business terms

A Glossary of Basic Business Terms

Matthew Gillman | July 8, 2022


    Understanding business jargon is always helpful, whether you're brand new to the world of entrepreneurship or you've been in business for decades and want to keep up with the slang your fellow business owners are using. This knowledge goes both ways; while it's important to understand what your business connections are saying, you'll also want to know the words to express yourself well to potential partners, investors, and contacts.

    Acquisition: An asset or object that is bought by somebody else, typically another business. "Acquisition" is frequently used alongside the word "merger."

    Advertising: Advertising is the publication or broadcast of material intended to attract public attention to a business or product. While advertising often costs money, some electronic methods can be used for free.

    Angel Investors: Individual investors who are able to back emerging businesses to help them reach a higher level of business that attracts venture capital. Often, this includes funding ranging from a couple of thousand dollars to a few million dollars.

    Appraisal: A formal estimation of the value of an asset or object.

    Business Incubator: An organization that helps startups and individual entrepreneurs develop their businesses by providing work spaces, coaching, and other support services.

    Copyright: The exclusive legal right to published and unpublished works that have been fixed in a tangible form. Copyrights are usually given to literature, scientific works, art, and music.

    Corporation: A corporation is a type of business that's recognized as a separate legal entity. Corporations have their own rights, privileges, and liabilities that are distinct from those of their owners and employees. This shields investors from personal liability in the event that a corporation experiences losses.

    Due Diligence: Reasonable steps an individual can take to obtain detailed and accurate information that could influence a transaction.

    Entrepreneur: An individual who organizes and operates a business or multiple businesses. This person is likely to take on great financial risks in order to try new business ventures, and unlike with a corporation, they are not shielded from loss.

    General Partnership: A type of business structure in which each partner shares the profits and losses the business may experience.

    Home-Based Business: A business primarily run out of the owner's home. It doesn't matter how big the business is, how many people are employed, or the type of business it is: If it's operated out of a home, then it is considered to be a home-based business.

    Independent Contractor: An individual who does work for a business on a contract basis, without being an employee of that business.

    Joint Venture: A legal entity created by two or more businesses working together for a specific enterprise. Joint ventures typically include each party sharing the results of this venture, both profits and losses.

    Limited Liability Company (LLC): A business structure in the United States that protects individuals from liability. It is not taxable and distributes the business's profits to its owners while still shielding the owners' personal assets from debt.

    Line of Credit: An amount of credit extended to a borrower, whether they are an individual or a business. Similar to a credit card, a line of credit allows a business to borrow money and then make periodic payments against the balance owed.

    Marketing: The process of drawing public attention to a specific business or product with the intention of selling or distributing it to a wider audience.

    Merger: The joining of two separate corporations into a new entity.

    Networking: The act of forming contacts and business relationships in order to increase knowledge, expand your business base, and better serve the community.

    Outsourcing: Purchasing goods or services from a foreign supplier to cut down on internal costs of operation.

    Patent: A government-issued document that grants rights to the inventor or creator of an object. This means that others are excluded from making, using, or selling the invention for a period of time.

    Public Relations (PR): The promotion of a specific image for a business. This includes a strategy of how the company would like its brand to be promoted in order to reach the specific audience that will appreciate its goods and services.

    Sales: The exchange of goods and services for money.

    Sole Proprietorship: A business that is owned and operated by one person.

    Trademark: A symbol, sound, color, word, or string of words that are used to distinguish specific goods and services from their competitors. Trademarks are legal protections that can be renewed for as long as they are being used in business.

    Venture Capital: A form of financing where the business gives up partial ownership in exchange for capital over a period of several years.

    About the Author

    Matthew Gillman is the founder and CEO of SMB Compass, a bespoke business financing company focused on providing financing and education to small businesses across the U.S. The company has provided over $250 million to more than 1,250 businesses. Coming from a family of small business owners sparked Matthew’s passion to not only become an entrepreneur, but also to work with his fellow entrepreneurs to build long-lasting relationships.