Start up business jargon buster

A pile of multi coloured letters to represent an alphabetical business jargon buster

If you're new to starting or running your own business, you may not fully understand the meaning of some frequently used words and terms. We've complied a glossary of some of them to cut through the jargon and help improve your knowledge.

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Angel investor A wealthy, successful person who invests in start-ups and high-growth companies for a share in the business. Visit the UK Business Angels Association website to find out more.

Automatic enrolment Government-introduced change that requires UK employers to automatically enrol staff into a company pension scheme, with both employer and employee contributing. Visit The Pensions Regulator website for more detailed information.


Bookkeeping Recording details of your sales and costs. By law you must maintain accurate financial records, but understanding your income, costs and cash flow can also help you to manage your business more effectively.

Bottom line The last line in a business' accounts or spreadsheet that shows total profit or loss. Many factors – chiefly costs – affect bottom line.

Brand Much more than your business name, logo, typeface or colours. Your brand is the experience customers have when engaging with your business and the perception this leaves.

Branding The name, symbol, design or appearance that differentiates your product, service or business from others.

Breakeven The amount your business must make in sales to cover your costs before you generate a profit.

Budgeting Creating a plan for how your business will spend money. Sound budgeting can help you to control your business finances.

Business plan Concise document that describes your business, its market, aims and strategy.


Cash flow The relationship between cash entering and leaving your business. Enough cash must enter your business so you can pay your bills on demand.

Channel How products or services reach a market. Examples include online, offline, exporting, selling directly to customers or indirectly via an agent, wholesaler or distributor.

Cloud computing Using remote servers hosted online to access, store and manage data. Businesses use 'the cloud' to manage their accounts, access customer relationship management data or for project collaboration. Often it's used simply to share files or store data safely.

Companies House Government agency that incorporates and dissolves companies. It registers the information companies are required by law to supply and makes it public.

Competitors Other businesses within your market that compete with you for sales. To be successful, you must be able to know what your competitors are up to and set your business apart from them.

Credit control The system that helps to ensure that credit is only given to customers who are able to pay, and that they pay on time.

Crowdfunding An alternative way of funding a project or venture by raising small amounts from many people, typically online.


Employers' liability insurance Almost all employers must have this insurance by law. It provides protection against claims for accidents or illnesses employees suffer because of work.

Employment contract Explains the legal terms and conditions for employees and workers. If you don't provide an employment contract, you must at least provide a written statement of employment on or before the first day of work.

Entrepreneur Someone who takes personal financial risk to set up a business or businesses. They're driven by a desire to be successful and wealthy rather than simply work for themselves.

Executive summary Appears at the front of your business plan and highlights its key points, enabling people to speed-read your business plan.


Forecast Using historic data or information to predict the future. So, previous annual sales figures might be used to forecast this year's sales or used with cost data to forecast cash flow.

Finance The money that enables an owner to start, run or grow their business. Various sources of start-up funding are available.

Flexible working Almost all employees with 26 weeks' continuous service are entitled to request flexible working (ie a way of working, such as flexible start and finish time, more suited to an employee's personal circumstances).

Franchising Selling licenses to franchisees who can then sell your products or services using your brand, processes and other intellectual property. Becoming a franchisee might enable you to run your own business.


Gross profit Turnover (ie total sales) minus cost of sales and direct costs. Gross profit percentage = gross profit/turnover x 100.


HMRC Her Majesty's Revenue & Customs, the UK Government department that's responsible for collecting taxes, while administering other regulatory regimes (eg the National Minimum Wage).


Income tax A tax levied directly by HMRC on personal income. A range of income tax allowances and reliefs are available.

Incorporation The legal process of forming a company, which is a separate legal entity to its owners, meaning there's unlikely to be any personal financial liability should the business fail.

Intellectual property Creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, images, music, etc. All businesses have IP which can be protected.

Invoice A bill for goods or services that you send to customers for payment. Invoices must include certain details including what's been supplied, price and VAT, if charged

Invoice finance Can ease your cash flow. A third party (eg a bank) buys your unpaid invoices for a fee. If you choose 'factoring', the invoice financier manages your sales ledger and collects money owed by your customers. With 'invoice discounting', the invoice financier lends you a percentage of your unpaid invoices in return for a fee.


KPI (Key performance indicators) These can help you measure how your business is performing in particular areas, so that you can improve. Examples include monthly sales, new customers, net profit, customer retention rate, etc.


Leasing You pay for use, rather than owning the asset, which can be a more cost-effective solution if your business needs machinery, equipment or a vehicle, as value can depreciate rapidly.

Limited company A type of business structure that is a separate legal entity to the owner. If you set up a limited company you become an employee and pay income tax and National Insurance contributions (NICs). The company must also pay NICs for its employees.

Limited liability partnership Another business legal structure, popular with solicitors, accountancy firms and dental practices. Partners aren't personally liable for business debts; their liability's limited to money they've invested in the business.


Market The place where goods are bought and sold. They can be physical or virtual; they can refer to a geographic location or type of customer, etc.

