Small Business Glossary: S

S corporation: A business structure that provides the corporate benefits of limited owner liability while also allowing the benefits of a partnership; profits are passed through to owners, called shareholders, without first being taxed at the corporate level. S corporations are limited to 75 owners and can issue only one form of stock.

salary: The pay given to employees who receive a set amount per set period, no matter how many hours worked.

salary structure: A matrix of job types and grades used to define compensation and benefits in the administration of a company’s pay philosophy, providing managers and employees with a visual map of the compensation structure.

sales: The process during which a product is offered, the case for purchase is made, the purchasing decision occurs, and the business-to-customer exchange takes place.

sales agreement: A contract outlining the terms of a sale, transferring ownership and possession of goods from seller to buyer in exchange for money or other specific value.

sales forecast: A prediction of future sales of a product over a specific time period based upon past product sales history, current and evolving market conditions, competitive circumstances, seasonality, and production capability.

sales kit: Informational materials, often contained in a folder, designed to explain a product, service, or company to a prospective customer. May include printed matter, videos, DVDs, demonstration materials, or samples that are usually to a prospect by a salesperson, though sometimes appearing instead on business Web sites.

sales literature: Informational materials used as selling aids. May include brochures, catalogs, charts, manuals, data sheets, price lists, press clippings, news releases, and customer testimonials.

sales management: A company function or process designed to attain sales goals through planning, staffing, training, leadership, and allocation and management of company resources.

sales presentation: The act of personally presenting a product to a customer with the aim of stimulating the purchase decision. Usually the salesperson shows or demonstrates the offering; describes how it will deliver benefits, solve problems, or provide opportunities; makes a price proposal; and responds to questions or concerns, all while attempting to hold the interest and enthusiasm of the prospective buyer.

sales quota: Sales targets assigned to sales staff, dealers, distributors, regions, or territories that establish sales value or volume to be attained over a specified time period. For example, telling employee John Smith that his sales quota is to sell 200 units this coming quarter.

sales representative: A salesperson or agent employed by a company to sell its products or services to customers and prospects for what’s normally commission-based compensation, though some sales representatives may earn a combination of salary and commission.

sales strategy: A component in business planning that focuses on how to generate qualified leads, close sales, compensate sales staff, and profitably manage order processing in support of the firm's larger business goals. Among elements often included in sales strategies are definition of target markets and customers, differentiation of product attributes, identification of the most efficient and effective tactics for selling, completion of an action plan, and design of measurement tools to monitor the plan's success.

sales tax: A tax on the sale of a product or service, usually levied as a percentage of, and added to, the price paid by the consumer.

Sarbanes-Oxley: A wide-ranging U.S. corporate reform legislation act, which lays down stringent procedures regarding the accuracy and reliability of corporate disclosures, places restrictions on auditors providing non-audit services, and obliges top executives to verify their accounts personally.

scope of service: A precise and chronological definition of the services or products to be provided in order to complete an agreed-upon task, usually included as part of an agreement or contract.

SCORE: An acronym for Service Corps of Retired Executives, SCORE is a national volunteer organization of 13,000 working or retired business owners, executives, or leaders with a wide range of business skills who offer free online or face-to-face business counseling, mentoring, training, and support for entrepreneurs and small businesses.

search engine: A site that collects information from Web sites by using a program called a spider, which crawls around the Web reading information and compiling keywords into an index that is searched to match the queries of Web users with sites that best fit their requests.

search engine alert: A request filed with a search engine to notify a Web user by e-mail when a requested name or phrase appears in new Web postings; used by marketers to monitor online news about themselves and their competitors.

search engine marketing (SEM): Marketing efforts undertaken by a Web site owner in an effort to achieve high visibility in search engine results through a combination of search engine optimization (SEO) programs and paid advertising that appears alongside organic search results.

search engine optimization (SEO): Techniques designed to gain a Web site a top or high ranking in search engine results for queries that include targeted keywords or phrases related to the site. Accomplished through the careful use of Web page titles, repeated use of keywords throughout site content, descriptive META tags, site indexing, code editing, and the establishment of a network of Web backlinks (links on other Web sites that point to the optimized site).

seasonality: Cyclic variation in consumer demand for which businesses plan, stock, and staff differently. Caused by seasonal factors such as weather or length of days or by a recurring period of the year such as back-to-school or holidays. For example, a hardware store stocks and markets snow shovels during winter months and barbeques during summer months, each in response to seasonal demand.

