Business Jargon Definitions - Part 1

So here are some of the juicy words I’ve noticed myself using recently, with what they mean in plain English for real people who happen to run businesses.

Opportunity Cost

This is the cost of choosing to do one thing over another. If you spend 5k on making a new website to promote your business that’s 5k you don’t have to spend on other opportunities. Maybe you’ve decided to do the website rather than a direct mail campaign (usually the right decision) but doing one thing can often mean you can’t do something else.

Opportunity costs don’t have to be financial - maybe you’ve committed to spending 30 minutes per day on Twitter to build relationships with potential clients. The opportunity cost is all the other things on which you might have spent that 30 minutes per day.

Often in business, we make decisions based on weighing up the pros and cons of different things to do, and the opportunity cost, or what you’re missing out on, can be a big part of that decision.

Scalability

I use this one all the time. I look at businesses in terms of whether they are scalable, and in what way.

Scalability means the ability to make the business into something much bigger. If you are a one person business which needs you to make the thing that you sell, such as many consultancy or craft based businesses, scalability can be quite difficult. On the other hand, if you can teach other people quite easily how to do the thing you sell, you can grow your business much more easily just by bringing in more people. You’re scalable.

As I work with businesses to help them to grow and make more money, one of my first jobs is to work out how a company can be made to be more scalable, as this is one of the key success factors you need to be a winner. Here are some other articles where I talk about scalability issues for small businesses: Key success factors
From freelancer to grown up business
Scaling up your business

Marketing Collateral

Fancy name for all the things you use to get your marketing name across, such as business cards, website, leaflets. We think of collateral mainly as security for a loan but it also means "in support of" in this version.

Your Favourites

What are your favourite business jargon terms?

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