Marketing The process by which products and services are conceived, developed, readied for market, promoted and distributed/delivered.

Marketing mix Refers to four key areas of marketing – product, price, promotion and place – all key considerations.

Marketing plan Details your marketing objectives and strategy, while also providing a way to measure your success so you can get better.

Market research Essential work that enables you to gain a better understanding of your customers and competitors, so you can make your products and services more appealing.

Margin The difference between sale price and cost of bringing a product or service to market. Gross profit margin is gross profit expressed as a percentage (ie gross profit/sales revenue x 100).

Mentor Usually an experienced businessperson who provides advice, guidance and support to help you start and grow your business –usually for a fee. Visit to find a mentor for your business.

Micro business A business with fewer than 10 employees and with a turnover of less than €2m.


National Living Wage (NLW) Available to those aged 23 and over, the National Living Wage is the minimum hourly pay almost all workers are entitled to. Not paying the NLW or NMW is a criminal offence.

National Minimum Wage (NMW) The minimum hourly pay almost all workers are entitled to. Different rates apply depending on the worker's age. Rates change each year. Not paying NMW or NLW is a criminal offence.

Net profit Gross Profit minus indirect costs and expenses. Net profit percentage = net profit/turnover x 100.

Niche market A smaller, more defined market segment. Niche marketing involves targeting a specific segment. Niche market products are usually more specialised.


Online marketing The online techniques businesses can use to promote themselves and advertise their products, services or brand.

Overheads Day-to-day running costs, such as rent, rates, etc. Sometimes they're called fixed costs, because they aren't affected by how many products you make or sell. Variable costs increase when you make or sell more.


Parental bereavement leave All employed parents have the right to one or two weeks' leave if they lose a child under the age of 18 or suffer a stillbirth from 24 weeks of pregnancy. It is paid to eligible parents at £156.66 per week or 90% of average weekly earnings, if lower.

Premises The building in which or from which a business operates. There is a wide range of commercial premises to choose from but many businesses operate from home.


Seasonal business A business only run for part of the year rather than through out. For example, in the summer only.

Sector Part of the economy in which businesses share the same or related products or services.

Segment A group of customers or buyers who share common characteristics, tastes, habits, wants and needs. 'Segmentation' means splitting a larger market into different groups.

Self-employed Someone who works for themselves, also known as a sole trader (see below). They pay tax on their business profits, not personal earnings, but are personally liable for business debts.

Shared Parental Leave A new system that offers parents more flexibility to arrange time off after the birth or adoption of their baby. New mothers can share their maternity leave with their partners following the birth of their babies. After taking two weeks off following the birth, a mother can share the remaining 50 weeks' leave flexibly with her partner.

Small business A business with up to 50 employees and/or a turnover of up to £10m a year.

SME Small and medium-sized enterprise – a term that is really only useful when distinguishing large businesses from all others. A medium-sized business has fewer than 250 employees and a turnover of up to £50m.

Social enterprise A business that exists to "tackle social problems, improve communities, people's life chances or the environment. They make their money from selling goods and services in the open market, but reinvest profits back into the business or local community". Visit the website of national membership body Social Enterprise UK >>

Sole trader Another name for someone who is self-employed.

Start-up A newly established business. 810,316 new businesses were registered with Companies House in 2021/22 (source: Companies House).

Statutory Maternity Pay Statutory Maternity Pay is paid for 39 weeks of an employee's maternity leave. Currently it is 90% of weekly earnings for the first six weeks, then 90% of weekly earnings or £151.97 per week whichever is lower for the remaining 33 weeks. Most pregnant employees are entitled to maternity leave and pay.

Statutory Paternity Pay Statutory Paternity Pay is paid to most employees who are new fathers. SPP is paid for one or two weeks' ordinary paternity leave at £156.66 per week or 90% of average weekly earnings whichever is lower.

Statutory Sick Pay Statutory sick pay (SSP) is currently £99.35 per week, but many employers pay more. You can refuse to pay SSP if you reasonably believe your employee is not genuinely ill or fail to notify you in the required way.

Strategy A plan of action designed to achieve a long-term or overall aim. A business' strategy and objectives should be explained within its business plan.

SWOT analysis Essential to any sound business plan. Doing a SWOT analysis enables you to identify your business' strengths and the opportunities these offer, as well as your weaknesses and the threats these pose.


Target market A specific group of consumers or customers at whom a business specifically aims its products and services.

Turnover Total value of sales made by a business in a particular period (usually a year).


Unique selling proposition (USP) The thing that sets your business apart from its competitors and gives customers a compelling reason to buy from you.


VAT Value Added Tax – a transaction tax levied on sales of goods and services. The VAT registration threshold is £85,000. You must become VAT registered if your sales exceed this, then charge VAT to your customers (the standard rate is 20%), issue VAT invoices if you grant credit, file VAT returns with HMRC and pay over VAT charged. You may be able to reclaim some of the VAT you've paid.


Working capital The cash your business needs to trade day to day and stay afloat (ie "your current assets minus your current liabilities").

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