The Trendlines Business Glossary ... where words reign supreme. Look for words related to business, finance, marketing, communication, and more. You'll find our definitions original, serious, alternative, and sometimes, witty. Have a suggestion for additional glossary entries? Send an e-mail to postmaster@trendlines.com.
A | B | C | D | E | F| G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
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A
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Agent
Individuals or companies (agencies) that represent buyers or sellers. Typically,
agents are compensated on a "success" basis, receiving cash commissions
or royalties. Agents usually do not take title to goods. See also broker, distributor and manufacturers'
representative.
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B
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Benefit
How the market uses and enjoys a product. See feature.
Broker
A person (or company) acting as an intermediary between a buyer and a
seller. Brokers may provide a service (for example, sale of real estate) or sell
a product. The meaning — and terms of compensation — vary widely by industry.
In some industries, such as securities and real estate, local governments require
that brokers be licensed.
Brokers do not usually take title to products; they receive
a commission on transactions rather than a salary or retainer. Brokers are independent
entities who may act for those whom they represent on a one-time or long-term
basis. And they may represent either the buyer or the seller, or occasionally,
both parties to a transaction.
Some industries use this term synonymously with manufacturer’s
representative.
Business plan
Business plans typically include the following sections: executive summary,
about the company and its technology or product, market overview, management,
competition, risk factors, financials. The length of a typical business plan
is about 20 to 30 pages, but it varies greatly. (Appendixes can be added for
important additional information.)
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C
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Cash flow
The amount of money you have after you pay all of your cash expenses, loan payments,
and taxes. A "positive
cash flow" generally means you are increasing your cash on hand or have money
in the bank. Cash flow is an indicator of a company's worth.
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Competition
Anything that may be acquired instead of your product or service.
This is the case without regard to whether the proposed product meets all or
only some of the desired needs or expectations of the user. Competition is anything
that stops the dollars from being used to buy your product or service; it
may include "doing nothing." Yes, nothing. In many cases, your customer can choose
to do nothing rather than make a purchase from you.
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Cost of goods
The line on the profit and loss statement (P&L) that means "what the thing cost you to make or provide." For manufacturers, the cost of raw materials and manufacturing and manufacturing-related overhead. Also called cost
of goods sold (COGS) and cost of sales.
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D
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Disruptive technology
A disruptive technology is any new "gizmo" that puts an end to the good life
for technologies that preceded it. When the automobile was first invented, it
represented a disruptive technology. Harvard Business School professors Richard
Rosenbloom, Joseph Bower, and Clayton Christensen developed the concept of disruptive
technologies.
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Distributor
Businesses that assume ownership of products and resell them. (Large
distributors, sometimes called master distributors, may sell to smaller
distributors.) Stocking distributors hold inventory, maintain a sales force,
offer credit, and often make deliveries. Compensated by margin of sale price
over cost price. See also agent, broker, and manufacturers'
representative.
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E
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Executive summary
A business plan in miniature. The first "chapter" of a full business plan, the executive summary often serves a stand-alone document. It addresses four main areas: (1) what is important about this new product or technology, (2) why someone needs it, (3) how it is going to make life easier or improve the quality of life, and (4) it's benefit to the investor.
Most executive summaries include these sections: company overview, business opportunity,
technology and products, team, business model, competition, intellectual property,
financial highlights. Typical length of executive summaries: three to five pages,
but shorter is better.
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F
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Fairness opinion
A fairness opinion provides an independent objective analysis of a transaction
from the point of view of a party independent of those who are party to the transaction.
Any number of factors in deals involving either public and private companies
can trigger the need for a fairness opinion. Fairness opinions are frequently
used to protect the interests of company directors, stockholders, investors and
involved parties with any kind of fiduciary responsibility. Fairness opinions
are often requested in deals involving public offerings, leveraged buyouts or
major refinancing/restructuring.
Feature
A characteristic of a product or technology (for example, built-in speakers or a touch screen).
See benefit.
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G
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Gross profit
Sales – [minus] cost
of goods.
The top-line profit before all of your operating costs, financial expenses, and
taxes.
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Gross profit margin
Gross profit/sales. Shown as a percentage. Gross profit margin is a very important number for benchmarking.
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I
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Industry map
An overall view (usually presented as a schematic) showing all of the players
and their relationships to one another for a particular industry or market
sector within an industry. It may incorporate a value
chain. Used for strategic
planning to clearly show market entry point options.