second-stage financing: Funding provided, often by venture capital investors, to established businesses already producing and shipping product but lacking the cash flow necessary to expand marketing, increase production, and achieve growth potential. Second-stage financing is often preceded chronologically by seed financing and startup financing, and is followed by third-round financing, and mezzanine or pre-IPO funding.

secure electronic transaction (SET): A system developed by Visa, MasterCard, and major computer manufacturers to protect the security of online financial transactions by using encryption and authentication methods and by employing digital certificates and digital signatures to protect privacy between the purchaser, merchant, and bank.

secure server: A Web server armed with security software that encrypts and decrypts messages to protect them from being tampered with and to ensure the privacy of commercial transactions, typically using major security protocols such as secure electronic transaction (SET) and secure socket layer (SSL).

secure site: A Web site resident on secure servers that provides protected and private exchanges of data, usually of a financial nature, encrypted for transit over the Internet.

security: A financial instrument that shows ownership, such as stocks or bonds.

seed money; seed capital: Funds invested during the earliest, often conceptual, stage of a company’s development by the business owner, family, friends, or other outside lenders.

self-financing: A business or project that generates all necessary funds from its own income instead of calling upon outside investors or lenders.

seller’s discretionary earnings (SDE): A recast income statement that includes adjustments to back out all expenses that represent owner benefits, one-time nonrecurring expenses, and discretionary expenses that another owner may not choose to make. This statement results in a report of how much a business actually makes for its owner or owners annually and is a key factor in business sale valuations.

seller-financed loan: A common approach to funding the purchase of a small business through a loan made by the seller to the buyer, usually after the buyer makes a significant cash down payment and always accompanied by the buyer’s agreement to repayment terms outlined in a seller-financed note, also called a promissory note.

seller-financed note; loan note; note payable: A promissory note required by the seller of a business who agrees to finance a portion of the buyer’s purchase price under a loan agreement detailed in a contract, or note, that clearly defines repayment terms.

selling memorandum; offering memorandum; selling book: A document provided by the seller of a business to serious prospects after the prospects sign a confidentiality agreement. Answers buyer questions about what the business is and does, why it’s for sale, the attributes that make it an attractive investment, growth opportunities, a summary of financial condition, and asking price.

selling terms: Conditions a seller places upon a buyer as part of an agreement to deliver goods or services on credit. These generally define the period during which credit is extended, the timing and size of scheduled payments, and possible remedies if the buyer fails to pay in full upon the designated deadlines.

sell-through: An advertising campaign that encourages immediate sales.

seminar: A formal presentation by one or more experts in which the attendees are encouraged to discuss the subject matter.

senior management team: The highest-ranking executives of a business or organization who share responsibility for overall strategy, day-to-day management, and long-term success of the enterprise. Appointed by a board of directors or senior shareholders, the senior management team plans for, leads, directs, and inspires the organization. Typical senior management team members include chief executive officer (CEO), chief operating officer (COO), and chief financial officer (CFO).

service: 1. An intangible product sold by a business, such as tax return preparation or landscaping. 2. The way a business interacts with its customers.

service mark: A protected trademark for a service rather than a product. Indicated by the letters SM in superscript. SM

severance: 1. In court orders, the process of separating issues and trying each part individually, sometimes called bifurcation. 2. In property, the separation of a portion of a land track through condemnation or other means, usually accompanied by compensation for the value of the separated parcel and the resulting decreased value of the remaining portion. 3. In employment situations, the act of separating with or terminating an employee, often with an offer of compensation called severance pay.

severance pay: Salary and benefits paid in addition to those already owed to an employee whose employment with a company is terminated, often because of a lay-off and typically based on the employee’s length of service, pay level at time of departure, and agreement to sign a separation or severance agreement that waives the employee’s right to future lawsuits against the employer. Severance pay is often offered to employees asked to leave their positions immediately instead of following a usual notice-of-termination period. A severance package typically includes pay based on months of service to the employer, unused vacation time or sick leave, retirement benefits, interim medical insurance coverage, and other forms of compensation.

sexual harassment: Any unwelcome physical, visual, or verbal sexual advance, or a request for sexual favors, that interferes with the victim's job performance.

share of audience: The percentage of radio or television sets tuned to a particular broadcast station or channel, or the percentage of target market consumers that read a particular newspaper or magazine, used to determine how effectively a media outlet reaches the desired audience of an advertiser.

shareholders; stockholders: Those who own shares of stock in a corporation or mutual fund and who are, therefore, entitled to a legal claim on a proportionate share of earnings, declared dividends, and assets, as well as a proportionate share of the liabilities. Share ownership also entitles owners to vote on certain matters including membership of the board of directors.

shelf talker: A small printed sign affixed to a retail shelf to draw attention to and prompt selection of a product at its point of purchase.

