Small Business Glossary: B
back pay: 1. Legally, a remedy for wage violations that requires an employer to correct the difference between what an employee was paid and what the employee should have been paid, often based on the Fair Labor Standards Act (FLSA) and other labor statutes. 2. Payment due for work done previous to the current pay period, sometimes unpaid for intentional reasons and often unintentionally unpaid due to such reasons as a back-dated or retroactive pay increase.
background check: A review of confidential and publicly available information to verify an individual’s background and creditworthiness prior to employment, agreement to loan transactions, or issuing of security clearances.
back-office operations: The administrative, technology, and infrastructure aspects of a business that aren’t visible to customers but are necessary for smooth business operations; includes functions such as payroll, cash management, inventory purchasing and management, order processing, and day-to-day business administration.
bait and switch: A fraudulent but commonly employed tactic that involves achieving consumer response by advertising a lower-priced offering than what a business hopes to sell and then working to redirect the customer’s interest toward higher-priced products once the purchase process is underway, often due to the fact that the advertised offering was of extremely low quality or in extremely short supply.
balance: 1. An equal amount of debits and credits in an account. 2. The remainder in an account when debits are paid.
balance sheet: A statement that summarizes financial condition and worth by presenting the monetary value of everything owned, called assets, less the total amount of obligations owed to others, called liabilities, with the difference between assets and liabilities indicating the business worth, called owner’s equity.
balloon payment: A large payment made at the end of a series of smaller payments, usually to pay off a loan in one final lump sum.
bandwidth: 1. The capacity of a communication line in a computer network to transmit data, with digital transmissions usually expressed as bits per second (bps) or bytes per second (Bps). 2. A measure of the width of a communication channel’s band of frequencies, usually measured in cycles per second, called hertz. 3. Colloquially, a synonym for available time, energy, or capacity.
bank financing: An approach to funding business startup or growth that involves a traditional bank loan, an option most feasible for companies with established products, customers, and sales history.
bankrupt: When an individual or business is legally declared unable to pay his, her, or its debts.
bankruptcy: A legal procedure for liquidating the assets of an insolvent business or individual, either voluntarily or forced by court orders requested by creditors, and resulting in the sale of assets, a fair settlement of legal claims by creditors, and a relief of liability for the debtor, who emerges unburdened by debt and able to rebuild a financial history from a clean slate.
banner ad: A promotional message placed by an advertiser on a host Web page, typically to present an invitation to click to reach the advertiser’s Web site. Banner ads were one of the earliest forms of Internet advertising and have developed to include ads that pop up, pop under, or scroll across the host site, usually sold to the advertiser at rates based on the cost per click (CPC) or cost per thousand impressions (CPM).
barrier to entry: Obstacles that challenge new contenders trying to enter a market or industry area, including high capital costs, difficult-to-attain raw materials, rarely granted licenses, stringent regulations, strongly established competitors, and difficult-to-replicate technology, processes, and distribution systems. Easy-to-overcome obstacles allow for high levels of competition while difficult-to-overcome obstacles help protect the activities of established businesses.
barter: The exchange of goods or services instead of money to acquire like-value goods or services, often used when purchasing media advertising space or time.
bellhop: A hotel employee who carries luggage and runs errands.
benchmark: 1. A standard by which a process or outcome can be measured or judged. 2. Interim performance goals against which progress toward an outcome is measured.
benefit: A program that a business offers employees to better those employees' lives, such as health insurance and a 401(k) retirement savings plan.
benefits: 1. In the field of human resources, indirect and noncash compensation mandated by law or voluntarily provided to employees in addition to salary or wages. 2. In the field of marketing, the advantages a customer gains from the unique features and offerings of a business.
best current practice: A procedure or approach currently considered the most effective based on its reliability and efficiency in generating the desired result.
bilingual: Able to speak and understand two languages, usually with equal or nearly equal facility.
binding arbitration: The outcome of arbitration in which the parties involved in a dispute agree to be bound by the decision of an unbiased, mutually selected arbitrator with no option for appeal and with the award to be enforced by courts, if necessary.
