A unicorn, in start-up terminology, isn’t the fabled creature of myth, but a privately held start-up company valued at over $1 billion. This term was initially coined by venture capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of successful ventures. Despite more unicorns emerging in recent years, they are still rare enough to deserve their enchanted moniker.
Entrepreneurs often talk about bootstrapping their business. This means launching and scaling a business without external funding or venture capital. Instead, entrepreneurs rely on personal savings, reinvesting operating income into the business, or other DIY techniques. This approach has been successful for numerous businesses, but it also means a slower growth rate and higher personal financial risk.
The term pivot in start-up lingo is an important one as it refers to a shift in strategy that helps the business achieve its objectives or keep it from failing. It is a testament to the agility and adaptability needed in the start-up culture. A prime example is Twitter, which started as a podcast platform named Odeo before pivoting to the microblogging service we know today.
The burn rate is a critical metric in start-up companies, indicating the rate at which it’s spending its capital to finance overhead before generating positive cash flow from operations. For example, if a company has $1 million in capital and spends $100,000 a month, the burn rate is said to be 10 months, reflecting how long the company can stay afloat with its current capital.
A disruptor is a company that revolutionizes industry norms with a new product, service, or business model. It can either create a new market or reshape an existing one. An excellent example of this would be Netflix, which has dramatically changed the landscape of home entertainment.
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A brick-and-mortar business refers to a business that operates a physical store or office where it interacts with its customers face-to-face. The term originated to contrast physical businesses with those that operate online or remotely.
Despite the rise of e-commerce and remote work, brick-and-mortar businesses still play a crucial role in our economy, especially in sectors like retail, foodservice, and personal care.
This term is particularly prominent in the western business landscape, where the balance between digital and traditional physical commerce is a major focus of entrepreneurial strategies and consumer behavior.
If you are an aspiring entrepreneur and are searching for a unique business name, consider checking out western names for businesses.
In entrepreneurial lingo, the term “scalable” refers to a start-up’s ability to grow or scale without being hampered by its structure or available resources. A business that can serve an increasing number of customers without compromising performance or revenue is considered scalable.
This term is a combination of “free” and “premium.” The business model works by offering basic services for free while charging for upgraded services or functionalities. This strategy is common in digital businesses, like LinkedIn, which provides basic professional networking services for free and charges for premium features.
This term refers to a specific pattern of growth, which, as the name suggests, looks like a hockey stick. The “blade” of the stick represents a start-up’s slow and steady growth, while the sudden uptick or “shaft” indicates exponential growth. It’s a visual representation of success that every start-up dreams of achieving.
If something is at the “bleeding edge,” it is ahead of the “cutting edge.” It’s technology so new and advanced that it could have a high risk of being unreliable and may lead to higher costs. Despite this, the potential for reward and industry advancement often outweighs the risk.
An angel investor is an individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. They are the lifeline for start-ups who are yet to reach a stage where they can secure funding from bigger institutional investors.
While knowing and using these terms can make you feel at home in any entrepreneurial discussion, remember, clarity and simplicity in communication can often trump jargon.
MVP (Minimum Viable Product)
The term MVP stands for “Minimum Viable Product.” This is a development technique where a new product or website is developed with enough features to satisfy early adopters. The final, complete set of features is only designed and developed after considering feedback from the product’s initial users. It’s a way for businesses to test the viability of a product before fully developing it.
An incubator in business is an organization designed to help new startups succeed. They help entrepreneurs solve some of the problems commonly associated with running a startup by providing workspace, seed funding, mentoring, and training. Examples include Y Combinator and TechStars.
In the entrepreneurial world, churn rate, sometimes known as attrition rate, refers to the number of customers who leave a product over a given period of time, divided by the remaining number of customers. It’s a vital metric for understanding customer retention and predicting revenue stream.
An exit strategy is a contingency plan that is executed by an investor or business owner to liquidate a position in a financial asset or dispose of tangible business assets once predetermined criteria for either incurring a loss or realizing profitability have been met.
Leverage refers to the strategy of using borrowed money to invest in a business with the expectation that the profits made will be greater than the interest payable. In a broader sense, it can also mean utilizing your unique capabilities or advantages to build your business.
In conclusion, the entrepreneurial journey is filled with unique experiences and challenges, and the language used reflects that journey’s dynamic and innovative nature. Familiarity with these terms will help aspiring entrepreneurs navigate this exciting world.