Glossary
Find definitions for common business terms
Adoption Rate
The percentage of customers or users who begin using a new feature, product, or service compared to the total number of potential users.
Agile
A project management methodology that emphasizes iterative development, collaboration, and flexibility to respond to changing requirements.
ARPU (Average Revenue Per User)
The average amount of revenue generated per user or account, often used to measure the financial performance of a SaaS company.
ARR (Annual Recurring Revenue)
The amount of revenue a company expects to receive from customers annually for subscriptions or services.
Assets
Resources the company owns and uses to generate revenue. The total is the sum of current and fixed assets.
B2B (Business-to-Business)
Referring to transactions and relationships between companies rather than between a company and individual consumers.
Burn Rate
The rate at which a company is spending its capital to finance operations before generating positive cash flow.
CAC (Customer Acquisition Cost)
The total cost of acquiring a new customer, including marketing, sales, and other associated expenses.
Cash Burn
The rate at which a startup spends its cash reserves, often measured monthly.
Cash Flow Forecasting
The process of estimating the future financial position of a company by predicting cash inflows and outflows.
Cash Increase
An increase in the amount of money the company has at the end of a specified period, calculated by adding up all cash inflows.
Churn Prediction
The use of data analysis to predict which customers are likely to cancel their subscriptions, allowing proactive measures to retain them.
Churn Rate
The percentage of customers who cancel their subscriptions over a given period, often measured monthly or annually.
Cloud Computing
The delivery of computing services over the internet, allowing access to shared resources, software, and information on-demand.
CLV (Customer Lifetime Value)
The total revenue a business can reasonably expect from a single customer account over the course of their relationship.
COGS (Cost of Goods Sold)
The direct costs of producing or acquiring goods sold by your company, usually materials, labor, and/or overhead costs.
Conversion Rate
The percentage of visitors or leads that take a desired action, such as signing up for a service or completing a purchase.
Cost Per Lead (CPL)
The average cost of acquiring a new lead, typically used as a measure of marketing efficiency.
CRM (Customer Relationship Management)
A system for managing a company's interactions with current and potential customers.
Cross-Selling
The practice of selling complementary or related products to existing customers.
Current Assets
Assets expected to be converted into cash or used up within one year, such as cash or accounts receivable.
Current Liabilities
Obligations expected to be settled within one year, such as accounts payable.
Current Ratio
Measures the company's ability to pay short-term liabilities due within one year using current assets, calculated as current assets divided by current liabilities.
Custom Pricing
A pricing strategy where the cost of the product or service is tailored to the specific needs or usage of the customer, rather than offering fixed pricing.
Customer Advocacy
Encouraging satisfied customers to promote and recommend your product to others, often through referral programs or testimonials.
Customer Health Score
A metric used to assess the overall satisfaction and engagement of a customer with your product, often used to predict churn.
Customer Onboarding
The process of helping new customers get started with your product, ensuring they understand how to use it and realize its value quickly.
Customer Success
A proactive approach to ensuring customers achieve their desired outcomes while using your product or service, often involving ongoing support and engagement.
Debt Financing
Raising capital by borrowing money, typically through loans or by issuing bonds, to be repaid with interest.
Debt-to-Assets Ratio
Measures the proportion of your company's assets that are financed through debt, calculated by dividing debt by assets.
Debt-to-Equity Ratio
Measures the proportion of debt used to finance your company's assets relative to the value of equity, calculated by dividing total debt by equity.
DevOps
A set of practices that combines software development (Dev) and IT operations (Ops) to shorten the development lifecycle and provide continuous delivery of high-quality software.
Discovery Call
The initial conversation between a salesperson and a potential customer, aimed at understanding the customer's needs and determining if there's a fit for the product or service.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
A financial metric that measures a company's operational profitability by excluding non-operating expenses.
Ending Cash
The amount of money the company has at the end of a specified period, calculated by subtracting cash inflows from cash outflows.
Expenses
Costs incurred by a business in its normal operations to generate revenue.
Financial Activities
Activities that involve obtaining or repaying capital to fund the company's operations and investments.
Fixed Assets
Long-term resources expected to provide benefits for more than one year, such as property or equipment.
Fixed Liabilities
Debts and obligations due beyond one year, such as long-term loans.
Freemium
A business model where basic services are provided for free, with the option to upgrade to a paid version with more features.
Gross Profit
The difference between revenue and COGS (Cost of Goods Sold).
Gross Profit Margin
A percentage that measures the profitability of your company's core business activities without considering expenses.
Inbound Marketing
A strategy focused on attracting customers through content creation and engagement, such as blogs, social media, and SEO, rather than traditional outbound methods like cold calling.
KPI (Key Performance Indicator)
A measurable value that demonstrates how effectively a company is achieving key business objectives.