Black Friday: A term used to label the day after Thanksgiving, which is considered the launch of the Christmas shopping season, a holiday for many, and the annual point at which many retailers overcome annual losses to achieve profitability, commonly called black ink, a likely root word of the term Black Friday.
black ink: A term used as a synonym for profitability, as opposed to the term red ink, which derives from the once-common habit of recording negative balances in red ink. By some theories, black ink is the basis of the term Black Friday, the day after Thanksgiving when most retailers overcome annual losses to achieve profitability.
blast e-mail: A form of online advertising that's similar to direct-mail collateral advertising; anti-spam regulations apply.
blind ad: A promotional message (in which the identity of the advertiser isn’t revealed) requesting that responses be directed to a post office box or unidentifiable e-mail address, frequently used by employers to limit the need for direct communication with unqualified applicants, or by those seeking to sell their businesses in order to retain autonomy and confidentiality until prospective buyers are selected and pre-qualified.
blog: Formed from the words Web and log. 1. (noun) An online chronicle, usually maintained by an individual, presenting news, ideas, facts, and opinions in a format that’s part editorial, part journal, and part dialog, but always with a distinct point of view and interest-area focus. 2. (verb) The action of maintaining or adding comments, called posts, to blogs, which as of 2010 numbered in the hundreds of millions.
blogosphere: The collection of hundreds of millions of blogs and those who maintain and contribute to them, who together form a grassroots, interactive, democratic media contingent increasingly viewed as a gauge of public opinion and a resource for traditional media, which frequently cites or links to blog entries.
blue sky: A term used by those valuing businesses to describe the portion of estimated worth that exceeds the maximum value of goodwill that can be supported by established business valuation approaches.
board of advisors: An informal group of carefully selected individuals that meets periodically to provide insight and guidance to a small business or organization that doesn’t have a formal board of directors.
board of directors: A group of individuals elected or appointed to serve as the governing body of an incorporated firm or nonprofit organization, often but not always paid in cash or stock, and usually meeting at least several times each year to set and oversee policy and overall direction, assume legal responsibility, and maintain a high level of oversight on behalf of the organization’s shareholders or stakeholders. The board of directors usually hires the organization’s president or chief executive officer (CEO) and other key management positions. It is headed by a board chairperson who may or may not be an employee of the organization.
bond: A financial instrument that governments and corporations use to raise capital for defined projects by seeking funds from investors who loan money in return for a guaranteed rate of return that varies depending on the risk level of the project being funded. Called debt instruments, bonds are considered fixed-income securities by investors because they usually pay a fixed rate of interest or yield on the funds invested. The yield on bonds issued to investors by governments is often tax-exempt.
bonded: Describes goods, services, or service providers subject to or secured by a surety bond, which guarantees a payment of monetary compensation if one member of a party, called the principal, fails to perform to the terms promised to the other party, who is called the obligee. A surety bond differs from insurance in that the bond protects against a contract or promise default, while insurance provides protection from damages caused.
bookkeeper: An accounting clerk who records day-to-day financial transactions using a double-entry bookkeeping system, bringing the records to the trial-balance stage, which ensures that entries are posted correctly by arriving at a total debit balance that matches the total credit balance.
bookkeeping: The methodical way in which businesses track their financial transactions; rooted in accounting.
bootstrapping: The use of an entrepreneur or small business owner’s own money to fund the startup of a business; as a result, the person self-funding the business owns all of the business equity.
bottom line: 1. The final line of a financial statement that shows the difference between all revenues and all costs, including expenses, taxes, interest, depreciation, and other obligations. Also called net earnings, net income, net profit, or net loss. 2. The summary finding or main point of a discussion, or the outcome of a situation.
brainstorm: 1. (noun) A sudden and innovative idea. 2. (verb) The process of arriving at innovative ideas, usually through an anything-goes group meeting that encourages free association and imaginative thinking by eliminating evaluation or criticism of ideas and discouraging individual pride of ownership of concepts.
brand: The belief consumers have about what a business, product, organization, or person is and stands for, and what unique benefits they trust it will deliver. Often confused with brand identity, a brand is not the trademark or logo, but the set of beliefs that reside in the consumer’s mind as a result of encounters and experiences with the brand’s name, packaging, price, advertising, publicity, and word of mouth.