Shinto: A principal religion of Japan, with emphasis on the worship of nature and of ancestors and ancient heroes, and the divinity of the emperor.

shopping cart abandonment: What occurs when online shoppers click to place an item in their online shopping cart but never complete the checkout process, often because of product uncertainty, insecurity about sharing credit card details, confusion over the checkout process, or a Web site error, all necessitating site owner concern and improvements.

signature: The text at the bottom of an e-mail that contains information about the sender.

silent partner: An investor who provides capital without any involvement in or responsibility for management and who participates in tax and cash flow benefits while sharing liability only to the extent of the amount invested.

single-entry bookkeeping: A bookkeeping approach used in cash-basis bookkeeping that reports each financial transaction once, entering income when it’s received and expenses when they’re paid, similar to how one keeps a personal checkbook; in contrast to double-entry bookkeeping, which is used in accrual accounting to record financial transactions as they’re incurred, regardless of whether money flows in or out at that time.

skill-based pay; knowledge- or competency-based pay: An alternative to pay based on job title or duties performed, skill-based pay permits employers to compensate employees based on the value they contribute to the company due to the number and type of skills they possess, therefore inspiring employees to acquire greater skills while also allowing companies greater flexibility in assigning skill-based employees to tasks throughout the company.

skyscraper: A vertical banner ad.

slander: False, disparaging, and reputation-damaging statements spoken about a person. When the statements are made in writing, called libel.

slogan; tagline: A short, memorable phrase that helps consumers link a business name to its marketing message and brand image.

slotting allowance; slotting fee: Money frequently paid by product manufacturers or suppliers to retailers in exchange for presence on retail shelves; widely used to achieve premium product placements and to get new products into supermarket distribution.

Small Business Administration (SBA): An independent agency of the U.S. government created by the Small Business Act of 1953 to protect the interests of small businesses and offer Americans management, technical, and financial support to help start, run, and grow them.

Small Business Administration-guaranteed loan (SBA-guaranteed loan): A loan made by an American lending institution, usually a bank, with the assurance that the Small Business Administration (SBA) stands behind the loan, basically as a cosigner. SBA guarantees are available only for loans and borrowers that meet detailed requirements. In the event of default of an SBA-guaranteed loan, the borrower remains obligated for the full outstanding balance due, but the SBA guarantees lender repayment of 50-80 percent of the loan amount, significantly reducing the lender’s risk.

Small Business Jobs Act of 2010: Signed into law September 27, 2010, by President Barack Obama, the law extends established Small Business Association (SBA) loan provisions by billions of dollars of additional lending support while providing tax cuts and other resources to help small businesses create jobs and drive economic recovery.

small talk: Light conversation about common, everyday things.

social media: Opinion-sharing Internet tools that people use to spread ideas. Includes social networking Web sites, blogs, online forums, photo and video sharing, and instant messages.

social media guidelines: Written policies that define the social media strategy and objectives of a business, empower employees to participate in social media networks, reward social media participation and beneficial problem-solving and interaction, and outline what to include and what not to include in personal and professional social media engagements.

social media network: An online community formed through a Web site that attracts individuals who join, create online profiles, list their interests, and issue invitations to connect with friends, colleagues, relatives, and friends of friends with similar personal or professional interests.

social media strategy: The approach a business follows to reach and interact with its target audience through social media channels. The strategy establishes objectives, success indicators, realistic timelines, a method for tracking effectiveness, and commitment to an ongoing program to achieve defined outcomes.

social networking: Using social media to connect and communicate with others.

social networking sites (SNS): Web sites that invite and enable users to join, create online profiles, list interests, and issue invitations to connect with friends, colleagues, relatives, and friends of friends with similar personal or professional interests in order to form a unique community of people.

Social Security: In the U.S., a federal system of old-age, unemployment, or disability insurance sinanced by a fund maintained jointly by employees, employers, and the government.

soft skill: An ability, such as conflict management or team building, that's defined in terms of expected outcomes, rather than as a specific method or technique.

