O
- Operational Risk
- The risk that the business venture will not be able to operationally deliver on its product or service due to uncontrollable risks such as weather, pests, natural causes, supplier stability, labor relations and political instability
- Organic Growth
- The rate of annual growth of the addressable market
- Organizational Analysis
- An analysis that typically refers to the strengths and weaknesses of the employees skills and the capabilities within a company
- Overhead
- See Indirect Expenses.
P
- Parent Company
- A company that owns part or all of a separate entity known as a Subsidiary
- Partnership
- A legal relationship/entity between two or more individuals for business purposes; can be a regular partnership or a limited partnership as defined by the legal documents
Limited Partnerships typically have one or more General Partners that manage the partnership while the Limited Partners participate as investors with limited decision-making authority - Patent
- An exclusive right granted by the U.S. Patent and Trademark Office (or the peer office of a foreign government) to a person for a fixed period of time (typically 14 years for a design patent and 20 years for other patents in the U.S.) in exchange for the detailed disclosure of the design or invention.
- PEO
- A PEO (professional employer organization) provides outsourced HR (human resources) services such as payroll, workers' compensation, HR administration and employee benefits administration. A PEO typically hires a client company’s employees, thus becoming their employer of record. The PEO then leases the employees back under contract to the original employer. This practice is also known as co-employment, employee leasing, or staff leasing.
- People Leverage
- The ability to delegate tasks to others in order to produce an income from their efforts
- Perishability
- The extent to which you have to sell a product or service in a short period of time or before a certain specified time, without the flexibility to store it or preserve it for a later use
- Positioning
- See Market Positioning
- Power of Attorney
- The written authorization that allows a person to act as an Agent for another person; may be general or limited to specific decisions or for a specific timeframe
- Preferred Stock
- A class of stock with certain preferences over common stock; the preferences are all negotiable, but typically include a liquidation preference, registration rights, drag-along rights and voting control (see the Resources Raising Capital section for the sample documents and more information)
Venture Capital investors usually invest in exchange for Preferred Stock - Price Elasticity
- See Elastic Demand
- Price Inelasticity
- See Inelastic Demand
- Price Sensitivity
- The awareness of the customer to what they perceive to be the range of prices within which they will buy a particular product or service
- Private Equity
- Any type of equity investment in a company that is not freely tradeable on the public stock market; typically refers to investment funds that have been raised on private markets, as opposed to public markets
Categories of private equity capital include:
- Leveraged buyout capital
- Venture capital
- Growth capital
- Angel capital
- Mezzanine capital
P (continued)
- Pro forma
- See Budget
- Product Line Proliferation
- The typical situation that occurs over time as a manufacturer experiences an increase in the number of products in its product portfolio based upon customer demand; e.g. Ford used to make just one car -- the model T -- in just one color - black -- but now one hundred years later, its product has "proliferated" into many, many models in many variations of colors, interiors and other extras
- Product Positioning
- See Market Positioning
- Profitability
- A company's ability to generate revenues in excess of the costs incurred in producing those revenues.
- Proprietary
- Any product, service, technology or intangible asset that is unique to, and legally owned by, a company
- Public Equities
- Stocks in publicly-held companies that are sold to the general public, typically through network of stock brokers via the stock market; highly regulated by the federal Securities and Exchange Commission (SEC) to protect individual investors
- Public Relations
- The part of an overall marketing strategy that includes generating awareness and influence through mass media such as press releases, newspaper, magazine and web articles, etc. to promote a company, product or service; typically performed by public relations firms that are hired with specific expertise to gain exposure for a client company
R
- Recurring Revenue
- Revenue that is highly likely to continue in the future; revenue that is typically monthly contractual revenue that is predictable and stable such as a security alarm monitoring company that charges $25 every month for a monitoring service
- Regulatory Environment
- The extent to which the target industry is subject to government regulation and the impact of that regulation on the market opportunity
- Relationship Type
- The type of customer relationship you are able to develop with your average customer ranging from a casual one-off non-contractual relationship to a deeper contractual relationship to a committed partner relationship
- Repeatability
- The ability to sell the same product or service over and over again with the same product or process content
- Retailer
- The business model of selling directly to the end user through retail store-fronts at retail prices with in-store sales personnel who can explain the purpose and value of the product or service
- Retained Earnings
- The amount of profit that is retained by a company for growth investment purposes and not disbursed to shareholders
- Return on Investment
- The ratio of an investment gain to the amount of the investment; also known as rate of return and commonly referred to as ROI
Example:
A $100 gain on a $1,000 investment has an ROI of 10% - Revenue
- Money received from customers or clients for the sale of products or services. Revenue is the "top line" of the Income Statement and is sometimes called Sales or Sales Revenue. Revenue is always listed first on an Income Statement prior to Expenses. To avoid confusion, Revenue should not be called Income, because Income is the term normally used for the "bottom line" results after all Expenses.
- ROI
- See Return on Investment