Lead Generation
The process of identifying and attracting potential customers (leads) who have shown interest in your product or service.
Lead Nurturing
The process of developing relationships with potential customers (leads) at every stage of the sales funnel, often through personalized content and communication.
Lead Scoring
The process of ranking potential customers based on their likelihood to purchase, based on their behavior, interactions, and demographic information.
Liabilities
Debts and obligations that your company owes to external parties, including current and fixed liabilities.
LTV Ratio
The ratio of Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC), used to assess the profitability and sustainability of customer acquisition efforts.
MRR (Monthly Recurring Revenue)
The amount of revenue a company expects to receive from customers every month.
MVP (Minimum Viable Product)
The most basic version of a product that can be released to customers, used to gather feedback and validate the product concept.
Net Income
The amount of money your company has earned after deducting all expenses from revenue.
Net Profit Margin
A percentage that measures the profitability of your company after accounting for all expenses.
NPS (Net Promoter Score)
A metric used to gauge customer loyalty and satisfaction, based on how likely customers are to recommend the company’s product or service to others.
Onboarding
The process of guiding new customers through the initial setup and training to ensure they successfully use the product or service.
Operating Activities
Day-to-day activities that your company engages in to generate revenue, such as sales, expenses, and profits.
Opportunity Pipeline
A visual representation of the stages a potential customer goes through, from initial contact to closing a deal, often used to forecast sales and manage sales efforts.
Outbound Marketing
A strategy focused on reaching out to potential customers through traditional methods like cold calls, emails, and advertising, as opposed to inbound marketing.
Payback Period
The time it takes for a company to recover its Customer Acquisition Cost (CAC) through revenue generated from that customer.
Pipeline Velocity
A measure of how quickly deals are moving through the sales pipeline, calculated by multiplying the number of opportunities, average deal size, win rate, and dividing by the sales cycle length.
Product-Led Growth (PLG)
A strategy where the product itself drives customer acquisition, expansion, and retention, often through a self-service model or freemium offering.
Product-Market Fit
The degree to which a product satisfies a strong market demand, indicating that the product has found its place in the market.
Prospecting
The process of identifying and reaching out to potential customers who may be interested in your product or service.
Qualified Lead
A lead that has been identified as having a high likelihood of becoming a customer based on specific criteria, such as budget, need, and decision-making power.
Quota
A sales target assigned to a salesperson or sales team, representing the amount of revenue or number of deals they are expected to close within a specific period.
Revenue
The total income generated by a business, typically from the sales of goods or services.
Revenue Growth Rate
The percentage increase or decrease in a company's revenue from one period to another, often used to measure business growth.
Runway
The amount of time a company can continue to operate before it runs out of cash, calculated based on current cash reserves and burn rate.
SaaS (Software as a Service)
A software licensing and delivery model in which software is accessed online via a subscription rather than being installed on a user's computer.
Sales Cycle
The length of time it takes to close a sale, from initial contact with a potential customer to the final signing of the contract.
Sales Funnel
A visual representation of the customer journey from the initial awareness stage to the final purchase decision, with stages such as lead generation, qualification, and closing.
Sales Operations
The set of processes, tools, and strategies used to support, enable, and drive the sales team's effectiveness and efficiency.
Self-Service Model
A sales and support model where customers can sign up for and use the product without needing assistance from a sales or support team.
Service Expansion
The practice of increasing the scope or range of services offered to existing customers, often as a way to increase revenue and customer loyalty.
SLA (Service Level Agreement)
A contract between a service provider and a customer that specifies the expected level of service, including uptime, response time, and support.
Solution Selling
A sales approach that focuses on understanding the customer's needs and challenges and offering a solution tailored to address them, rather than just selling a product.
Solution Stack
The combination of various software, tools, and technologies used to build and run a SaaS product, often referred to as a "tech stack."
Subscription Revenue
Income generated from customers who pay on a recurring basis (e.g., monthly or annually) for access to a product or service.
Total Addressable Market (TAM)
The total market demand for a product or service, representing the maximum revenue opportunity available if a company could capture 100% market share.
Trial Conversion Rate
The percentage of users who start a free trial of a product and then convert to a paid subscription or purchase.
Up-selling / Upselling
A sales strategy that encourages customers to purchase a more expensive version of a product or service or add additional features.
User Persona
A semi-fictional representation of your ideal customer based on market research and real data about your existing customers.
Variable Costs
Costs that vary directly with the level of production or sales, such as materials, labor, or transaction fees.
Win Rate
The percentage of sales opportunities that result in a closed deal, used as a key metric to assess sales performance.
Working Capital
The difference between current assets and current liabilities, indicating the liquidity of the company and its ability to meet short-term obligations.
