Business Glossary
Find business terms according to your needs
A
A/B Testing
A method of comparing two versions of a webpage or app against each other to determine which one performs better. For example, testing two different email subject lines to see which one has a higher open rate.
Accelerator
A program that provides early-stage startups with mentorship, resources, and funding in exchange for equity.
Agile Methodology
An iterative approach to project management, emphasizing flexibility and adaptability to change. In software development, teams work in agile methodology called short sprints, regularly reviewing progress and adjusting plans as needed.
Angel Investor
An individual who provides capital to startups in exchange for equity, often at the early stage of development.
Application Programming Interfaces (API)
A set of rules and protocols that allows different software applications to communicate and exchange data with each other. A weather app using an API to get real-time weather data from a weather service like AccuWeather.
Artificial Intelligence (AI)
The simulation of human intelligence in machines, enables them to perform tasks that typically require human intelligence, such as learning, problem-solving, and decision-making. For example, Google's Gemini, OpenAI's Chat GPT, or Mekari Airene.
B
Blockchain
A decentralized and secure digital ledger that records transactions across multiple computers. Cryptocurrencies like Bitcoin utilize blockchain technology.
Blue Ocean Strategy
Creating a new market space where competition is minimal. For example, Nintendo creating the Wii, a gaming console that appealed to a wider audience than traditional consoles.
Bootstrapping
Starting and growing a business with minimal external funding, often relying on personal savings, revenue generated from early sales, and reinvesting profits. For example, a small bakery starting with a single oven and gradually expanding using profits to buy more equipment.
Break-Even Point
The point at which total revenue equals total costs, resulting in neither profit nor loss. For example, If a company sells a product for $10 and has variable costs of $5 per unit and fixed costs of $10,000, they need to sell 2,000 units to break even.
Bridge Financing
Short-term financing obtained by a company to cover expenses until it can secure long-term funding, such as a larger investment round. For example, a startup receiving a small loan to cover payroll and operating costs while they finalize a larger Series A funding round.
Burn Multiple
A metric used in venture capital to assess a startup's efficiency. It's calculated by dividing a company's monthly recurring revenue (MRR) by its monthly burn rate (cash spent). A higher burn multiple indicates better efficiency. For example, if a startup has an MRR of $100,000 and a monthly burn rate of $50,000, its burn multiple is 2.
Burn Rate
The rate at which a company spends its cash reserves before generating positive cash flow. For examnple, we could say a startup with a monthly burn rate of $50,000, meaning it is spending $50,000 per month.
Business Model
The plan outlining how a company creates, delivers, and captures value. For example, a subscription-based SaaS company, a retail store selling products, a consulting firm offering professional services.
C
CAC (Customer Acquisition Cost)
The total cost of acquiring a new customer. CAC in a company is usually related to marketing expenses, sales commissions, and any other costs incurred to bring in a new customer.
Cannibalization
When a new product or service from the same company negatively impacts the sales of its existing products or services. For example, A new smartphone model from Apple cannibalizes sales of older models.
Cap Table (Capitalization Table)
A table that summarizes the ownership structure of a company, including the number of shares issued, the percentage ownership of each shareholder, and the type of shares (common, preferred, etc.). For example, a document showing that founders own 50% of the company, early investors own 30%, and employees own 20%.
Cash Flow
The movement of money into and out of a business. Cash inflows include sales revenue and investments, while cash outflows include expenses like rent, salaries, and inventory costs.
Churn Rate
The percentage of customers or subscribers who stop using a product or service over a given period. We could say if a subscription service loses 5% of its customers each month, its monthly churn rate is 5%.
Cloud Computing
The delivery of computing services over the internet, such as storage, processing power, and software, on-demand. For example, using Amazon Web Services (AWS) to store and process company data instead of maintaining your own servers.
Competitive Advantage
A unique feature or characteristic that allows a company to outperform its competitors. Example a brand has superior customer service, lower costs, innovative products, strong brand recognition for their competitive advantage.
Conversion Rate
The percentage of website visitors or leads that complete a desired action, such as making a purchase, signing up for a newsletter, or filling out a form. For example, if 100 people visit a website and 10 make a purchase, the conversion rate is 10%.
Convertible Note
A short-term debt instrument that can be converted into equity at a future date, often used by startups to raise early-stage funding. For example, an investor lending $100,000 to a startup with the option to convert that loan into equity at a later stage at a predetermined valuation.
Cost of Goods Sold (COGS)
The direct costs associated with producing or acquiring the goods that a company sells. For a manufacturer, COGS includes raw materials, direct labor, and manufacturing overhead.