SOHO: An acronym standing for small office, home office; a market segment comprised of small businesses of usually 1-10 employees that operate either in small offices or home offices and often rely on high-end technology to achieve a competitive edge.

sole proprietor: The person who owns and runs a business structured as a sole proprietorship; this individual is directly responsible for the business, its debts, and taxes on its income.

sole proprietorship: A business structure under which the business has no separate existence from its owner or owners, who are personally liable for business losses and for taxes on business income; the simplest form under which to operate a business.

sole source: 1. An individual or business that is the one and only source of supplies, services, or materials. 2. An individual or business considered uniquely qualified to provide the services required by a contract, and therefore granted business on a no-bid contract rather than as part of a request for proposals.

solvency: A healthy financial condition that allows an organization to use its current assets to cover its current liabilities and fund continued growth. Solvency is often measured by a current ratio, which is calculated by dividing current assets by current liabilities. If current assets are double current liabilities, then the business is considered not only solvent, but also in good short-term financial health.

source document: Evidence (such as a deposit slip or invoice) of a business dealing; critical in constructing an audit trail.

spam: Unsolicited electronic commercial messages sent in violation of the CAN-SPAM Act, delivered primarily to large lists of e-mail addresses and increasingly to instant message addresses and newsgroups. Spam accounts for the majority of all e-mail sent.

specialty media; advertising specialties; SWAG: The term for generally inexpensive items imprinted with an advertiser’s name, logo, and marketing message to be given to customers and prospective customers for free as a way to gain and maintain awareness of the product or brand.

spider; Web crawler; bot: A software program that scans Web sites and Web pages to read content, scan META tags for keywords and descriptive information, and follow all site links in order to gather and index information used by search engines in page-ranking formulas and search query results.

spin: A particular emphasis or slant imparted to information in order to create a desired effect.

spinoff: 1. An independent company created from an existing part of another company. 2. Divestiture by a corporation of a unit, division, or subsidiary by issuing stockholders a proportionate number of shares in a new entity. 3. A leveraged buyout (LBO) by management of an existing business unit, subsidiary, or division. 4. Something derived from an earlier work, as in a television series whose lead character transitioned from another series as a minor character.

spot: 1. An ad that airs on television or radio channels. 2. The timeslot during which an ad runs. 3. Ad time purchased on specific channels rather than through an entire network, referred to as a spot buy rather than a network buy.

stakeholder: Anyone or any organization that holds a stake in how well your business performs.

stakeholders: Individuals or groups with an interest in the success of an organization. These people are affected by and impact the organization’s actions, decisions, policies, or activities. Generally, stakeholders are divided into groups: internal stakeholders (such as owners, directors, and employees) and external stakeholders (such as creditors, suppliers, governments, and communities).

standard operating procedures (SOP): Written, step-by-step, detailed instructions to be followed precisely in carrying out a task or function. Such procedures are used by companies to ensure quality control, uniformity, and consistent performance.

Standard Rate and Data Service (SRDS) Lifestyle Market Analyst: A privately owned online database for use by marketers and media planners to plan marketing, advertising, and product management strategies by comparing current demographics, market segmentation, and consumer targeting data by interest or geographic area.

start-up: A new business venture.

start-up: A new business venture.

startup business: A business in its earliest stage of development. A term popularized in the late 1990s signifying a business that opens with a new product or service idea and hopes of raising funds and attracting clientele, most often backed by high-growth plans and high risk to reward ratios.

startup costs: Nonrecurring initial expenses incurred while starting a new business. Includes costs for items such as licenses, property acquisition, equipment purchases, and required fees.

startup financing: Funding often provided by angel and venture capital investors, and sometimes in return for an equity or ownership stake, to young businesses that are beyond the initial, conceptual phase but that need additional money to fund marketing, increase production, and achieve growth potential.

stationery: Coordinated writing materials; specifically, paper and envelopes used for letters.

stealth competitors: Businesses that compete with a marketer in an indirect fashion by serving the same customers but in different, unexpected ways; for example, weight-loss programs are stealth competitors to bakeries.

sticky Web site content: A term that refers to online information that either keeps users on a site for long periods of time or that brings them back to the site repeatedly, or both. Often this content is created through frequently updated posts of relevant news, interactive material that draws user involvement and comments, and devices for amusing and entertaining site visitors.

stock bonus plan: The part of an overall employee compensation program designed to reward exemplary job performance through direct awards of company stock and/or an option to purchase company stock at preferred pricing.

