The glossary

Business language in plain English. Each term links to the guide that goes deeper.

Accounts receivable: Money customers owe you for work you've already delivered. It counts as revenue on paper but isn't cash until it's paid.In everyday termsLike a tab you've let a regular run at your café: the sale happened, but the money is still in their pocket.Go deeper: Cash flow vs. profit
AI agent: An AI system that keeps working toward a goal between conversations, using its own cloud computer and the apps you connect, and asks you before consequential actions.In everyday termsLike a house sitter rather than a friend on the phone: far more useful, so it matters which rooms you open and what it must ask first.Go deeper: AI agents compared

Beachhead market: The first narrow market you aim to win completely before expanding. Small enough to dominate, specific enough to reach directly.In everyday termsLike opening one restaurant and filling it every night before you open a second, rather than opening five half-empty ones.
Bootstrapping: Funding a business from personal savings and revenue instead of outside investors. You keep control and ownership, and growth is paced by cash.In everyday termsLike renovating a house room by room with the money you earn, instead of taking out a big loan to do it all at once.
Burn rate: How much more cash a business spends each month than it brings in. Divide cash in the bank by burn rate to get runway.In everyday termsLike how fast a bathtub drains when the tap is running slower than the drain is emptying it.Go deeper: Cash flow vs. profit
Business model: How a business creates value for customers and captures part of that value as revenue. It covers who pays, for what, how often, and at what cost to serve.In everyday termsLike the recipe and the menu prices together: what you make, for whom, and how each plate pays for itself.Go deeper: Choose a business model

Cash flow: The movement of money into and out of a business over a period. A profitable business can still run out of cash if money leaves before it arrives.In everyday termsLike your household account between paydays: you can earn a good salary and still be short on the 28th if rent leaves before pay arrives.Go deeper: Cash flow vs. profit
Churn: The share of customers, or of recurring revenue, you lose over a period. Monthly churn of 5% means one in twenty customers leaves each month.In everyday termsLike water leaking from a bucket you're trying to fill. The bigger the hole, the faster you have to pour just to stay level.Go deeper: Unit economics
Contribution margin: What is left from a sale after the costs that rise with each sale. It is the money available to cover fixed costs and, eventually, profit.In everyday termsLike what's left from each glass of lemonade after paying for the lemons, sugar, and cup. That's the money that goes toward the stand itself.Go deeper: Unit economics
Customer acquisition cost (CAC): The total sales and marketing spend needed to win one new customer, including ads, tools, and the time of the people doing the selling.In everyday termsLike the total cost of a fishing trip divided by the fish you caught: bait, fuel, and your time all count.Go deeper: Unit economics
Customer discovery: Structured conversations with potential customers to learn about their problems and current behavior before you build a solution.In everyday termsLike a doctor taking your history before prescribing anything. You ask about what has actually happened before suggesting a cure.Go deeper: Customer discovery interviews

Gross margin: Revenue minus the direct cost of delivering what you sold, shown as a percentage of revenue. A $100 sale that costs $35 to deliver has a 65% gross margin.In everyday termsLike a bakery selling a $4 loaf that costs $1.40 in flour, butter, and baking. The 65% left is what pays for the shop, staff, and profit.Go deeper: Unit economics

Jobs to be done: The progress a customer is trying to make in a particular situation. People "hire" a product to get a job done, and fire it when something does the job better.In everyday termsLike hiring a ladder: nobody wants a ladder, they want the gutter cleaned. A neighbor with a long pole is competing with the ladder.Go deeper: Jobs to be done

Lifetime value (LTV): The total contribution you expect to earn from a customer over the whole relationship. Compare it with what it costs to acquire them.In everyday termsLike the value of a gym member over all the months they stay, not just their first payment.Go deeper: Unit economics
Limited liability company (LLC): A U.S. legal structure that generally separates the owners’ personal assets from the business’s debts. Rules and costs vary by state.In everyday termsLike a fireproof wall between your home and your workshop: if the workshop catches fire, the wall is meant to protect the house. It only holds if you keep the two separate.Go deeper: Choose a legal structure

Minimum viable product (MVP): The smallest version of an offering that lets you learn whether customers actually want it. Its purpose is learning, not launching.In everyday termsLike serving one dish from a pop-up stall to see if people come back, before signing a lease on a full restaurant.Go deeper: Validate a business idea

Payback period: How many months it takes for a customer’s contribution to repay what you spent to acquire them. Shorter payback means growth needs less cash.In everyday termsLike the months it takes an energy-efficient boiler to save enough on bills to cover what you paid for it.Go deeper: Unit economics
Pivot: A deliberate change to one core part of your strategy, such as the customer, problem, or model, based on what the evidence showed.In everyday termsLike a hiker changing trails after reaching a lookout and seeing a better route. The destination stays; the path changes.
Positioning: How you define what your offering is, who it is for, and why it is the better choice compared with the alternatives that customer already has.In everyday termsLike where a store puts you on its shelves. Placed next to the right alternatives, the right shoppers instantly see why you're the better pick.Go deeper: Positioning
Product-market fit: The point at which a specific group of customers genuinely wants what you offer, shown by repeat use, referrals, and demand you don’t have to force.In everyday termsLike a restaurant where regulars come back without coupons and bring friends. You stop pushing people in; they start pulling you along.Go deeper: Product-market fit

Runway: How many months the business can keep operating before cash runs out at its current burn rate.In everyday termsLike the fuel left in a plane: at the current burn, it tells you how long you can stay in the air before you have to land.

Smoke test: An experiment that measures real interest, such as sign-ups, deposits, or pre-orders, before the product fully exists.In everyday termsLike putting up a 'Coming soon: taking reservations' sign and counting bookings before you buy any kitchen equipment.Go deeper: Validate a business idea

Total addressable market (TAM): The total revenue available if you won every possible customer for what you sell. Useful for sizing ambition, less useful for planning your first year.In everyday termsLike the total number of people who could ever eat at restaurants in your city. It's real, but it isn't how many will eat at yours next month.

Unit economics: The revenue and costs attached to a single unit you sell, or a single customer. They tell you whether growing makes you healthier or just bigger.In everyday termsLike checking whether each lemonade cup makes or loses money before you hire friends to sell more of them.Go deeper: Unit economics

Validation: Collecting evidence that a specific customer has a problem and will pay you to solve it, before you invest heavily.In everyday termsLike a test drive before buying a car: you collect real evidence before you commit real money.Go deeper: Validate a business idea
Value proposition: The specific outcome a customer gets from your offering and why it matters to them, stated in their terms rather than yours.In everyday termsLike the one-sentence reason a friend gives for recommending a mechanic: "They tell you what's actually wrong and don't upsell."Go deeper: Business Model Canvas
Vibe coding: Building software by describing what you want to an AI tool in plain language, then reviewing, testing, and refining what it writes.In everyday termsLike directing a fast builder who follows instructions literally: the clearer your plan and the closer your inspection, the better the house.Go deeper: The Vibe Code Bible, a free guide to building software with AIWritten by Khalel Dumaz, CEO of Vora IQ, which publishes The Founder Almanac.

Working capital: Short-term assets minus short-term obligations. It is the cushion that pays for day-to-day operations while you wait for customers to pay.In everyday termsLike the cash a market stall keeps in its float: enough to buy stock and make change while waiting for the day's sales to come in.Go deeper: Cash flow vs. profit