Crowdfunding
Crowdfunding is the stage of a company raising small amounts of capital from a large number of people, typically via online platforms. One simple example is that using platforms like Kickstarter or Indiegogo to fund a new product or project.
Customer Lifetime Value (CLV)
The total revenue a company or business expects to earn from a single customer over their entire relationship during their subscription. Here is how it works, a customer who spends $100 per year for 5 years has a CLTV of $500.
D
Data Lake
A centralized repository that stores large amounts of raw and unstructured data from various sources. For example, a company storing all its customer data, website traffic logs, and social media interactions in a data lake for analysis.
Decacorn
A startup valued at $10 billion or more.
Demand Forecasting
Predicting future customer demand for products or services. Demand Forecasting is usually conducted by the product and marketing management team by using historical sales data, market trends, and other factors to estimate future sales volume.
Dilution
A decrease in a shareholder's ownership percentage in a company due to the issuance of new shares. For example, a company issues new shares to new investors, existing shareholders' ownership percentage will be diluted.
Disruptive Innovation
Adapting from the word disruption, which is the process of changing the traditional way an industry operates, disruptive innovation is a new product or service that disrupts an existing market by offering a more affordable or accessible alternative. A simple example to position this term is Uber disrupting the taxi industry.
Diversification
Expanding a company's operations into new markets, products, or services to reduce risk and increase growth opportunities. For example, a car manufacturer entering the electric vehicle market.
E
E-commerce
The buying and selling of goods and services over the internet. E-commerce is considered an industry segment. The current famous e-commerce such as online retailers like Amazon, and online marketplaces like eBay.
E-commerce Platform
Software that enables businesses to sell products or services online. For example, Shopify, WooCommerce, Magento.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
A measure of a company's profitability that excludes the effects of interest, taxes, depreciation, and amortization. For example, used to compare the profitability of companies with different capital structures and accounting methods.
Economies of Scale
Cost advantages that arise from increased production volume. A large manufacturer can often produce goods at a lower cost per unit than a smaller manufacturer due to bulk purchasing of raw materials and more efficient production processes.
Ecosystem
The interconnected network of organizations, individuals, and resources that support a particular industry or market. This can be also defined as a network of organizations, individuals, and resources that support startups, including accelerators, VCs, mentors, and service providers. For example, the tech ecosystem in Silicon Valley, which includes startups, venture capital firms, universities, and research institutions.
Elevator Pitch
A concise and persuasive presentation of a business idea or opportunity, typically delivered within the time it takes to ride an elevator.
Emotional Intelligence
The ability to understand and manage one's own emotions and the emotions of others. Emotional Intelligence has multiple factors such as effective communication, empathy, conflict resolution, and leadership.
Employee Turnover
The rate at which employees leave a company and are replaced. For example, a company has 100 employees and 10 of them leave within a year, the employee turnover rate is 10%.
Entrepreneurship
The process of starting and running a new business.
Equity Stake
Ownership in a company, typically expressed as a percentage of the company's shares. For example, an investor owning 10% equity in a company means they own 10% of the company's shares.
Ergonomics
The study of how people interact with their work environment to improve efficiency and safety. For example, designing workstations to prevent injuries, providing ergonomic chairs and equipment.
Executive Summary
A concise overview of a business plan or report, highlighting key findings and recommendations.
Exit Strategy
A plan for how the founders and investors will exit the company, typically through an acquisition, merger, or IPO.
F
Feasibility Study
An assessment of the practicality and potential profitability of a business idea or project.
Fintech
The use of technology to improve or automate financial services. Mobile banking apps, peer-to-peer lending platforms, cryptocurrency exchanges.
First-Mover Advantage
The competitive advantage gained by being the first company to enter a new market or introduce a new product. For example, Apple's dominance in the smartphone market due to its early entry.
Flexible Work Arrangements
Work arrangements that allow employees to have some flexibility in their work hours, location, or work schedules. For example, Remote work, flexible work hours, compressed workweeks.
Focus Group
A small group of people who participate in a guided discussion about a specific topic, is often used for market research. A group of potential customers discussing their preferences for a new product design.
Founder’s Dilemma
The challenge faced by founders in deciding whether to maintain control of their company or to give up some equity to experienced investors who can provide valuable resources and expertise.
Franchise
A business model where a franchisor grants the right to use their brand, products, and operating systems to franchisees in exchange for a fee. McDonald's, Subway, and 7-Eleven are some brands that have franchise business models.
