Startup from A to Z

Forget the ABCs you learned in grade school. This entrepreneurial alphabet has the terms you need to know to help your new business succeed.
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Writer and Author, Specializing in Business and Finance
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This story appears in the March 2009 issue of Start Up. Subscribe »

ngel investor: It's easy to believe in angels when you find one who'll open his checkbook to finance your business. Angel investors typically fork over their own dough to help smaller companies get started. They often invest in companies that are too small or risky for venture capitalists to take seriously. Some angels take an equity stake, while others simply want their money back plus interest once the business takes off.


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usiness plan: Want to woo investors, or simply keep your business on course? You must have a good business plan. It doesn't have to be lengthy, but it does have to define your idea, map out business operations and predict potential. Oh, and it needs to clearly show much moola you'll need to get your business going and keep it growing.

affeine: Whether it's a supersize cup of joe or a stash of energy drinks, a little bit of caffeine can help you get through those long 50-, 60- or 70-hour work weeks.

ebt: While bootstrapping is admirable, don't rule out debt financing, says finance expert Bob Low, author of Accounting and Finance for Small Business Made Easy. "Sometimes [borrowing is] the best way to get the money you need to grow." That may mean borrowing against assets or simply floating expenses on a line of credit. Just watch that your debt load doesn't get too heavy for your cash flow and profit margins to carry.

quipment: Efficiency is essential, so don't skimp on equipment, especially if it will save you and your staff time or money. Read trade journals to keep up on innovations that may help one person do the work of two--without having to put a cot in the back office.

inancial statements: Read them. Learn them. Live them. If you're not reviewing your financial statements on a regular basis, says Low, you're likely missing important information about your company's performance.

rowth: Growing too fast can be hazardous to your business health, says small-business consultant Carol Frank, author of Do As I Say, Not As I Did! Gaining Wisdom in Business Through the Mistakes of Highly Successful People. Growth for growth's sake isn't very smart. You need to make sure you have the financing that growth requires and that your foundation is in place so you can accommodate that growth. That's the time to make your business bigger.

uman capital: This is a fancy way of saying "employees," but it's a good idea to start thinking of the people you employ as real assets. Seek out the best and invest in them.

deas: From creative marketing to innovative new products, you need great ideas in order to be successful. Be ready to capture them when they emerge, whether by keeping a small recorder in your car or having a water-soluble marker available to write them on your bathroom wall. After all, don't most people get their best ideas in the shower?

oint venture: If two heads are better than one, two companies must be unstoppable, right? Sometimes. Alex Hiam, a small-business consultant and author of Marketing Kit for Dummies, estimates that 1 in 5 joint ventures works out. "The kinds of partnerships that work best are those where the companies are at a different level in the distribution channel," Hiam says. For instance, a manufacturer and a distributor would share the profits of a product they jointly get into the marketplace.

nowledge: Knowledge is power, especially when it comes to your business. You need to do your homework by researching your market category and the opportunity it holds, as well as finding out as much as you can about starting a business in general. Industry associations, trade publications, government websites like and, and even your local library can all provide important information to get you started on the right foot.

enders: Going in on bended knee won't work. What lenders really want to see is your ability to repay the money you borrow. So work on polishing up that credit rating--both business and personal--and come in with solid sales and cash-flow projections backed by industry research.

arketing: Sometimes, promoting products and services seems like an easy place to cut back, but that's the worst idea, says Frank. "Out of sight is out of mind. The last thing you want is to be out of your customer's mind when you're trying to find new business." Instead, look for low-cost methods, such as e-mail marketing, contacting your best customers with special offers and seeking out publicity opportunities.

ame: What's in a name? Perhaps a cease-and-desist letter. Before you slap your business or product name on expensive stationery, packaging and marketing materials, check out whether it's been trademarked by going to the U.S. Patent and Trademark Office website,, as well as conducting an internet search and consulting your attorney.

perations: Be a smooth operator by setting up solid business practices. Be clear about your business hours, policies and procedures, and communicate them well so that both customers and employees know what to expect.

rofit margins: Your profit margin speaks volumes about the health of your company. This ratio of income divided by revenue is a useful tool to compare your company's profitability with others in your industry.

uick restaurant delivery: When you feel the need to feed--a late-night pizza pick-me-up or sandwiches for a lunchtime staff meeting--it's a good idea to have the best delivery joints on speed dial.

egulations: Many entrepreneurs are rule-breakers by nature, but ignoring the regulations, licenses and other applicable laws of your business landscape can land you in hot water and cost you big bucks.

ales channels: Gone are the days when products or services were marketed through only one channel. Now, says Hiam, companies can not only look to traditional sales channels but also find sales channels online, through direct selling or alliances with distributors. Says Hiam, "Being innovative and a leader in distribution is the easiest way to become a multimillionaire."

axes: You know you have to pay them. Find out which ones apply to your business and remit promptly. Don't mess with the tax man.

nplug: You deserve a break today and one next week and one the week after that. To be most effective in your business, you need to get away from it regularly, says Hiam, or you'll burn out and stifle creativity. Whether it's a sunrise yoga class or a midday trip to the museum, find your choice activity and engage on a regular basis.

enture capital: Got the "next big thing"? Venture capitalists today are looking for companies that have the potential to grow big, fast. If you're poised to burst out on the scene and score big, make a solid case in your business plan and start knocking on venture capitalist doors.

ebsite: You know you need a website--and you know you need one that's interesting and interactive. Frank says it's essential to offer something for which visitors will give their e-mail addresses in exchange. That helps you grow your marketing base. White papers, information or even free consultations can get you the contact info you need for a promotional follow-up.

marks the spot: Location, location, location plays a critical role in the success of a retail business, but choosing the right spot can make a difference for any business, says Hiam. Look for places that are hubs for your industry because they'll likely be rich in the resources, people and infrastructure you need to be successful.

es: From reflecting a positive attitude to being persistent in your pursuit of sales, the word yes is essential in the entrepreneurial vocabulary.

eal: People who are only in business for the money usually crash and burn, Hiam says. To achieve success, you must have true zeal for your business, your products and services, and your customers. "Zeal is a better word than love," Hiam says, "because it shows the energy you have for the business, too."

Gwen Moran is co-author of The Complete Idiot's Guide to Business Plans. Reach her at

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