stock exchange: 1. An organized financial marketplace where bonds, notes, and shares, called securities, are bought and sold through a regulated process of competitive bidding. Stock exchanges are a primary means for raising capital for corporations, governments, and municipalities, and also serve as a clearinghouse for private investors seeking to sell securities for cash. The three largest stock exchanges are the New York Stock Exchange (NYSE), the London Stock Exchange (LSE), and the Tokyo Stock Exchange (TSE). 2. Payment for the purchase of a business by exchanging stock in the purchasing corporation.

stock option plan; employee stock option plan: An incentive program that rewards employees who have met predetermined performance goals with the option, but not the obligation, to make future purchases of common shares of stock in the employer’s business at the stock price as of the date the award was made, which may be significantly less than the selling price on the date the employee chooses to exercise the option to purchase.

storyboard: A series of illustrations used in preliminary planning of films, television ads, interactive media sequences, and other visual communications to show proposed scenes, copy, shots, and motion sequences; also used as flow sheets when planning computer programming projects.

straight-line depreciation: An approach for recording the decreasing value of a fixed asset in equal amounts during each year of its useful life; used for long-term assets such as buildings that aren’t likely to quickly lose value.

strategic alliance: An agreement between two or more individuals or independent firms to work collaboratively toward mutually beneficial business goals or objectives.

strategic business unit (SBU): In larger companies, elements of an organization structure that isolate product lines or services into divisions with their own profit objectives that operate almost like businesses within the larger business.

strategic plan: A plan devised to reach a business goal. Begins with a definition of the end to be achieved and works backwards to define all the approaches, steps, resources, and actions necessary to move the organization from its current situation to its desired future.

strategy: A practical, action-oriented plan devised to prompt change and achieve a business objective. Developed through a process involving examination of a current situation, development of new approaches, roles and functions, integration of established and new policies, practices and resources, and the outline of tactics to be used and actions to be taken in order to realize the desired outcome.

subbrand: A brand that’s closely tied to a parent brand but that is distinguished by its own identity and values, often introduced as a means to extend the market potential of the primary brand into a lower-price category without harming its established brand image and esteem.

subcontractor: A secondary contractor who agrees to perform all or part of the work outlined in another contractor’s large-scale contract following specific, mutually agreed-upon terms regarding scope of service, timeframe, quality of work, compensation and payment schedule, billing and payment procedures, grounds for termination, and other information that defines the working arrangement.

subliminal advertising: Advertising and other promotional messages delivered without the recipient’s awareness through use of techniques that are considered scientifically unproven and ethically deceptive, such as low vocalization or rapidly flashed images that are below the threshold of conscious perception.

subordinated loan position: A secondary claim to the security assets pledged by a borrower as part of a promissory note agreement, a condition that occurs when a borrower requires more than one loan, uses the same valuable assets as collateral in each loan agreement, and pledges senior rights or first claim to other lenders.

succession planning: The formal process an organization employs for identifying and preparing successors for key executive, managerial, and operational positions, typically by identifying suitable candidates, exposing them to well-defined developmental experiences, and generally supporting their development until they are able to assume the position for which they have been prepared.

supply and demand: Key components of the free market system economic model. The concept of supply and demand determines pricing; economic theory suggests that the price of an offering will vary until it reaches a point where the quantity desired by buyers, called demand, equals the number of units available in the marketplace, called supply, thus achieving what is called market equilibrium.

surety bond: A contract that guarantees compensation to cover resulting losses if one member of a party, called the principal, fails to perform to the terms promised to the other party, called the obligee. Surety bonds required by governments are called license and permit bonds, which differ from insurance in that the bond protects from a contract or promise default, while insurance provides protection from damages caused.

surname: The family name, or last name, as distinguished from a given (or first) name.

sustainability: 1. In terms of ecological and social impact, the capacity to maintain or support an activity or process over an extended period without creating negative impact on the environment or depletion of the natural resources required to support such activities. 2. In terms of a business growth strategy, the ability to achieve ongoing development, growth, flow of goods, and stakeholder value at a constant or decreasing cost.

sweat equity: The value contributed to a company, organization, or cause by people freely donating their productive time and effort. In startup companies, sweat equity is often valued and compensated via stock awards.

SWOT analysis: An acronym for strengths, weaknesses, opportunities, and threats; an analytical tool used as part of a larger strategic planning process to help a company assess the internal and external conditions it faces and to plan actions that build upon established business capabilities to take advantage of opportunity and avert potential threats.

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