Small Business Glossary: I

ideal customer: A definition of those who want and have the ability and authority to purchase the unique offerings of a business, a standard against which customer leads and prospects are measured in order to prioritize efforts during the lead-management process.

incentive program: A motivational program used by management to stimulate sales or inspire employees by offering bonuses, merit-pay increases, and other defined rewards in exchange for attaining specific goals over a specified period.

income: All the earnings of a business.

income statement; profit and loss statement: A financial statement that summarizes money earned and spent over a specified period and up to the date the report was created, including all revenues minus all costs and expenses to arrive at the bottom line (net profit).

incubator: A business or facility that shares resources and expertise to aid entrepreneurs and startup companies often in the technology sector to grow and succeed.

independent contractor: A person or business hired by a business to perform services not as an employee, but on a project basis under an arrangement that the Internal Revenue Service describes as independent if the employer has the “right to control only the result of the work and not the means and methods of accomplishing the result.” Sometimes called a freelancer.

indirect competitors: Businesses that serve the needs or wants of a marketer’s customers with a similar but not identical offering; for instance, a tea shop is an indirect competitor of a coffee shop.

individual retirement account (IRA): 1. A personal account called a Traditional IRA established and self-directed by an individual to save money for retirement by contributing a limited amount of annual tax-deferred earnings that accrue safe from taxation until they are withdrawn at age 59.5 or later, at which time ordinary income tax applies, with a penalty if withdrawn earlier. 2. A personal account called a Roth IRA which differs from a Traditional IRA in that contributions are not tax-deferred and withdrawals of contributions and investment gains taken after age 59.5 are not subject to taxation.

influencer: A person who may or may not be a buyer or consumer of a product or service, but who sways the opinions of others and therefore is targeted by marketers in an attempt to gain awareness, interest, and support that will be passed through the buyer chain.

infomercial: A televised direct marketing ad that usually lasts 15 or 30 minutes and appears during non-primetime viewing hours, usually formatted to resemble a talk show and almost always requesting viewer action in the form of toll-free calls to make immediate purchases or to register information requests. Infomercials usually present demonstrations of desirable, easy-to-achieve solutions backed by consumer testimonials, followed by a presentation of affordably priced products not usually available through bricks and mortar retail outlets.

information technology (IT): The industry or discipline involving the collection, dissemination, and management of data through the use of computers, software, and computer systems.

infringe: To violate the terms of an agreement or disregard others' rights, such as with a copyright or patent.

initial public offering (IPO): The first sale of stock shares by a private company to the public, often offered by smaller companies with highly attractive growth potential, as share purchasers base buying price on future growth and income projections, allowing the business offering stock to raise significant funds for expansion.

innovation: The process that converts a new idea, method, device, or process into a new product or service.

installment contract: A legal agreement specifying that payments, delivery of goods, or the performance of services will be spread over time and completed on specific future dates, with failure to meet agreed-upon actions generally considered a breach of the agreement, which can result in a defined liability or penalty.

installment sale: The exchange of an asset for the promise of a series of future payments made over a specified time period during which the seller retains an interest or stake in the asset until all payments are made; sometimes employed as a means to obtain tax advantages by deferring recognition of income from the sale until future taxable years.

intangible: Any asset a business owns that has value but can't be touched, such as licenses, patents, and trademarks.

intangible assets: Non-physical assets of value such as contracts, franchise ownership, exclusive licenses or permits, intellectual property, and goodwill or going-value concern, which are only carried on a balance sheet if a business has paid to acquire them.

intellectual property: Intangible assets that result from creativity and result in trademarks, patents, licensing agreements, copyrights, proprietary information and trade secrets that have value, though they aren’t reflected on the balance sheet unless they were purchased from a previous owner.

interest: The money a business needs to pay back, in addition to the amount it borrows from a bank or other institution, based on a percent of the amount borrowed.

internal accounting controls: Systems, procedures, and precautions established by a business for the express purpose of minimizing errors and preventing fraud, including such requirements as multiple approvals or signatures for financial transactions over a certain dollar amount, surveillance cameras, surprise inventory inspections, and entry restrictions.

Internal Revenue Service; IRS: The bureau of the U.S. Treasury Department responsible for tax collections.

Internet: The global system that links computer networks worldwide, allowing users to send and receive e-mail and browse the World Wide Web, among many other functions.

introvert: A person whose interest is more in oneself than in external objects or others.

inventory: 1. An itemized list of all goods of value held by a business including raw materials, supplies, and finished and unfinished products. 2. The cash value of all raw materials, supplies, and products held for production or sale by a business, reflected on financial statements as a current asset.

inventory turnover: An estimate of the number of times the inventory of a business is sold or used in a year and a measure of manufacturing efficiency. Calculated by dividing annual cost of goods sold (also called cost of sales) by average annual inventory value, which is determined by adding the cash value of inventory at the beginning of the year with the value of inventory at the close of the year and dividing by two.

invest: Put money into a business, stocks, and so on for the purpose of obtaining an income or profit.

investor: A person who provides funds by taking an ownership position or providing a loan to a business or other venture with the intention of achieving a financial return with manageable risk, as opposed to a speculator who assumes high risk in return for the potential of high rewards.

investor capital: Money provided by individuals or firms to a business or other venture, usually in exchange for an ownership share or the promise of a portion of profits.

invoice: 1. (noun) A bill or itemized statement detailing money owed for goods delivered or services rendered. 2. (verb) To send a bill for goods delivered or services performed.

quan xi: A Chinese phrase that means the quality and integrity of a business relationship.

Italian cut: A style of men's suit that has an unvented jacket with padded shoulders and relatively full pants.

itinerary: A detailed outline for a proposed journey.

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