accrual basis accounting An accounting method in which income is reported in the fiscal period during which it was earned regardless of when it is received and expenses are recorded in the fiscal period during which they occur, whether they are paid at that time or not.

advisory board An informal group of individuals who provide guidance to a business by acting as a sounding board and bringing their own expertise to bear to assist in making strategic decisions.

appreciative inquiry A process within an organization in which employees look at ways to change and improve performance. The theory behind appreciative inquiry is that when employees begin to appreciate what is best about the business and focus on the things they do well, they are able to find new ways to do even better and improve the business.

balance sheet A snapshot of the business’s assets and liabilities for a particular time period.

behavioral interviewing A way of interviewing that takes into account a candidate’s past experiences to determine his ability to perform a role. Past experiences are often good predictors of how the candidate will perform in the future. These kinds of probing questions enable you to gain a deeper understanding of how a candidate handled a particular situation.

benchmarking Measuring a business’s processes, procedures, and practices against the processes, procedures, and practices of companies considered the best at what they do in the particular areas being measured.

benefit As it pertains to products and services, what problem a product or service solves or what need it fulfills for customers.

best practice A specific method that improves the performance of a team or an organization and can be replicated or adapted elsewhere. Best practices often take the form of guidelines, principles, or ideas that are endorsed by a person or governing body that attests to the viability of the best practice.

brand The identity associated with your business and its products and services. It can be depicted by a logo, slogan, specific colors, and a name.

break-even analysis A technique used to analyze how much must be generated in sales in order to achieve enough revenue to pay expenses and generate a profit.

budget A list, broken down by product, service line, or category, of all planned revenues and expenses associated with a business.

business economics See managerial economics.

business owner’s policy (BOP) A package insurance policy that combines property, liability, and business interruption insurance for small- to medium-size businesses.

business plan A formal plan that describes a business’s strategic goals, marketing and sales strategy, operations and management, products and services to be offered, and financial information.

cash basis accounting An accounting method in which income is recorded when it is received and expenses are recorded when they are paid out.

cash flow statement A document which shows how the cash of your business moved (in and out of the business) over a specified time period.

change management A structured managerial strategy for getting employees to transition to a new way of performing their jobs. It involves introducing people to change gradually and gaining their acceptance as it takes place.

cloud computing Using programs and data stored on servers connected to computers via the Internet rather than storing software and data on individual computers.

COBRA coverage COBRA refers to the Consolidated Omnibus Budget Reconciliation Act of 1985 that provides terminated employees with the ability to temporarily continue health coverage at group rates.

competency-based interviewing See behavioral interviewing.

cost of goods sold (COGS) The direct costs associated with producing and offering your products and services.

critical success factors (CSFs) Activities that your business undertakes with the aim of meeting strategic long-term goals. CSFs are measured with performance indicators.

customer relationship management (CRM) system A software program that enables businesses to track and manage their interactions with current and prospective customers. CRMs are used to ensure a coordinated interaction with customers.

customer value The benefits and satisfaction the customer receives from purchasing or investing in your product or service.

dashboard A visual representation of how a business is performing at a particular point in time. For example, a dashboard may include sales metrics, revenue numbers, or marketing metrics.

disability insurance Insurance on the earned income of the policy’s beneficiary against the risk that personal disability will make it impossible for that individual to work and earn money.

draw In sales, money a business provides to its salespeople against future commissions. Draws may be recoverable (which means they must be paid back) or nonrecoverable (which means they do not need to be paid back).

emotional intelligence A gauge of an individual’s ability to control his or her emotions and evaluate and manage the emotions of others. Individuals with high levels of emotional intelligence do an outstanding job at leading teams, managing others, and working with customers.

employment-at-will This U.S. legal doctrine allows the employer or employee to terminate an employment relationship at any time with no liability. There are certain exceptions to this doctrine.

enterprise resource planning (ERP) system An integrated software application that serves as a business management tool, helping to track resources, tangible assets, materials, finances, suppliers, vendors, customers, and employees.

entrepreneurial edge A person’s spirit and drive to identify and create business opportunities.

farmer In sales, a salesperson who excels at maintaining existing customer accounts.

features The specific attributes of a product or service.

firewall Hardware and software that blocks outsiders from accessing your data and creates a secure environment for your data while permitting those with authorization, such as employees, to access information as needed.

fixed costs A business’s overhead or sunk costs. Examples of fixed costs include lease payments and salaries of employees.

franchise An extension of a business in which others pay a fee to use its logo, trademarks, and methodology for doing business.

general liability insurance Insurance that protects a business’s assets in the event that it is sued for something it did (or failed to do) that caused damage to property, injury, or a combination of the two.

go-to-market plan A plan for introducing a product or service into the marketplace and for selling and delivering that product or service to customers.

gross margin The amount of money a business makes (profit) for each product or service it sells.

hunter In sales, a salesperson who is responsible for getting new customers or clients.

inbound marketing A situation in which potential customers find a business on their own rather than through any marketing initiative on the part of the business.

income statement A statement showing the revenue and expenses for a business for a specific period of time.

innovation A commitment to constant, never-ending improvement.

intellectual property (IP) Copyrighted materials, trademarks, patents, and trade secret protections.

