Professionals in every field have their own words to describe what they do as a short cut to communication within their own expert group. Unfortunately, we often assume everyone else understands these terms. No one will own up to it of course for fear of sounding stupid. No one likes to question a term or say “Sorry, I don’t understand.”
Business is no different. These are some of the jargon terms even business people may not understand. For non business-speaking people i.e. most small businesses, this may help you to understand what that ‘smarty pants’ consultant or coach is telling you!
- Balanced scorecard. A tool that measures financial, customer, internal business process and growth. Most small businesses do not use it, preferring to use an excel spreadsheet, which is both easier and more useful.
- Cash flow forecast. An assessment and understanding of the expected cash coming into and flowing out of the organisation in specific periods. Contrary to belief, this is a mystery to many accountants who like facts rather than the ‘fairy-tale’ of trying to guestimate what money will most likely be there in the future. Ignore this one at your peril though. Getting this wrong (or not doing one) is that main reason successful businesses go out of business. You have been warned.
- Competitive advantage. The strategic development of more favourable benefits to enable customers to choose an organisation’s product or service over its competitors. It is generally useful to have a product that is better for your prospective client than your competitors’ product. Or at least one they THINK is better (this is what marketing is for).
- Focus group. Small groups of people, representing target audiences, that are brought together to discuss a topic that will offer insight for product development and/or marketing efforts. A really useful way to get a bunch of prospective clients in the room to tell you what they like and don’t like about your product/service idea. Much cheaper than making something and then finding out they don’t like it.
- Intrapreneurship. Entrepreneurial-based activities within an organisation for the purpose of an innovative new activity within the organisation itself. Not just your R&D people, but anyone who has a good idea. Not only do you get some innovative activity going on in your business, but your government may even give you a tax break to pay for it.
- Liabilities. Debts that the organisation must pay. This usually means the bank first followed by big investors, down to Aunt Nelly (the one with the big angry son).
- Net Present Value (NPV). A way of estimating cash shortfall on long-term projects (or other business activities). Widely used by MBA students, large corporates and almost no one else.
- Payback period. How long it takes to recoup an organisation’s investment in a project or business operation. An investor may ask you about this. Most times, a good cash-flow forecast is enough, as it will show this. The investor just wants to know when he will get his money and the interest etc. back.
- Perceived risk. The extent to which a stakeholder e.g. bank (or anyone else) is uncertain about the likely success of your business. This is rarely the same as the actual risk. Rather like marketing, it isn’t what the actual risk is, but what they think it is that matters.
- Value Proposition. Quantified review of benefits, costs and value. Value is the value to your prospective client. Not to be confused with price or actual cost.
I am sure there are many other terms that you have come across that you would class as ‘business jargon’. Please add them, and I’ll include them in my guide.
Email me to talk to a business consultant / coach who speaks English or text Jacqui Hogan on 07739 488060