Financial Terms

Accounts Payable Money your business owes to suppliers. If you've received goods or services but haven't paid for them yet, that's accounts payable.

Accounts Receivable Money customers owe you. You've done the work or delivered the goods, but haven't been paid yet.

Angel Investor Someone who invests their own money in early-stage businesses, usually in exchange for shares. Often successful entrepreneurs who want to help others.

Balance Sheet A financial snapshot showing what your business owns (assets), what it owes (liabilities), and what's left over (equity).

Bootstrap Starting and growing a business using only your own money and the cash the business generates. No outside investment.

Burn Rate How quickly your business spends money. If you spend £10,000 per month and have £60,000 in the bank, your runway is six months.

Cash Flow The movement of money in and out of your business. Positive cash flow means more money coming in than going out.

Corporation Tax Tax that limited companies pay on their profits. Currently 25% for companies with profits over £250,000, 19% for smaller companies.

EBITDA Earnings Before Interest, Tax, Depreciation, and Amortisation. A way of measuring profitability that excludes one-off costs. Useful for comparing businesses.

Equity Ownership in a company. If you own 50% equity in a business worth £100,000, your stake is worth £50,000.

Gross Profit Revenue minus the direct costs of producing your product or service. Excludes overhead costs like rent and salaries.

Net Profit What's left after all expenses. Revenue minus everything you spent to earn that revenue.

P&L (Profit and Loss) A report showing your income and expenses over a specific period, usually monthly or yearly.

Revenue All the money your business brings in from sales, before any costs are deducted. Also called turnover.

Runway How long your business can operate with current cash reserves. If you spend £5,000 monthly and have £25,000 in the bank, your runway is five months.

Valuation How much your business is worth. Usually calculated based on multiples of revenue, profit, or assets.

VAT (Value Added Tax) Tax added to most goods and services. Currently 20% in the UK. Must register if your turnover exceeds £85,000.

Legal and Structure Terms

Articles of Association The rules governing how your company operates internally. Covers things like how decisions are made and shares are transferred.

Companies House The UK government agency where you register your company and file annual documents.

Directors People appointed to run a limited company. Have legal responsibilities for the company's actions and decisions.

Incorporation The legal process of creating a limited company. Makes your business a separate legal entity from yourself.

Limited Liability Protection for business owners. Your personal assets are separate from business debts (with some exceptions).

Memorandum of Association A legal document stating that the shareholders agree to form the company and become members.

Registered Office Your company's official address for legal correspondence. Must be a UK address and appears on public records.

Shareholders People who own shares in a company. Share ownership usually means sharing in profits and having voting rights.

SIC Code Standard Industrial Classification. A number that describes what your business does. Required when registering a company.

Sole Trader The simplest business structure. You and your business are legally the same thing. Easy to set up but offers no protection from debts.

Marketing and Sales Terms

B2B (Business to Business) Selling products or services to other businesses rather than individual consumers.

B2C (Business to Consumer) Selling directly to individual customers rather than businesses.

Conversion Rate The percentage of potential customers who actually buy. If 100 people visit your website and 5 buy something, your conversion rate is 5%.

CRM (Customer Relationship Management) System for managing interactions with customers and potential customers. Often software that tracks contacts, sales, and communications.

Customer Acquisition Cost (CAC) How much you spend on average to get one new customer. Include all marketing and sales costs.

Lead A potential customer who has shown interest in your product or service.

Market Research Finding out what potential customers want, how much they'd pay, and who else provides similar products or services.

Niche A specialised segment of a market. Often easier to dominate a small niche than compete in a large general market.

ROI (Return on Investment) How much profit you make compared to how much you invested. If you spend £1,000 on marketing and it generates £3,000 in sales, your ROI is 200%.

Target Market The specific group of people most likely to buy your product or service.

USP (Unique Selling Proposition) What makes your business different from competitors. The main reason customers should choose you.

Technology and Operations Terms

API (Application Programming Interface) A way for different software systems to communicate with each other. Allows integration between different tools.

CMS (Content Management System) Software that lets you create and manage website content without coding. WordPress is a popular example.

Cloud Computing Using internet-based services instead of your own servers. Examples include Google Drive, Dropbox, and most modern business software.

E-commerce Selling products or services online. Can be through your own website or platforms like Amazon.

Scalability How easily your business can grow without proportionally increasing costs. Software businesses are highly scalable; consulting services less so.

SaaS (Software as a Service) Software delivered over the internet, usually with monthly or annual subscriptions. Examples include Spotify, Netflix, and most business tools.

Investment and Growth Terms

Due Diligence The process investors use to verify information about your business before investing. Includes checking financial records, legal documents, and market research.

Exit Strategy How business owners plan to eventually sell their stake. Common exits include selling to competitors, management buyouts, or public offerings.

Pivot Changing your business model or strategy based on what you've learned. Often involves focusing on a different customer segment or solving a different problem.

Proof of Concept Early evidence that your business idea works. Could be initial sales, successful tests, or customer validation.

Seed Funding Early-stage investment to help develop your business idea. Usually comes before significant revenue.

Series A, B, C Stages of investment funding. Series A is usually the first major round after seed funding, followed by Series B, C, etc.

Term Sheet A document outlining the key terms of an investment deal before formal contracts are signed.

Venture Capital (VC) Investment firms that fund high-growth potential businesses in exchange for equity.

Making Sense of Business Talk

Don't let jargon intimidate you. Most business concepts are simpler than they sound. When someone uses a term you don't understand, ask them to explain it in plain English.

Remember, clear communication is a sign of expertise, not simplicity. The best business people can explain complex ideas simply.

Keep Learning

This glossary covers the essentials, but business language evolves constantly. When you encounter new terms, look them up or ask for clarification.

The goal isn't to memorise every term, but to understand the concepts behind them. That understanding will serve you much better than a perfect vocabulary.

At Foundrs, we believe business should be simple enough that you don't need a translator. That's why our AI explains everything in plain English and handles the complex terminology behind the scenes.

Your business success won't be measured by how many acronyms you know, but by how well you solve problems for your customers. Focus on that, and the rest will follow.

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