Small Business Management

business plan

business plan A document designed to detail the major characteristics of a firm—its product or service, its industry, its market, its manner of operating (production, marketing, management), and its financial outcomes on the firm's present and future.

test marketing

test marketing Selling your product or service in a limited area, for a limited time.

traction

traction Those characteristics of your business that show it is making progress, such as making sales, recruiting customers, being sold in more locations, or achieving milestones that reflect a firm's growth or development.

vision statement

vision statement A very simple 5- to 10-word sentence or tagline that expresses the fundamental idea or goal of the firm.

working capital

working capital The cash immediately available to the firm for the day-to-day expenses and operations of the firm.

cover letter

cover letter A one-page document on business stationery (also called letterhead ) that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan.

data room

data room An online repository (e.g., Dropbox, Box, ShareVault) for the documentation that backs up and details the specifics of your business and business plan. The contents of the data room are very similar to those of the three-ring-binder personal edition of the plan held and used by the founder.

due diligence

due diligence The process of investigating a business to determine its value and potential for investment.

elevator pitch

elevator pitch A 30-second (100 words or less) action-oriented description of a business designed to sell the idea of the business to another.

executive summary

executive summary A one- to two-page (250-500 words) overview of the business, its business model, market, expectations, and immediate goals. It is typically put at the start of a business plan and is the most popular summary form for a business plan.

external legitimacy

external legitimacy The extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family.

information plan

informational plan A business plan that gives potential customers or suppliers information about the company and its product or service.

internal understanding

internal understanding The extent to which employees, investors, and family members involved in the business know the business's purposes and operations.

invention plan

invention plan A business plan that provides information to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights.

Key employee/ partner plan

key employee/partner plan A business plan that provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees.

micro-commitment

micro-commitment An online action that is quick and easy to make and connects you to the message, but does not require a substantial personal or financial commitment, such a liking or favoriting a post or reposting it to your own social media account.

mission statement

mission statement A paragraph that describes the firm's goals and competitive advantages.

new entrant business

new entrant business A firm whose product or service is established elsewhere, but is new to this market.

offering circular

offering circular (OC) A legal document required by firms seeking funding through equity crowdfunding platforms created under the JOBS Act. An OC contains SEC required forms, an offering memorandum (which is almost identical to a PPM), and the financial statements of the firm.

operational plan

operational plan A business plan designed to be used internally for management purposes.

pioneering business

pioneering business A firm whose product or service is new to the industry or is itself creating a new industry.

pitch

pitch The name given to the formal presentation of a slideshow summarizing your business plan given before judges or potential investors or partners.

pitch deck

pitch deck The name of a slideshow presentation that summarizes a business or more often a business plan.

preselling

preselling Involves introducing your future product to potential customers and taking orders for later delivery.

private placement memorandum

private placement memorandum (PPM) A specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments.

proof of concept website

proof-of-concept website An Internet-based type of business plan providing information or demonstration of a product or service designed to solicit information on customer interest.

proprietary technology

proprietary technology A product or service or an aspect of one that is kept as a trade secret or is protected legally using patent, copyright, trademark, or service mark.

research and development

research and development (R&D) The part of a business (and a business plan) that is focused on creating new products or services and preparing new technologies, ideas, products, or services for the firm's market.

risks

risks The parts of a business or business plan that expose the firm to any kind of loss—profits, sales, reputation, assets, customers, and so on.

screening plan

screening plan Also called a mini-plan, gives the basic overview of the firm and a detailed look at the financials.

signature block

signature block A snippet of text (or text and images), typically inserted at the bottom of an email, that contains contact information for the sender of the email.

storytelling arcs

storytelling arcs There are several classic structures to stories, such as beginning, middle, and end, or a multiple-step journey, or a situation-complication-resolution.

tagline

tagline Memorable catchphrase that captures the key idea of a business, its service, product, or customer (also known as a slogan).