Freemium
A business model that offers basic features for free while charging for advanced features or services. For example, many mobile apps offer a free version with limited features and a premium version with access to all features.
Freemium Model
A pricing model where a basic version of a product or service is offered for free, while advanced features or functionality are available for a fee. Many mobile apps offer a free version with limited features and a premium version with access to all features.
G
Gig Economy
An economy where a significant portion of the workforce consists of independent contractors, freelancers, and temporary workers. For example, platforms like Uber, Upwork, and Fiverr that connect freelance workers with clients.
Gross Domestic Product (GDP)
The total market value of all goods and services produced within a country in a specific period.
Gross Margin
The percentage of revenue that remains after deducting the cost of goods sold (COGS). For example, a company sells a product for $100 and the cost of producing that product is $50, the gross margin is 50%.
Growth Hacking
Using creative, low-cost strategies to grow a startup’s user base quickly.
H
Hedge
A risk management strategy used to offset potential losses in investments.
I
Inbound Marketing
A strategy focused on attracting customers through content marketing, social media, and SEO.
Incubator
An organization that supports startups in their early stages by offering resources like office space and networking.
Intellectual Property (IP)
Intangible creations of the mind that have commercial value, such as patents, trademarks, copyrights, and trade secrets. An example of IP such as company's logo, a unique software algorithm, a novel drug formula.
Internet of Things (IoT)
The network of interconnected devices with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction. For example, Smart home devices, wearable technology, connected cars.
J
Just-In-Time (JIT) Inventory
An inventory management system where goods are received only as needed for production or sales, minimizing inventory holding costs. For example, a manufacturing plant ordering raw materials only when they are required for immediate production.
K
Key Performance Indicators (KPIs)
A measurable value that indicates how effectively an individual or organization is achieving specific objectives. For example, the KPI for the marketing team would be website traffic; the KPI for the aftersales team would be customer churn rate, and so on so forth.
L
LTV (Lifetime Value)
The predicted revenue a company can expect to earn from a customer during their lifetime.
Lean Manufacturing
A systematic approach to minimizing waste and maximizing efficiency in production processes. Lean manufacturing uses some approaches such as eliminating unnecessary steps, reducing inventory levels, and improving workflow.
Lean Startup
A methodology that emphasizes building and iterating products based on customer feedback while minimizing waste.
Licensing
Granting permission to another company to use a company's intellectual property, such as a brand name or technology, in exchange for royalties or other fees. For example, a clothing company licensing its brand name to a manufacturer to produce and sell branded merchandise.
Liquidity Ratio
Financial metrics used to determine a company's ability to pay off its short-term liabilities.
Logistics
The process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption. Logistics has several elements such as warehousing, transportation, inventory management, and order fulfillment.
Low-Code/No-Code
Platforms that allow users to develop software applications with minimal coding knowledge.
M
MVP (Minimum Viable Product)
A simplified version of a product with just enough features to gather user feedback and validate the idea.
Machine Learning
A subset of AI that allows machines to learn from data without being explicitly programmed. Some applicable example of machine usage is the recommendation systems, fraud detection, image recognition.
Market Segmentation
The process of dividing a broad consumer or business market into sub-groups based on shared characteristics. The practical use case of Market Segmentation is segmenting a consumer market based on demographics (age, gender, income), psychographics (lifestyle, interests), and behavior (purchasing habits).
Market Share
The percentage of a market controlled by a particular company or product. If a company sells 20% of all smartphones in a given market, it has a 20% market share.
Marketing Mix
The four key elements of a marketing strategy. It is previously defined as 4Ps: Product, Price, Place (distribution), and Promotion. Nowadays, there are 8Ps: Product, Price, Place, Promotion, People, Positioning, Processes, Performance.
Minimum Viable Product (MVP)
A basic version of a product with just enough features to attract early adopters and validate a product idea. A mobile app with core functionality but lacking some of the planned features.
Mission Statement
A short, concise statement that defines a company's purpose and overall direction.
Moonshot
An ambitious, innovative project with a high risk of failure but the potential for massive impact if successful.
N
Net Income
A company's total revenue minus all expenses, including taxes, interest, and depreciation.
Network Effect
A phenomenon where a product or service becomes more valuable as more people use it.
Networking
Building and cultivating professional relationships with other people. Example of the networking is attending industry events, connecting with people on LinkedIn, and having coffee chats with potential collaborators.
O
Omnichannel Marketing
A multi-channel sales approach that provides a seamless customer experience, whether online or offline.
Outsourcing
Hiring an outside company or individual to perform tasks or services that were previously handled internally. For example, a company outsourcing its customer service operations to a call center in another country.