brand architecture: The relationship between a brand and the business that owns it, usually falling into one of three categories: parent-dominated brands, which introduce new offerings under the brand identity of the parent organization (for example, General Electric); parent-endorsed brands, which introduce new offerings as individual brands but with the strong and visible endorsement of the parent brand (for example, how Apple introduces products such as iPod and iPad); and parent-silent brands, which are introduced as self-standing brands with little visible link to the brand owner (Proctor & Gamble is the most apparent example).
brand equity: The economic value of a brand as an asset, based on the level of recognition the brand has achieved, the reputation it has earned, and the strength of consumer beliefs about the unique qualities it consistently delivers. An intangible asset that often accounts for up to half the sale price of a business that includes a valuable brand as part of the transaction.
brand experience: The sum of all encounters with a brand, whether before, during, or after a purchase, and regardless of whether the interaction is through advertising, retail displays, product usage, sales, technical support, publicity, word of mouth, or any other controlled or uncontrolled contact that allows consumers to form impressions that affect what they believe.
brand extension: An offering that carries the value of an established brand into a price, product, or market category new to the brand owner; for example, a chocolate chip brand stretches its brand to introduce frozen chocolate chip cookie dough. Successful brand extensions feature a new offering clearly linked but different from the original branded offering and of interest to customers who highly value the brand that’s being extended.
brand identity: The name, symbols, and other marks that customers associate with a brand and that brand owners manage for maximum visibility in the marketplace. Identifying elements include brand names, logos, slogans, unique colors and typestyles, signature tunes or smells, and other unique differentiating forms of presentation.
brand image: A set of beliefs about the personality, attributes, benefits, and promises of a business, product, organization, or person that exists in consumer minds, for good or bad, as a result of all associations, interactions, and experiences with the brand.
brand licensing: Leasing a trademarked or copyrighted brand identity to a manufacturer, called the licensee, for use on products that appear to consumers either as offerings branded by the brand owner, called the licensor, or co-branded by the licensee and licensor, depending on the contractual agreement. Brand licensing is a widely employed method for brand extension because it allows brand entry into new product areas without additional operational effort.
brand management: The process of controlling how a brand’s identity, message, and experience is developed and conveyed across all points of interaction, including throughout an entire organization, across all points in the purchase process, and through all communication and distribution channels.
brand promise: A summary of the positive difference a business, product, organization, or person pledges to consistently deliver, presented internally in a statement that guides development of all elements of a brand and externally as the basis of all marketing messages.
brand value: The perceptual value of a brand in consumer minds, based on beliefs acquired from all interactions and customer experiences with the brand which, if consistently positive, lead to a willingness to buy more readily, pay higher prices, demand fewer promotional offerings, and contribute to a higher brand equity, which is the economic value of the brand.
branded mobile app: An Internet application that extends business presence, promotion ability, and customer service into the world of mobile commerce through software downloaded to mobile devices and used by customers for education, entertainment, or purchase and service assistance.
branding: The process of building a positive collection of perceptions about a business, product, organization, or person in consumer minds as a result of all associations, interactions, and experiences with a branded business, product, organization, or person.
bricks and mortar: The term used to describe a physically sited retailer that welcomes on-site customers, in contrast to a business that operates exclusively online.
bridge financing; bridge loan: A short-term loan provided to a business or individual working to obtain necessary longer-term financing.
briefcase: A flat, flexible case, usually of leather, for carrying papers, books, and so on.
British cut: A style of men's suit that has a side-vented or unvented jacket with square shoulders and a tapered waist, and pants that are relatively narrow.
broadcast media: A category of mass media that reaches large numbers of people through electronic audio and video signals transmitted by local radio and television stations, national and international radio and television networks, and cable systems, which are used by marketers to convey publicity and advertising to target market audiences.
broker: A business opportunity in which you buy or sell products or services for a parent company, often acting as an agent.
browser: Short for Web browser, a software program used to access and reach sites and pages on the World Wide Web.
budget: An itemized financial forecast of costs for a particular purpose over a defined time period, accompanied by an estimate of forecasted same-period revenue and resulting in a pro forma or estimated income statement that summarizes anticipated financial condition based on cost and revenue assumptions.
budgeting: Establishing a detailed projection of anticipated costs and revenues for a defined purpose over a defined time period to use as a plan for managing expenditures and monitoring performance.
burnout: When an employee experiences emotional exhaustion coupled with low job satisfaction.
