The ABCs of Entrepreneurship
When I was first applying for an internship position at Bridge for Billions, I think I had to read the company description about six times before understanding what was going on. They were talking about “design thinking” and “incubators” and “social enterprises.” It was all just flying over my head.
Many people feel this way when first dabbing into the world of entrepreneurship. There’s a lot of jargon that gets thrown around by people to show that they’re in the loop with “innovation” and “bootstrapping startups.” It’s overwhelming; entrepreneurship is its own language with hundreds of new words to learn and concepts to understand. Anyone who’s tried to learn another language can tell you that there’s a steep learning curve. But we’re here to help! We’ve compiled some of the most common words that stumped some of us on the Bridge Team when we were first learning about entrepreneurship.
1. Accelerator — An accelerator helps a more developed startup (usually scale-ups) impulse itself forward. Once again there’s much debate on this topic, but you’re usually accelerated after you’re incubated.
2. Angel investor — Angel investors are like normal investors in that they invest in your company usually in exchange for equity or convertible debt. Unlike normal investors, angel investors tend to be independent of any investment fund in specific or if they are, they would be an angel investor if they invested in your company outside of the investment fund with which they’re involved.
3. Bootstrapping — “We’re bootstrapping” is a phrase often muttered by entrepreneurs; especially those who are dorm-room founders. This means that they’re starting their business with almost no financial resources. They’re self-funding their business and have to be very careful with how they spend their money.
4. Breakeven point — Your breakeven point is when your expenses (what it costs you to produce and sell your product) are equal to your sales (what you make from selling your product). This is the point where you are neither making money or losing money. Once you’ve passed your breakeven point you’re considered financially viable.
5. Business Canvas — This is a large visual chart where you insert the different portions of your business plan including: Key Partners, Value Proposition, Customer Segments, etc. in order to get an overview of your entire business. You can use your business canvas for a number of reasons including: further development, and strategic planning.
6. Customer Acquisition Cost — also known as CAC, which means the amount of resources (they can be financial or manpower) that it takes for a company to get one new customer. When it comes to financial CAC, it’s easy to find out take the amount you’ve spent making sure that your business reaches your customer and divide it by the total number of customers you’ve gotten. When it comes to man-based Customer Acquisition Costs, it’s a bit more difficult to calculate, and it’s a bit more of a guesstimation of how time and manpower do you have to put into an activity to gain a customer.
7. Crowdsource — Crowdsourcing is when you use a group of people as a source to collect information or ideas.
8. Design Thinking — It is a technique that emphasizes the human experience when creating solutions. Design Thinking requires that people observe the human need that creates solution. Most of the time when people think of a problem they want to solve, they automatically jump to the technical solution; instead, design thinking focuses on the human side of the problem. People who employ design thinking also use very hands on methods for prototyping and testing.
9. Elevator pitch — the idea behind this one is that you should be able to provide all the information within this pitch in the time it takes to ride an elevator, which seems to usually take 2 minutes tops. You should be able to succinctly and clearly explain your product and your product’s value proposition (check out #17 to learn more).
10. Equity — Many investors ask for equity from entrepreneurs in return for a cash investment in the company, or co-founders ask for an equity in the company, but what is it that they’re getting really? Equity, which is usually described in percentage, just means what portion of the company belongs to someone. If an investor asks for 15% equity that means they want to own 15% of your company in return for investing X$ in your business, and it’s up to you to decide whether that’s too much.
11. Incubator — Most people when they hear incubator think of the place where you put chicken eggs in make them hatch. While that’s not what people mean when they say they’ve been accepted by an incubator, the idea is similar. An incubator is where your business goes to develop and mature. There are massive debates that surround what services an incubator should provide and what the difference between an incubator and accelerator is. If you want to learn more about the debate check out a cool article here.
12. Iteration — Most people use iteration when talking about computer programs. It’s just a fancy way of saying a new version, when you talk about another software iteration. It can also be used by non-software entrepreneurs when discussing the initial phases of their project when they can still change their concept. So even if you’re not a techie you can still be “iterating” your project; it just means you’re still going back to the drawing board and ensuring that your product solves your customer’s problems.
13. MVP — Nope this doesn’t mean your Most Valuable Player. In business, MVP is a Minimum Viable Product, which is the most basic version of your product or service that has enough features to satisfy the needs of early customers and then receive feedback. This is how you test your product to see if things are working and if customers like it. From here you can develop a second version, go to the market and improve!
14. Pitch deck — This is a short presentation where you explain the various aspects of your business to potential investors and partners. These should usually be around fifteen slides, and the average length of your presentation should be around five minutes. This means that you have to be sure that what you’re putting in there is 100% CRUCIAL for an investor to know.
15. Pivot — When a company pivots, it means they’ve changed direction in some manner. This can mean that they’re targeting a new market; they’ve launched a different product; or they’ve changed their business model (now they sell their product to businesses instead of individual customers for instance). A pivot doesn’t usually mean a minor change in strategy. It usually implies a pretty big shift, but that’s not a bad thing! Entrepreneurs should be willing to pivot and change things that aren’t working in order to survive.
16. Stakeholder — These are all the people who are necessary to the running of your business. These can be official business partners or someone with whom your business has some form of alliance. Stakeholders can be people who market your product, the people who provide your raw materials, people who will influence how your product will be seen in the market, or even local distributors.
17. Value Proposition — Your Value Proposition describes the benefits that your product can provide your customers. You can usually segment your Value Proposition by differing customers since the benefits offered can change based on what customers you’re addressing. You can learn more about how to build your Value Propositions here.
18. Valuation — People are always talking about how Snapchat or Latest Trend Startup “was valued at X$” This just means that some businessmen or a legal office evaluated the company and put a number sign on it. They determined how much money the company was worth. This is used to establish ownership, sale value or even for financial reporting purposes.
19. Venture Capital — This is a type of financing that is given by firms or funds to startups that seem to have the potential for high growth or have shown high growth (it could be number of employees, of customers, and/or annual revenue). Venture Capital funding is usually seen in the first rounds of funding. Funds hope to make the money they invest back when a company is sold to a larger company or when the company beings to sell stocks.
Think we missed any obvious ones that we should add? Comment below and we’ll make a second version with those that we’ve missed 👇
