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If you’ve spent some time learning basic skills through financial blogs or business and startup articles, you’ve probably noticed that the startup domain uses common financial terms. Many entrepreneurs and startup owners are unfamiliar with the financial dictionary. Obviously, most entrepreneurs did not enter the business sphere to be banking specialists or analysts.
Common Financial Terms From Startup and LingoHowver, common financial terms are clearly the indicators of how a business runs and why it should be understood at a fundamental level. To get you started on the right track, here are some essential finance startup definitions and common finance terms every founder should know. Moreover, EndModelslab have also included some helpful points to brush up on your finance skills.
In most cases, it is wise to use popular vocabulary. Below is a list of the most popular and important finance jargon, popular finance terms and definitions that help new founders follow through and focus on projects without losing the opportunity to build a startup. sophisticated.
A
Accounts payable – Money that is owed by a business to its suppliers or other parties for services or goods. This is an up-to-date liability on the balance sheet.
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Accounts Receivable – Money owed to a business by customers for services or goods that have been delivered. It is a current asset on the balance sheet.
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Angel (also called Business Angel) – a professional private investor who buys a share in the project with his own money in order to return on investment.
as soon as possible (as soon as possible) – at the earliest opportunity; The urgent task must be done immediately.
Assets – A variety of categories are considered assets, such as cash, stocks, inventory, structures, vehicles, equipment, co-working spaces, appliances, etc. Assets can generally be sold to someone else and do not guarantee protection against investment loss.
B
Balance sheet (also called the statement of financial position) – A summary of a company’s financial condition as of a given date. It lists the company’s assets (machines, buildings, inventory, cash, etc.), its liabilities (what it owes), and the amount invested by its shareholders.
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Prime – When a business founder starts a business with minimal capital and personal financing, it is constantly evolving. It means founding and building a business from individual finances or from the revenue from the new startup.
Ultimately – A substantial term i.e., the essential refers to the profit of a company – income statement of the company below profit and expenses. Expenses include loans, overhead, insurance, and taxes.
Budgeting – Process of estimating costs, setting up an agreed budget for the companies and developing a plan to manage the actual and forecast costs of this budget.
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VS
Cash flow – This is the amount of money that regularly runs through your business. It reflects the possibility of paying operational expenses. Starting a business is full of challenges, but growing can be even trickier. To survive as a business, you need to master cash flow management. THE Cash flow is a metric for businesses.
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Crowdfunding – increase the monetary contributions of many people.
D
Dead end – Multiple processes are waiting in the infinite resource state due to them blocking each other.
Flow (the flow of transactions) – the term, usually consumed by investors; Incoming stream suitable for communication start-ups (and later for investment).
death valley – The life period of a start-up, the most difficult stage in which all the costs are realized, the project has started, but has not yet arrived, and it is not clear whether it will.
Depreciation – Some business assets decrease in value after a certain period of time. For example, a desktop device may lose value for every year of physical deterioration. If your business has fixed assets, you need to factor in depreciation costs.
Dividends – A portion of the net profit distributed by a company to its shareholders.
E
EBIT (Managed before interest and taxes) – An indicator of the operational efficiency of the project.
EBITDA – Earnings before interest, taxes, depreciation and amortization. EBIT plus depreciation.
Summary in seconds – Account of the essence of the project to the investor in a very concise form, about 30 seconds, brief enough to end in an elevator ride.
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Equity (also called capital) – Equity refers to the property, stock, business and retained earnings. It can help you subtract liabilities from assets to calculate capital.
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Exit – The situation where one of the shareholders sells his share.
F
Financial model – A financial projection model of a specific business idea. Gives the opportunity to understand whether or not to invest in a particular project.
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First refusal – The right of the investor to make the first selection of candidates competing for investments.
Freemium – From the words “free” and “premium”, the business model that offers to use the basic product or service for free, while enhanced (enhanced) features are available for an additional cost.
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Friends, family and fools – In the classic system of attracting money, the source of the initial investment. The phrase went from Silicon Valley and became a popular expression.
Fund raising – The process of finding and attracting money.
g
Go-to-market strategy – Market entry strategy.
Gross profit – The difference between a company’s revenue and cost of goods sold (costs that are a direct result of producing the product or providing a service, such as materials, direct labor , utilities, etc.). It does not include fixed costs (overhead costs that generally do not change, such as office expenses, rent, etc.), taxes and interest payments.
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I
Initial Public Offering (Initial Public Building) – The initial public offering of shares on the stock exchange.
Irritate (Internal rate of return) – The internal rate of return, an indicator of the rate of return on cash flow. One of the common financial terms.
K
Killer feature – A deadly product quality or the starter service that gives a great competitive advantage.
I
Lean – The classic concept of management based on the desire to minimize losses of all kinds.
Leverage – In the financial world, simply put, leverage usually means the amount of money you have borrowed to run your business.
Passives – Liabilities are debts of the business that must be paid in full within the next year, including taxes payable, notes payable and accounts payable.
Limited downward – Limit risk of loss with enormous growth potential.
NOT
Net revenue – This is a basic term that refers to the turnover or total profit of a business. In short, when preparing a monthly budget, you calculate the difference when subtracting expenses from income.
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NPV (net present value) – Method of estimate future cash flows Estimates and translation into current evaluation.
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O
Outsourcing – The use of an external source / resource to attract other companies to carry out certain operations.
P
PL (Profit and Loss) – A form of financial reporting and profit and loss planning.
“
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“
Post money – Valuation of the company, based on the investment received.
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Pre-money – Valuation of the company before investment.
R
Retention – user feedback. It shows how often the person uses the product.
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Revenue sharing – revenue division; Distribution of profits / losses between partners.
Royalties – Payment for the right to use the property (including intellectual property) of another person.
S
seed stage – the initial stage of a start-up which includes market research, writing a Business plan and product testing. Stock – shares of the company in equity capital.
T
Sheet – A protocol with basic agreements on the terms and procedures of investments (this document has no legal effect). Traction – Positive customer and market feedback, evidence that the product/service is in demand.
V
Assessment – a process for estimating the current value of an asset or a business.
W
Empty (Work in progress) – Not fully executed a contract.
Startup trends and updated terminology
Of course, different companies have nearly limitless financial terms and jargon. Also, sometimes it seems like they have their own separate language, and it can be extremely difficult for an experienced business guru to keep up.
On top of all that, the startup scene is constantly moving, with a new Financial models, as well as the innovation and technologies that emerge daily. Indeed, even minor differences can mean a lot to startup founders, so keeping up to date will help to stay on the same page and prevent problems from arising in the future.
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