Basic Business Terms Every Aspiring Entrepreneur Needs to Know

Are you a new and aspiring entrepreneur? If so, the world of business might feel confusing to navigate. A great way to successfully get your bearings is to understand and naturally use key startup terms in your day-to-day operations. From the technical to the non-technical, in the article below, we highlight some basic business terms and pieces of information that every aspiring entrepreneur needs to know.

Target Market

This is an essential element of marketing and a term every business owner needs to know. Your target market is your primary demographic or audience attempting to sell your products or services. You must take the time to research potential target markets before narrowing down on one, as your audience determines your sales. The more you can tailor your brand, products, and marketing messages to your customers, the more likely you will have great sales. You will also lower your risk of underperforming ads or product lines when you know exactly how to attract that specific group of customers. 

Cash Flow

Wave reports that every business needs healthy cash flow to thrive. And it’s easy to see why - when you have cash flow, you have more money to invest in your business operations and employees. To determine your cash flow, you will likely utilize a cash flow statement which is a document that summarizes the flow of cash in and out of your company for a specific period. The document will detail the amount of money available at the start and end of the period, broken down into different categories such as investing or operations. 

Keeping up with this document will ensure that you know where your money is coming from and going, which can help you make the necessary adjustments to improve. For example, suppose you see that your money isn’t coming in on time or is delayed. In that case, you can adopt strategies to incentivize customers to pay more promptly. 

SEO

SEO is an important tool for businesses looking to increase their visibility in the crowded virtual marketplace. By understanding the way search engines work, and taking steps to ensure that your website optimizes them, you can help to boost your rank in online searches and potentially attract more visitors (and customers) to your business. Working with the SEO marketing experts at Uplift Media can give you a powerful advantage as you strive to make yourself seen among consumers who are searching for relevant items or services.

Business Plan

According to the U.S. Small Business Administration, a business plan is essentially a roadmap for success. This simple document can be used to hone in on strategy, pitch to future investors, and even request a loan. The most important function is that it helps business owners detail various parts of their company, which in turn helps foster clarity and efficiency in each vertical. 

For example, you will likely have a financial section of your business plan where you detail starting funds, budgeted expenses, and forecast financial performance. You can keep looking back on these details every step of the way to ensure you are where you need to be financially. The same applies to other verticals like marketing, operations, and manufacturing. A business plan will hold you accountable and guide you through the ups and downs of business for success in the long run. 

Business Structure

A business structure is a term that’s arguably one of the most critical business terms out there because it determines how your business is organized. When your structure is set up correctly, your operations will become smoother and more organized. In addition to your business running on autopilot, your system will determine how you pay taxes and assess liability. Be sure to look up different business structures to choose the right one for your business needs. 

Many entrepreneurs decide to form their business as a limited liability company (LLC), as it has several benefits. These include protection of personal assets, flexibility, and much less paperwork required during the formation process as well as ongoing filing requirements. You can avoid hefty lawyer fees by using a formation service. Visit https://bestllcservices.com/legalzoom-llc-services-review/ to read reviews before choosing a service. 

Return on Investment

This term is also known as ROI and is the primary metric that measures the efficacy of an investment. If you’re confused about measuring ROI, you can use an online calculator to help you do so. Tracking ROI for various parts of your business will be crucial to ensure its performance and make necessary changes if the investment isn’t working out. And remember - investment here doesn’t necessarily mean financial. You could be investing in an employee, machinery, or even a design feature for your office - ultimately, all these things are investments intended to grow your business!

Pivot

A big part of being an entrepreneur is realizing that failure is imminent. Some strategies will simply tank, while others need to be updated to succeed. Newbie business owners often make the mistake of sticking to their original plan as they are confident they are right. However, you sometimes need to majorly change your idea - or pivot - to be successful. This process involves being open to iterations and testing different ideas and versions of a product. Thus, try not to invest too much time, effort, and money in testing only one version of an idea. Instead, build, test, and adjust quickly to find a winning idea without investing too much. 

Whether you’re focusing on refreshing your buzzwords or making a leap into the business world by forming an LLC, you must learn this industry's essential terms and vocabulary. This will make communicating with your team, vendors, and other business owners easier. It’s time to get business savvy today!