C
- Capability
- The combination between knowledge, skills and technology that gives a company the ability to perform a service or produce a good; also stated as a competency
- Capital
- The money invested in a company, either by the entrepreneur or by investors, private or public
- Cash And Cash Equivalents
- The value of assets that can be converted into cash immediately, as reported by a company; usually includes bank accounts and marketable securities, such as government bonds and bankers' acceptances
Cash equivalents on balance sheets include securities that mature within ninety days
- Cash Basis of Accounting
- The accounting basis in which revenue and expenses are recorded in the period they are actually received or expended in cash
Use of the cash basis generally is not considered to be in conformity with generally accepted accounting principles (GAAP) and is therefore used only in selected situations, such as for very small businesses and (when permitted) for income tax reporting. See also Accrual Basis
- Cash Cycle
- The average amount of elapsed time between when you experience the costs of the product or service you are delivering and when you collect from your customer for the product or service
- Cash Flow
- The amount of money which flows in and out of a business with the difference between the two being the important number
If more money flows into a business than out of it, it is cash positive; if more money flows out than in, it is cash negative
- Cash Flow Statement
- A financial statement of a company's cash flow results with a breakout of the cash from operations, investing activities and financing activities
- Closing
- The actual finalizing of a business deal or transaction such as the sale of a product, purchase of a company or purchase of real estate
- Cold Call
- The act of calling or visiting a prospect without their permission and without a scheduled contact
- Collateral
- Assets that are pledged to secure a loan in an asset lending situation
- Common Law
- Any law determined by judicial decree from the bench (in individual cases) rather than legislation passed into law by elected officials
- Common Stock
- A class of stock which is the most common and prevalent form of stock ownership; Common Stock has voting rights, but does not enjoy the same rights afforded to Preferred Stock shareholders
When a Venture Capital firm invests in an early-stage company, the entrepreneur and management team typically get Common Stock, while the investors get Preferred Stock (see Preferred Stock)
- Competency
- The combination between knowledge, skills and technology that gives a company the ability to perform a service or produce a good; also stated as a capability
- Competition Level
-
Companies compete on several levels such as:
- The basis of the needs of consumers
- General competition
- Product competition
- Brand competition
A company needs to focus on all four levels to be able to fully understand customer demand
- Competitive Forces
-
Forces that determine the organizations level of competition within a particular market. According to Harvard's Michael Porter, there are six forces that have to be taken into consideration:
- Power of the competition
- Threat of new entrants
- Bargaining power of buyers
- Bargaining power of suppliers
- Threat of substitute products
- The importance of complementary products
See the VentureAnalysis for a much deeper view of the industry dynamics
- Competitive Rivalry
- The intensity with which competitors compete with each other over customers
- Competitor Analysis
- Analysis of who the competition is, how they operate and how powerful they are
- Competitor Behavior
- The defensive and offensive actions of the competition
- Competitor Concentration
- The amount of market share concentrated among the largest competitors within an industry; an indication of the market power of the largest competitors
- Competitor Strategy
-
How a company competes with other companies; typically there are two primary strategies:
- Low price (or "value") strategy
- Product differentiation strategy
- Complementary Products
- Complementary products are products or services that can diminish the demand of a company's products and services
- Concept Risk
- The risk that the value proposition will not be easily understood, accepted and adopted by the potential customers
- Confidentiality Agreement
- An agreement where one or both parties agrees to hold any information received by the other party confidential, typically for a certain period of time; typically used in mergers and acquisitions discussions, partnership or joint venture discussions, capital raising pursuits and between employer and employee; also called an NDA
- Consideration
- The remuneration, compensation or inducement that a party gets in exchange for entering into a contract; consideration is typically required for a contract to be enforceable
- Copyright
- The exclusive ownership of a literary or artistic form of work such as computer software, music, written work, etc.
