7 Business Terms Every Entrepreneur Should Know

Business Jan 11, 2017
7 Business Terms Every Entrepreneur Should Know
For a risk-taking entrepreneur, the world of business is their eggshell.
There is an endless supply of ideas and products to profit from, and the ability to be one's own boss can be very attractive.

Entrepreneurs can be beacons for economic change in a time of recession.

With innovation and initiative, they can seize opportunities to build enterprising businesses.

The following are terms that every entrepreneur should be familiar with.

1. Angel Investors

An angel is an investor willing to support a company in the early stages in exchange for joint ownership in the form of stock or convertible debt.

As a major source of capital for a startup, an angel investor is a perfect way to bridge the gap between the money lent from friends and loved ones and an actual venture later on.

A relatively small amount of businesses are graced by angel investors. Because of the partial ownership, an angel investor will want to be involved in major decisions within the company, so the business owners must be accepting of this.

Angel investors typically target businesses with room for growth, so a small-scale company with no plans for expansion will likely not be of interest to an angel investor.

2. Intrapreneur

Intrapreneurs work within a company to help develop an idea into a product. They are said to have all the workings of an entrepreneur without the risks involved.

With financial backing from the company, they are free to explore ideas without the added stress of acquiring funding for their work. They can also utilize the mind power and skill of those working in the company.

The Skunk Works® intrapreneurship at Lockheed Martin is one of the most well-known examples of successful intrapreneurship.

Franchises may also be considered a form of intrapreneurship because a parent company provides backing for the otherwise independent business.

3. Business Incubator

A business incubator helps a startup acquire cheap leases for their business, secretarial help by the hour, insurance plans, networking with other entrepreneurs, and other support.

The first known business incubator was started in Batavia, New York in 1959, but it wasn't until 1984 that business incubators became popularized because the Small Business Administration began to heavily endorse them.

A business incubator is extremely helpful to a community's economy, creating jobs for a variety of people.

Business incubators are most commonly used by firms in the process of developing or researching a product rather than a retail environment.

4. Limited Liability Company (LLC)

An LLC is like a typical partnership, except the partners have full limited-liability protection, meaning they can't be held accountable for the company's actions and debts.

An LLC must be officiated by the state. Funding for an LLC can be raised by selling off membership interests. With an enormous number of benefits, the LLC may be the wiser route to go than the corporation.


The Service Corps of Retired Executives, known as SCORE, provides free counseling to aspiring entrepreneurs.

It is a nonprofit organization and is a resource partner with the Small Business Administration.

It was founded in 1964 and has served more than 8.5 million clients. They also offer business workshops and webinars for a low cost.

There are SCORE chapters all across the United States with headquarters located in Herndon, VA.

6. Nonprofit

On a state level, a nonprofit is a corporation designed to endorse a community or public interest. While all earnings must be collected for the benefit of the cause, nonprofits are allowed to hire paid employees.

Most nonprofits qualify for exemption from federal corporate income taxes, depending on the type of nonprofit. For example, charitable organizations, social welfare, and clubs are among the many types of nonprofits that can qualify for exemption.

Nonprofit organizations are essential to community fortification.

7. Burn Rate

The burn rate is the negative cash flow within a company over time. It is generally tabulated monthly.

A company with high cash burn rates can be bad news for an investor, given that it indicates that a company isn't self-sustaining.

Burn rate is most commonly of note in new, yet-to-be-profitable companies with room for growth.

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