In short: plain-word definitions of the business plan terms you will meet most often. Each one links to a guide that explains it in more detail.
A
- Acquisition cost
- What you spend on marketing to win one new customer. Learn more →
- Average order value
- How much a customer spends on a typical visit or order. Learn more →
B
- Break-even point
- The point where sales cover all your costs — no profit and no loss. Learn more →
- Brand message
- One sentence that says who you are for and why you are different. Learn more →
- Business plan
- A document that explains what your business does, who it serves, and how it will make money. Learn more →
- Buying barriers
- The things that stop people from buying, such as price, trust, or distance. Learn more →
C
- Cash flow
- How money comes into and goes out of your business over time. Learn more →
- Company profile
- A short introduction to your business for partners, suppliers, and customers. Learn more →
- Competitor
- Another business that customers could choose instead of you. Learn more →
- Cost of goods sold
- What the items you sell cost you to make or buy. Learn more →
- Customer group (segment)
- A group of customers with similar needs. Learn more →
E
- Executive summary
- A short overview of the whole business plan, placed at the start. Learn more →
F
- Financial projections
- Your best estimate of future sales, costs, profit, and cash. Learn more →
- Fixed costs
- Costs that stay the same each month, such as rent. Learn more →
- Funding required
- How much money you need from savings, loans, or investors to start. Learn more →
G
- Gross profit
- Sales minus the cost of what you sold. Learn more →
I
- Impact
- How serious a risk would be for your money and customers if it happened. Learn more →
L
- Likelihood
- How probable it is that a risk will happen. Learn more →
M
- Margin
- Profit as a percentage of the selling price. Learn more →
- Market size
- How many possible customers there are and how much they spend. Learn more →
- Markup
- Profit as a percentage of the cost. Learn more →
- Mitigation
- What you do to make a risk less likely or less harmful. Learn more →
N
- Net profit
- What is left after paying all costs. Learn more →
O
- One-page business plan
- A short business plan that sums up each section in a sentence or two. Learn more →
- Operating costs
- The regular costs of running the business, such as rent, salaries, and marketing. Learn more →
P
- Penetration pricing
- Starting with low prices to win customers, then raising them later. Learn more →
- Profit and loss
- A summary of sales, costs, and profit over a period. Learn more →
R
- Revenue
- The money that comes in from sales. Learn more →
S
- Startup costs
- The money you spend before the business earns steady income. Learn more →
- SWOT analysis
- A review of your strengths, weaknesses, opportunities, and threats. Learn more →
U
- Unique value proposition
- One sentence that says why customers should choose you. Learn more →
V
- Variable costs
- Costs that change with how much you sell, such as ingredients. Learn more →
Frequently Asked Questions
What is the difference between revenue and profit?
Revenue is all the money that comes in from sales. Profit is what is left after you pay your costs.
What is the difference between fixed and variable costs?
Fixed costs stay the same each month, such as rent. Variable costs change with how much you sell, such as ingredients.
What does SWOT stand for?
Strengths, Weaknesses, Opportunities, and Threats.
What is a break-even point?
The point where your sales cover all your costs, so you make no profit and no loss.
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