business assets: Items of monetary value owned and listed on financial statements as either current assets, which include items that are liquid enough to be converted into cash within a year, and fixed assets, which include items of value such as real estate and major equipment that may take longer to liquidate for cash. Current and fixed assets are considered tangible assets. Additionally, businesses have intangible or non-physical assets such as contracts, licenses, intellectual property, and goodwill, all of which contribute to business value but are listed on financial statements only if the business paid to acquire them.
business capabilities: Key talents or abilities that a business employs to achieve success, generally itemized into eight categories: research and development (R&D), operations, marketing, distribution and delivery, customer service, management and leadership, organization, and financial strength. Business capabilities are the focus in assessments of strengths, weaknesses, opportunities, and strengths called SWOT analyses, used as a framework for strategic planning.
business casual: A category of business dress that's less formal than business wear (such as a full suit) but more formal than casual wear (such as a t-shirt and sandals); usually consists of nice slacks or a skirt, and a button-down shirt or blouse.
business environment: A term describing the full range of forces that impact business success, including industry and market area conditions and growth trends, shifts in competition and consumer tastes and trends, and government, environmental, and economic factors affecting how a business operates and how consumers shop and buy.
business expense: All expenditures that are ordinary and necessary for business operation, which by Internal Revenue Service definition includes expenses that are common and accepted in an industry and helpful and appropriate for trade or business.
business intelligence: 1. All skills, facts, technologies, processes, and practices employed by a business to make sound decisions and set successful strategies. 2. The method businesses use to store key information securely and reliably, keeping the information easily accessible to those within the organization seeking accurate and timely information.
business mission: A statement defining the purpose of a business and the approach it will follow to achieve success, usually created after careful internal examination and then communicated inside and outside the organization to explain what the business is, what it does, and the positive impact it seeks to make.
business model: The method a business uses to generate revenues, earn profits, and protect its position in the marketplace, stated in business plans and funding requests to answer the fundamental business question, How do you plan to make money?
business network: Any association of businesses, usually like-sized and with common interests, in which members work together by pooling resources and sharing information and other assets to accomplish goals that likely aren’t possible without collaboration.
business opportunity: An idea, product, system, or service that someone has developed and offers to sell to others to help them start their own, similar businesses.
business plan: The outline or roadmap a business follows to achieve its goals and objectives, used as a guiding document within an organization and for presentation to investors, lenders, partners, and key associates to describe what the business is and does, the business model it employs to make money, the target audience and customer profile, market and industry conditions, financial situation and projections, business opportunities and risks, and strategies for achieving success.
business promise: A written summary of the positive difference you deliver to all who deal with your business.
business structure: The legal framework under which a business is organized, whether as a sole proprietorship, a partnership, a C corporation, an S corporation, or a limited liability company (LLC).
business valuation: An estimation of the economic worth of a business including the value of all tangible and intangible assets and business goodwill, which is also known as going-concern value or business reputation.
business value: What a business is worth, usually based on its fair market value, which is an estimate of what a buyer is likely to pay for it based on comparable business sales or standard pricing formulas.
business value proposition: A statement of the unique positive results customers can consistently depend on when doing business with an organization.
business-to-business (B2B): Describes businesses that sell primarily to other businesses, in contrast to business-to-consumer (B2C) businesses.
buying behaviors: The patterns consumers follow when making purchases, including how they go about searching for, selecting, purchasing, and using products and whether they tend to buy independently or on the advice of others, impulsively or after careful consideration, in bulk or in small quantities, in response to promotions, through online, mail, or retail channels, and other behaviors that fit into a category called customer psychographics.
buying signals: Verbal and nonverbal cues that inform a salesperson that a customer is ready to buy, including actions such as increased relaxation, eye contact, nodding, agreeing, leaning forward, uncrossing arms or legs, making calculations, or reaching for a pen or billfold, at which time selling ends and the process of closing begins.
buyout: The outright purchase of a company or the acquisition of a controlling interest in a corporation.
buzz: A form of marketing that uses high-profile entertainment or news to get people to talk about your brand.
buzz marketing: A marketing approach that involves highly targeted communications with influential customers. Communications appear personal and limited in number rather than professionally produced and widely distributed, often aiming to inspire positive word of mouth leading to viral marketing communications.