Someone new to the world of entrepreneurship will notice right away that entrepreneurs have an interesting way of speaking. From “unicorn” to “bootstrapping” to “foodpreneur,” entrepreneurs use a lot of strange language to describe what they do. By combining words, or by assigning new meaning to old ones, they have created a whole new vocabulary to better communicate their needs and ideas in an ever-evolving ecosystem. The EntrepreLingo Series is an effort to fill our readers in on some of the weirder—or less straightforward—terms you’re sure to hear in an entrepreneurial environment. So far, we’ve covered: A, B, C, D and E, and F through H. This week, we’re looking at I through L.
An incubator is an organization that provides startups with the support and resources they need for growth and development. All incubators provide different levels of assistance; however, many feature educational resources, access to office space and/or mentorship programs.
Like entrepreneurs, intrapreneurs are innovators; however, they innovate within a pre-existing corporate setting.
IPO (Initial Public Offering)
The IPO is the first stock a private company makes available to the public.
Iteration is a term you hear most often in tech startups. It is the practice of developing software in stages, testing each stage, receiving feedback from your team or users, and then making improvements based what you find. This method allows developers to identify problems early in the development process and make changes more easily, rather than waiting until a project is fully developed.
KPI (Key Performance Indicator)
A KPI is a performance measurement that demonstrates how well a company—or part of a company—is reaching certain key objectives. Those objectives vary from venture to venture, but examples of KPIs may include customer acquisition rates, manufacturing quality or even employee turnover.
To launch is to introduce a venture or new product or service to the market.
Lean (or Lean Startup)
First introduced by Eric Reiss in his book The Lean Startup, lean practices involve using iteration and validated learning to reduce risk and avoid the need to raise large amounts of funding. Over time, however, “lean” has evolved to simply mean a business is committed to keeping its overhead costs low.
Leverage is the money a business borrows in an effort to increase its rate of return on investment. Leverage is calculated by a company’s total debt, divided by its total equity.
Liquidation is one step in the process of dissolving a company. During liquidation, business operation comes to a halt and the company’s assets are divided among its shareholders or sold to pay off any remaining debts. Liquidation may also refer to discounting inventory in an effort to sell it off.
LLC (Limited Liability Company)
In an LLC, company members are not held personally liable for the company’s debts. An LLC combines the flexibility of a partnership with the protection of a corporation.
This is a pricing strategy wherein certain products—or leaders—are sold at a loss to attract customers and stimulate other product sales. For instance, an electronics store may sell DVDs at discounted prices to attract customers who may also purchase televisions and stereo systems.
“Low-hanging fruit” is a metaphor for an easy solution that yields the best results. In sales, for instance, this term is used to describe the customer who is most likely to buy or use a specific product; by targeting low-hanging fruit, companies can drive sales while saving money on marketing and customer acquisition costs.