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M
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Manufacturers' representative
Businesses that typically do not assume ownership of manufactured products
but sell as an agent. Manufacturers'
reps usually do not carry inventory and are paid on commission. A good option
for a small business that can not support its own sales force. Sometimes
called manufacturers' agents. See also agent, broker, and distributor.
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Marketing plan
A marketing plan documents how you are going to achieve your marketing goals
through your marketing strategy and
your tactics.
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Marketing strategy
How to achieve your marketing objectives.
Sometimes referred to as your business model.
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Market research
Also known as competitive intelligence.
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Markup
Markup and gross profit margin confuse many. Markup represents the amount added to a cost to arrive at a selling price and is usually expressed as a percentage. So, an item that costs $50, and is sold for $100, has a 100% markup; however, its gross profit margin is 50% (or a "50% gross," as in "they grossed 50% on that"). Note that some industries or countries are more inclined to refer to markup than gross profit margin, thus the source of confusion.
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Mission
A straightforward statement that tells three things: (1) what you do, (2) who you do it for, (3) and the benefit. It is a general picture of the purpose of a business or organization. See also vision.
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N
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Net profit
Gross profit - [minus] taxes, interest, operating expenses, and all other cash and non-cash expenses. What’s left after subtracting all cash and non-cash expenses from sales. If it’s a positive number it’s profit; if it's negative, it's a loss. Net profit is what you use to buy your yacht! Also called net
earnings, net income, or "the bottom line." Can be pre- or after tax.
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Net profit margin
Net profit/sales. Shown as a percentage. Net profit margin is a very important number for benchmarking. Can be pre- or after tax.
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O
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Operating profit
Gross profit - [minus] all operating expenses. This is the profit before subtracting (or adding) taxes and interest.
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Operating profit margin
Operating profit/sales. Shown as a percentage.
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Original equipment manufacturer (OEM)
A business that sells equipment or components to other companies (or resellers) to use in building a complete product. See also private
label.
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P
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Private label
Goods manufactured by one company but sold under another
company's brand name. Private label goods can be found in many industries
including clothing, food, cosmetics, and industrial and pharmaceutical
companies. See also OEM.
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Profit and loss
A statement prepared at the end of an certain period (for example,
the end of a year) to show general fiscal information and the gross and net
profit or loss of a business.
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S
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Sales
Amount invoiced (if on "accrual" basis) or collected (if on "cash" basis) for
goods and services. Also called revenues or turnover.
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Slogan
Slogans are short, catchy descriptions that sometimes play on the company's
name, product, or some aspect of a product. (Think of "Drivers wanted" from
Volkswagen.) Slogans are dynamic and may change from product to product. There
is debate about whether slogans and taglines are
the same thing. Some people use the terms interchangeably, but at Trendlines
we differentiate between the two.
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Strategic partners
Investors, advisors, and other businesses who can do something active to move your business forward. They may assist with marketing, help push your R&D efforts forward, or invest in the company. A very much overused term.
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T
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Tagline
A tagline is a short description — about five or six words — describing a company,
its philosophy, its position, or its advantage. (For a financial services company
that emphasized personal attention, we recommended, "The service you expect.
The attention you deserve.", and for a manufacturer of woven straps and tapes
looking for a potential partner, we arrived at "Banding together.") Taglines
are static; they last for years and years. In fact, a good tagline truly identifies
its company. We often remind clients that their tagline should "travel" with
their company name. It should appear on websites, stationery, and e-mails. See
also slogans.
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Toll manufacturing
The OEM of the chemical, food, and pharma industries.
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Total cost of ownership (TCO)
Sometimes known as full cost or fully costed. Often expressed
over a period of time — "The three-year TCO is $1,200." All the expenses related
to acquiring and operating an asset (initial price, maintenance and upkeep, installation,
storage, opportunity costs, training costs, support, interest, depreciation,
upgrades).
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Tranch
Very simply, a tranch is a portion of something, but especially money. ("We are
seeking to raise $2 million in three tranches.")
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V
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Value chain
The "who" (retailers, VARs, distributors) or the "what" (dollars
or percentages) that is added at every step of the manufacturing process
-- from the origin to the end-user. Sometimes shown as a horizontal flow
chart. Sometimes part of an industry map.
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Vision
A short (and snappy) statement of how the future will look when the organization achieves its mission.
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W
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Web 2.0
The changes that the Web has undergone which have transformed
it from a "data collection and archive space" to a "communication space"
for sharing all types of information -- from blogs to photos -- and everything
in between. Web 2.0 is spurring profitable commercialization through
its offering of services. |