P
Pareto Principle (80/20 Rule)
The principle that 80% of the effects come from 20% of the causes. 80% of your sales may come from 20% of your existing customers.
Pivot
A significant change in a startup's business model or product strategy to adapt to market feedback.
Positioning
How a company or product is perceived in the minds of consumers compared to its competitors. For example, Red Bull positioning itself as an energy drink for extreme sports enthusiasts.
Pricing Strategy
The methods used to determine the price of a product or service. For example, cost-plus pricing, value-based pricing, penetration pricing, skimming pricing.
Pro Rata Rights
The right of an investor to maintain their percentage of ownership in subsequent funding rounds.
Product-Market Fit
The stage where a startup's product satisfies a strong market demand, leading to sustainable growth.
Profit Margin
The percentage of revenue that a company retains as profit after deducting expenses. If a company has $100 in revenue and $70 in expenses, their profit margin is 30%.
Q
Quality Assurance (QA)
The processes and procedures used to ensure that products or services meet specified quality standards. For example, testing software for bugs, inspecting products for defects, conducting customer satisfaction surveys.
R
ROI (Return on Investment)
A measure or financial metric used to evaluate the profitability of an investment, calculated by dividing the net profit by the cost of the investment. If you invest $100 in a marketing campaign and generate $150 in revenue, your ROI is 50%.
Revenue Run Rate
An estimate of the annual revenue based on current monthly or quarterly revenue.
Risk Management
The process of identifying, assessing, and mitigating potential risks that could negatively impact a business. For example, implementing insurance policies, conducting safety audits, developing contingency plans.
Runway
The amount of time a startup can operate with its current cash reserves before it runs out of money.
S
SAFE (Simple Agreement for Future Equity)
An agreement that gives investors the right to acquire equity in the future, typically during a later funding round.
SWOT Analysis
A strategic planning tool used to evaluate a company's Strengths, Weaknesses, Opportunities, and Threats which is implemented to identify a company's competitive advantages, areas for improvement, market trends, and potential risks.
Sandbox
A testing environment used to experiment with new ideas, tools, or features without affecting the main system.
Scalability
The ability of a business to increase its production or output without significantly increasing costs. A software company can easily scale its operations by selling its product to more customers online without incurring significant additional costs.
Seed Funding
Early-stage funding provided to startups to help them develop their product or service and validate their business model.
Series A Funding
The first round of institutional funding typically raised by a startup from venture capital firms.
Series A, B, C Funding
Various rounds of funding that startups raise as they grow, each with different goals and valuation metrics.
Six Sigma
A data-driven methodology for improving quality and reducing defects in processes. One example of six sigma approach would be identifying and eliminating the root causes of production errors to improve efficiency and reduce waste.
Software as a Service (SaaS)
Software that is delivered over the internet on a subscription basis. For example, Mekari Talenta, Mekari Qontak, Mekari Jurnal, and other Mekari products.
Stakeholder
Any individual or group that has an interest in or is affected by the activities of an organization. Stakeholders could be the customers, employees, investors, suppliers, and the community.
Stickiness
The measure of how often customers return to use a product or service.
T
Target Market
The specific group of consumers that a company aims to reach with its products or services. For example, the company that sells luxury sports cars targets high-income individuals with a passion for automobiles.
Tech Stack
The combination of technologies, programming languages, and tools used to build a startup's product or service.
Term Sheet
A non-binding document that outlines the terms and conditions of an investment deal.
Traction
Evidence of market acceptance and growth for a startup, such as increasing user numbers, revenue growth, and positive customer feedback.
U
Unicorn
A privately held startup company valued at over $1 billion.
Upskilling
The process of teaching employees new skills to improve their performance.
V
Valuation
The estimated worth of a company, often determined during funding rounds.
Value Proposition
The unique benefits that a company offers to its customers that differentiate it from the competition. For example, offering higher quality, lower prices, superior customer service, or a unique feature that competitors lack.
Venture Capital Firm
An investment firm that funds startups and early-stage companies in exchange for equity. Here are some examples of venture capital in Indonesia: East Ventures, Alpha JWC, Antler, BNI Ventures, BRI Ventures, Trihill Capital, etc.
Virality
The rapid spread of a product or service through word-of-mouth or social sharing.
W
Work-life Balance
Balancing the demands of work with personal and family responsibilities.
Working Capital
The difference between a company’s current assets and current liabilities.
Z
Zebra
A profitable and sustainable company that balances profit with social impact, contrasting with 'unicorns'.
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