The 10 Business Terms You Need To Know When Building Your Startup
If you’re new to the world of entrepreneurship, the amount of terms that get tossed around can be overwhelming. We get it. The extensive list of abbreviated appellations can seem like your business cohorts are speaking a foreign language if you’re not yet used to it. So until you become as successful as Mark Cuban or as esteemed as Mark Zuckerberg in the entrepreneurial world, you can just fake it with this business acronym cheat sheet.
CPA- Cost Per Acquisition
A CPA is the fiscal measure of what it took to amass a new customer, a new twitter follower, a new lead etc. For example: if you put forth $1000 for a social media campaign to garner new followers and end up with 667 as a result, your CPA is about $1.50. Thus a low CPA is what a company strives for as this reflects a cost efficient strategy on their part.
ROI- Return On Investment
The ROI is a performance measure that calculates the effectiveness of an investment made by your company. To better understand, the formula for ROI is the cost of of your investment subtracted from the gain of your investment divided by again, the cost of your investment. So if you invested $800 to revamp your website and ended up with 5 new customers who paid you $200 each for your company’s product, your ROI would be 25%.
KPI- Key Performance Indicator
A KPI is a metric used to measure success. These will widely vary company to company but some typical examples are net revenue and customer loyalty. If your goal for your company is to bring in one million dollars one year and you exceed that, than you have surpassed one of your KPIs and can note your company is moving in the right direction.
COGS- Cost of Goods Sold
Also typically known as ‘cost of sales’, COGS are the costs that can be attributed to the production of the items or services sold by your company. They relate, however, only to the direct costs and not those associated with distribution and use of a sales force. Rather, this number ecompasses the cost of the materials used to build your product as well as how much you spent on labor. For SAAS products this is typically the cost of development.
DBA- Doing Business As
A DBA is the operating name of your company as opposed to its official, registered name. DBA’s are typically employed to present a simple, less formal title to consumers, or when a desired name wasn’t able to be registered or when the business is owned by a franchise or separate company.
CSR- Corporate Social Responsibility
CSR refers to the steps your company has taken to benefit society. Whether this is through fostering environmental sustainability, making donations to charities, volunteering etc, CSR not only adds inherent value to your company and the community, but publicly frames it in a positive light as well.
POS- Point of Sale
The POS which is often used interchangeably with POP (point of purchase) is the time and place in which a transaction transpired. POS software moderates this exchange between the customer’s payment and the company’s goods or services. These systems allow you to analyze the data of your sales and maintain a history so you may adjust the way you make sales in the future.
CRM- Customer Relationship Management
CRM are the strategies companies utilize in bolstering positive relationships with their clients with the ultimate goal being to drive overall growth. Specifically, this can refer to aiming to enhance customer retention and loyalty or making these relationships more meaningful. Some examples of CRM systems could be a company's website, direct mail system, or social media platforms as in all of these cases the company is in direct communication with the consumer.
UX- User Experience
The user experience of a product refers to the more technical elements that make it (hopefully) easy to use and compatible to a specific user’s preferences. Think Google for example. When utilizing the search engine, Google often can guess what you’re searching for and complete your thoughts for you. It also pulls up what it believes to be most relevant based on the search terms you used.
UI- User Interface
Frequently confused with UX, user interface refers to the aesthetics and design of your product as opposed to the technicalities associated with it. The user interface is the look and feel of your company’s goods, the overall presentation of them and how they engage users. UX and UI, as you can imagine work in tandem as one doesn’t function (not well anyway) without the other.