The business and finance vocabulary you'll meet while building your plan — defined simply.
Accounting spread of an asset's cost (equipment, machinery) over its useful life, rather than all at once.
A snapshot of a company's worth at a point in time: what it owns (assets) and what it owes (liabilities).
The point (in date or volume) where revenue exactly covers costs. Beyond it, the business makes money.
The minimum revenue a business must reach to cover all its costs. Expressed in currency, whereas break-even is often expressed as a date.
How a company creates value and makes money: what it sells, to whom, how, and at what profitability.
A structured document presenting a business project: market, strategy, team and financial forecasts. Used to convince banks and investors.
The average cost to acquire one new customer (marketing + sales spend divided by customers won).
Money immediately available in a company's accounts. Running out of cash is the leading cause of failure for young businesses.
Money actually coming in and going out over a period. A company can be profitable on paper yet short on cash flow.
Earnings before interest, taxes, depreciation and amortization. Measures pure operating profitability, independent of financing.
A quantified projection of activity over 3 to 5 years: expected revenue, costs, profit and cash.
Costs that don't vary with activity: rent, salaries, subscriptions. Payable even with no sales.
An operation where a company raises capital from investors (angels, funds) in exchange for equity.
The difference between revenue and the direct cost of goods or services sold. The first profitability indicator.
A statement summarizing income and expenses over a period to show profit or loss.
Total revenue a customer generates over their whole relationship with the company. Compared to CAC, it shows whether the model is profitable.
The simplest version of a product, enough to test the market and learn before investing further.
Analysis of demand, competition and trends in a market, to confirm a project has a place before launching.
Final profit relative to revenue, once all costs are deducted. Expressed as a percentage.
The amount the founder invests themselves. Reassures banks: a higher contribution lowers perceived risk.
A short presentation (10-15 slides) meant to convince investors: problem, solution, market, team, numbers.
A strategic change of direction (target, product, model) when the initial approach isn't working.
A measure of the gain generated relative to the amount invested. Shows whether a spend is worthwhile.
Total sales over a period, before tax. It's gross income, not profit.
A strategic analysis matrix: Strengths, Weaknesses (internal), Opportunities and Threats (external).
The amount contributed by shareholders when the company is created, in exchange for shares.
Three market sizes: total (TAM), serviceable (SAM) and obtainable (SOM). Used to quantify the opportunity.
An estimate of a company's worth, notably during a fundraise or a sale.
Costs that rise with activity: raw materials, commissions, shipping fees.
Stable resources available to fund the operating cycle. The counterpart to the working capital requirement for managing cash.
Cash a business needs to fund its operating cycle (inventory, receivables) before being paid. A poorly anticipated requirement is a frequent cause of tight cash flow.
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