- Corporation
- A legal entity for conducting business that is legally separate from its owners (shareholders); corporations can be either for-profit (known as "C" corporations or "S" corporations) or non-profit (known as 501(c)3 corporations, one of thirteen different types of 501(c) organizations)
- Cost of Goods Sold (COGS)
- The cost of buying raw material and producing finished goods or the cost of delivery a service; includes all Direct Costs or Variable Costs, but Indirect Costs or Fixed Costs; also known as Cost of Sales (COS)
C (continued)
- Cross-Sell
- The ability to expand the customer relationship from selling the initial product or service to selling additional products or services; sometimes called expanding the wallet share of the customer
- Current Assets
- The assets of a company that are reasonably expected to be realized in cash, or sold, or consumed during the normal operating cycle of the business (usually one year); typically includes cash, accounts receivable and money due within one year, short-term investments, US government bonds, inventories, and prepaid expenses
- Current Cash Debt Ratio
- A measure of the ability to pay current liabilities in a given year with cash derived from operating activities; calculated using net cash from operating activities divided by average current liabilities
- Current Liabilities
- The liabilities (debts owed) by a company which are due for settlement during the normal operating cycle of the business (usually one year); typically includes accounts payable, notes payable, and taxes due etc.
- Current Ratio
- A measure of the ratio of a company's current assets to its current liabilities; a current ratio greater than 2:1 is typically deemed creditworthy, while a ratio between 1:1 and 2:2 is uncertain and a ratio of less than 1:1 is deemed not creditworthy
- Customer Acquisition Cost
- The total marketing and sales costs to convert a prospect into a new customer
- Customer Concentration
- The amount of market share concentrated among the largest customers within an industry; an indication of the market power of the largest customers
- Customer Life
- The length of the average customer relationship, typically associated with recurring revenue or repeat sales business models; indicative of the ability to experience repeat sales
- Customer Relationship Leverage
- The ability to cross-sell more goods and services to a customer once a customer is acquired
- Customer Switching Costs
- The costs that a customer experiences when they switch to another provider or supplier
D
- Damages
- The compensation ordered by a judge, arbitrator or mediator to compensate an injured party for injury, loss or damage suffered by the fault, negligence or misconduct of another party
- Debenture
- A debt security issued by an issuer that receives cash from the holder and owes the holder an agreed upon principal and interest (coupon) at a later date (fixed maturity); typically issued by the U.S., state or local government or a corporation and typically not backed by any form of security interest (unlike a bond that is typically backed by a security interest)
- Debt Service
- The regular, recurring debt payment made to keep a loan current that typically consist of principal and interest, but may be interest only
- Default
- The failure to pay the agreed upon debt payment on the due date according to the loan or debt agreement
- Deferred Bonus Plan
- See Long Term Incentive Plan
- Demand Letter
- A letter from an attorney that threatens litigation if the party receiving the letter does not comply with the demands of the letter, typically a payment or action of some sort
- Demographical Trend
- Trends that reflect changes in the population such as its size, age groups, religion, salaries etc. that can affect customer demand
- Depreciation
- The non-cash charge on an Income Statement which reflects the gradual reduction in value of an asset over time as its usable life is exhausted
- Direct Expenses
- Expenses that are directly attributable to producing a product or delivering a service. For a bakery, the Direct Expenses would typically be the ingredients in the baked goods and the Direct Labor that went into the baking itself. For a lawn mowing service, the Direct Expenses would typically be the gasoline and oil used that month as well as the Direct Labor for the crew that does the mowing. Expenses that are not directly attributed to producing a product or delivering a service are called Indirect Expenses or Overhead.
- Direct Labor
- Labor expenses that are directly attributable to producing a product or delivering a service and that are typically included in overall Direct Expenses. For a bakery, the Direct Labor would typically be the bakery staff that is directly involved in the baking process. For a lawn mowing service, the Direct Labor would typically be the crew that does the mowing. Labor that is not directly attributed to producing a product or delivering a service is called Indirect Labor.
- Direct Mail/Marketing
- Any marketing material or message that is sent directly to a customer prospect, typically in the form of printed material, telemarketing or by email
- Direct Sales
- The business model of selling direct to the end user through a direct field-based sales force or a telesales or inside sales force
- Discounted Cash Flow
- Usually known by the abbreviation DCF, this principle is based upon the Time Value of Money and is usually performed in a spreadsheet with the potential future cash flows that are thought to be generated from a business opportunity calculated for future periods and then discounted back to the present by an assumed interest rate or cost of capital to arrive at a Net Present Value.
- Distribution Channel
- The path a company's product follows as it is delivered to the end user through various distributors, resellers, jobbers, partners, retailer, self service outlets, vending routes, telesales, e-commerce, direct mail, etc.
- Distributor
- A company that purchases another company's products for resale to their customers (also called reseller, jobber or channel partner)
Distributors expect to receive a significant price discount (typically around 25 - 50%) for providing the distribution service
- DMU
- Decision making unit; all the people involved in the decision-making process from the customer's view point