they’re considering whether or not they want to become a customer, and at the bottom they’ve made their decision to make a purchase.
39. SEO (Search Engine Optimization). SEO is the process of optimizing your website so that it appears higher on the search results page on search engines like Google. This can help drive more traffic to your website.
40. Social proof. Social proof often comes in the form of testimonials, reviews or rewards. When potential customers see others enjoying your product or service, it can give them the confidence they need to make a purchase.
41. Target market. Your target market is a specific population you are trying to reach with your marketing efforts.
42. Traditional marketing. Traditional marketing often refers to offline marketing efforts like print ads, radio, television or direct mail.
43. USP (Unique Selling Proposition). Your unique selling proposition is the thing that sets you apart from your competitors. This could be anything from a unique product to the level of customer service you offer.

Business Terms for Business Models & Structures

44. B2B (Business to Business). B2B refers to a business that offers products and services to other businesses.
45. B2C (Business to Consumer). B2C refers to businesses that offer products and services to individual consumers.
46. B2G (Business to Government). B2G refers to a business that offers products and services to government agencies.
47. LLC (Limited Liability Company). An LLC is a type of flexible business structure. It is a separate legal entity from the owners. It’s a popular business structure for small businesses because of the protection and tax benefits it offers.
48. Nonprofit. A nonprofit is an organization that doesn’t operate to make profit, but instead to fulfill a mission. They often rely on donations, grants and fundraising for support.
49. Partnership. A partnership is a business that is owned by two or more individuals. The business is not a separate legal entity from the owners.
50. Sole proprietorship. A sole proprietorship is a business owned by one individual. It is not a separate legal entity from the owner.

Business Terms for Finance & Legal

51. Accounts receivable. Accounts receivable is the money owed to a business. For example, if you deliver a product or service to a customer and later send an invoice, the money owed would be your accounts receivable.
52. Acquisition. Acquisition is when one company buys another. It can be an effective way to drive growth as the company will be acquiring the other’s business assets.
53. Actuary. An actuary is a professional who has advanced skills in mathematics and statistics. They help find ways to reduce risk and uncertainty.
54. Audit. An audit is a review of a business’s financial statements and records to ensure they’re accurate and compliant. Audits often come from the IRS but could also be required by other regulatory agencies depending on your industry.
55. Balance sheet. A balance sheet is a financial document that provides an overview of things like your business assets and liabilities at a certain time.
56. Business assets. Business assets are resources owned by a business that have monetary value. These could be tangible, like equipment or inventory, or intangible, like trademarks or patents.
57. Business cycle. A business cycle refers to the natural changes of the economy. It includes expansion, peak, contraction and trough. Recognizing what cycle you are in can help guide your business decisions.
58. Capital expenditure. Capital expenditures are when your business spends money to acquire a long-term asset.
59. Cash flow. Cash flow is the money moving in and out of your business. A positive cash flow means you can fulfill your financial obligations and have some left over to invest in growth.
60. Copyright. A copyright grants a creator legal rights to their work and its use. While a formal registration is encouraged, any creator or business can place a copyright notice on their own original websites, marketing materials, packaging, etc. to inform others they are the owner.
61. Depreciation. Depreciation is when an asset loses value over time, due to age or wear and tear.
62. Financial institution. A financial institution provides financial services. This includes agencies and businesses like banks, online lenders, credit unions or investment services.
63. Fiscal year. A fiscal year is a 12-month period a company uses for accounting purposes. A business may choose a period that aligns with their operations or industry.
64. Fixed costs. A fixed cost is a cost that remains the same regardless of production levels — like rent or salaries.
65. Income statement. An income statement provides insights into a business’s revenues and expenses over a period of time.
66. Investor. An investor is a person or organization that owns a share of a business. They provide capital in the expectation that they’ll earn a return.
67. IP (Intellectual property). Intellectual property includes things like inventions, designs and brands that are protected by legal means such as a patent, copyright or trademark.
68. Liquidity. Liquidity is a measure of how much cash you have on hand to tackle any short-term expenses. While certain business assets, like expensive equipment, may have value they are not necessarily “liquid” because they can not be easily converted into cash.
69. Merger. A merger is when two companies combine to form a single business.
70. Net income. Net income is the total amount of money a business has after subtracting all expenses, taxes and other costs.
71. Net profit margin. Net profit margin is the percentage of revenue that remains after deducting all expenses.
72. Overhead. Overhead refers to the expenses that aren’t directly related to running a business, but are part of the cost of doing business, like rent or utilities.
73. ROI (Return on Investment). ROI is a measurement of the success of a project. It compares the cost of the investment to the gains it provided. It’s often used to measure the success of a marketing campaign.
74. Venture capital. Venture capitalists provide financing to startups or small businesses that have a lot of potential to grow in hopes that the business will expand a lot in the future and provide a high return.
75. Working capital. Working capital is the difference between a company’s assets and liabilities. It is a measure of a business’s liquidity and efficiency.

Business Terms for Human Resources

76. Employee Retention. Employee retention is the percentage of employees who stay with your company over a period of time. High employee retention can help your business run efficiently and save money.
77. Freelancer. A freelancer is an individual who may be hired by businesses to perform a certain task or complete a specific project. They are not hired on as employees but instead operate as a contractor.
78. Onboarding/Offboarding. Onboarding the process of hiring and getting a new employee started. Offboarding is the process of managing their departure from the company.