key employee insurance Insurance to ensure continuation of the business operations if a key person(s) passes away, becomes seriously ill, or otherwise cannot participate in the business.

key performance indicator (KPI) See performance indicators.

lean process management A focus on improving the processes and procedures within a company by eliminating tasks that add no value.

lessons learned Information from past projects, such as problems that occurred and risks that were encountered, that can inform future projects.

malware Malicious software that is installed on a user’s computer system without the user’s consent. It may slow down the computer, steal passwords, or download important data.

managerial economics How business decisions are made by managers to achieve a business’s goals and objectives. It is also referred to as microeconomics or business economics.

mediation An informal process led by a third party mediator to help two or more parties resolve their differences. The mediator helps the two parties come to an agreement on resolution, but it is not necessarily a binding process.

mentoring program A program in which junior employees are partnered with more senior employees; the senior employees provide the junior employees with guidance in performing their roles and responsibilities. microeconomics See managerial economics.

mission statement A written statement that describes the business’s purpose and provides a sense of direction for the business. It helps management to develop complementary strategies.

natural search When a person searches a specific term on a search engine and the results that appear are based on relevancy to the term being searched, not as a result of the business paying for an ad to appear based on the same term.

onboarding A process for effectively assimilating new employees into a business in the shortest time frame possible. Onboarding includes helping people to understand the culture of the business, and providing training on products and services, as well as on relevant processes, procedures, and policies.

opt in Permission granted by current or prospective customers to receive messages from a business about its products and services. It is understood that the recipient will continue to receive messages until such time as he chooses to opt out and be removed from the mailing list.

organic searches See natural search.

outbound marketing The process of actively pushing information about products and services to customers. An example of outbound marketing is an e-mail blast to a list of potential customers advertising your products or services.

pay-per-click See sponsored links.

PCI-compliance audit Also known as a Payment Card Industry Data Security Standard (PCI DSS) Audit; an audit to ensure that a business is following the security guidelines meant to keep credit card information secure.

performance indicators Quantifiable metrics used to measure the success of activities undertaken to reach strategic goals.

positioning statement Statement that includes information on what a business does (products and services offered), who the target customers are for those products and services, how the business brings value to its customers, and why it is different from its competitors. Positioning statements are used to develop sales and marketing strategies, but they must also be well understood by everyone with frontline customer service responsibility. In essence, these statements represent a company’s promise to the customer.

professional development Opportunities provided to employees to help them further develop their skills and knowledge and grow both personally and professionally.

profit sharing A program that enables employees to share in the profits of a business by receiving a one-time bonus or percentage increase in salary based on how well the company has performed that year.

scenario-based interviewing See behavioral interviewing.

search engine optimization (SEO) The process and strategy of presenting a business on the web to improve the ability of potential customers finding it through natural searches on search engines such as Google, Yahoo!, and Bing.

SMART objectives Business objectives developed to be specific, measurable, achievable, relevant, and timely.

software as a service (SaaS) Applications that are licensed to customers for use as a service on demand.

sponsored links Advertising, also called pay-per-click keywords. Businesses pay Google search engines to advertise based on the keyword searched. The business has control over frequency, time of day, geographic location, as well as amount to be spent in a period of time for those ads.

strategic direction A course of action to move forward with a strategic plan that allows for flexibility to account for changing marketing conditions and customer demands.

strategic plan A long-range plan that serves as a business’s road map for the future. It includes the product lines and services, the number of employees, technology requirements, industry trends, competitor analysis, revenue and profitability goals, types of customers, and long-range marketing plans.

succession plan A plan for identifying, developing, and retaining individuals who have the ability to take on key leadership roles within the business.

SWOT analysis A planning method used to evaluate the strengths, weaknesses, opportunities, and threats involved in a particular strategic direction for your business.

talent management The long-term process of recruiting employees, onboarding them into the business, providing them professional development opportunities, managing their activities and career path, and doing succession planning.

tax law The Internal Revenue Code and other state and federal statutes, rules, and regulations that apply to taxation of businesses and individuals.

value proposition A three- to five-sentence statement that conveys to customers the value and benefits that a business brings to them. The value proposition should convey why the customer should purchase that business’s products and services over the competition’s.

variable costs Costs that vary depending on output. Materials required to manufacture products and temporary employees hired for certain busy times are examples of variable costs.

venture capital (VC) firms Firms that provide financial funding to start-up firms with high potential for future success. In exchange, the partners of the VC firm (with interest) get equity in the business. Many VC firms also provide oversight of business operations to ensure the appropriate use of the investment monies.

vision statement A statement describing the long-term view of a business—where it wants to be in the future. It is the reason for the business’s existence.

voice of the customer A program that includes a process for capturing—via interviews, surveys, or focus groups—information about the customers’ perceptions, expectations, and needs. This information might be used to develop products and services.

Voice over Internet Protocol (VoIP) A set of technologies and protocols that allow for communication over the Internet. VoIP allows for telephone communications, multimedia communications, faxing, instant messaging, and video communications.

wiki A particular website that allows individuals to collaborate by creating and editing information in web pages.

workers’ compensation An insurance policy that is provided by the employer to ensure for medical compensation for employees injured on the job.