Business Model: An overview of what an organization does, including customers, key products or services, and major sources of revenue, expenses. Business models can appear in many different forms, ranging from long and formal business plans to more flexible and lean canvases.
Burn Rate: How much money a new business needs to continue operating on a monthly basis. See also: runway
Capital, or Capital Raise: Another term for money or fixed resources that businesses need to operate. All business must have capital in order to purchase assets, maintain their operations and grow. Often, entrepreneurs will talk about 'raising capital' when finding additional investors.
Customer Discovery: The process of identifying and understanding your first customers.
Cost of Goods Sold (COGS): How much it costs you to make each individual product that you sell. Example: You sell phone cases, and it costs you $0.50 in materials and $2.00 in labor costs for each case, for a total COGS of $2.50.
Intellectual Property (IP): IP refers to protections for your ideas, often in the form of legal barriers to who can use them without your permission. Examples of IP include patents, copyright, trademarks, and trade secrets.
Market Opportunity: The potential customers and/or revenue that a given product or service might be able to target. Often a new or different area that is not addressed by competitors.
Product-Market Fit: An initial match between a product you can sell and a well-defined set of customers that are interested in paying you for it. Generally seen as evidence for a good value proposition. "It took us 2 years, but we've finally found product-market fit, and our monthly revenue and recurring customers have both tripled in the past six months."
Runway: The ratio between cash reserves and burn rate, giving the number of months that a business can continue to operate at current levels without increases in revenue or raising more capital.
Value Proposition: A statement of the benefits and value of a product or service to the target customer. It consists of several key components:
- What is offered and how it is offered to target customers
- What type of value or benefit is associated with the offering (for example, cost savings, time savings, revenue increase, customer/employee satisfaction), and how much of it the customer can expect
- How the value is generated
- Why it differs from anything else on the market