Business Plans - Resources | Appendix C - Glossary of Small Business Terms

Appendix C -
Glossary of
Small Business
Terms

Glossary of Small Business Terms

Absolute liability: Liability that is incurred due to product defects or negligent actions. Manufacturers or retail establishments are held responsible, even though the defect or action may not have been intentional or negligent.
ACE: See Active Corps of Executives
Accident and health benefits: Benefits offered to employees and their families in order to offset the costs associated with accidental death, accidental injury, or sickness.
Account statement: A record of transactions, including payments, new debt, and deposits, incurred during a defined period of time.
Accounting system: System capturing the costs of all employees and/or machinery included in business expenses.
Accounts payable: See Trade credit
Accounts receivable: Unpaid accounts which arise from unsettled claims and transactions from the sale of a company's products or services to its customers.
Active Corps of Executives (ACE): (See also Service Corps of Retired Executives)
A group of volunteers for a management assistance program of the U.S. Small Business Administration; volunteers provide one-on-one counseling and teach workshops and seminars for small firms.
ADA: See Americans with Disabilities Act
Adaptation: The process whereby an invention is modified to meet the needs of users.
Adaptive engineering: The process whereby an invention is modified to meet the manufacturing and commercial requirements of a targeted market.
Adverse selection: The tendency for higher-risk individuals to purchase health care and more comprehensive plans, resulting in increased costs.
Advertising: A marketing tool used to capture public attention and influence purchasing decisions for a product or service. Utilizes various forms of media to generate consumer response, such as flyers, magazines, newspapers, radio, and television.
Age discrimination: The denial of the rights and privileges of employment based solely on the age of an individual.
Agency costs: Costs incurred to insure that the lender or investor maintains control over assets while allowing the borrower or entrepreneur to use them. Monitoring and information costs are the two major types of agency costs.
Agribusiness: The production and sale of commodities and products from the commercial farming industry.
America Online: (See also Prodigy)
An online service which is accessible by computer modem. The service features Internet access, bulletin boards, online periodicals, electronic mail, and other services for subscribers.
Americans with Disabilities Act (ADA): Law designed to ensure equal access and opportunity to handicapped persons.

Annual report: (See also Securities and Exchange Commission)
Yearly financial report prepared by a business that adheres to the requirements set forth by the Securities and Exchange Commission (SEC).
Antitrust immunity: (See also Collective ratemaking)
Exemption from prosecution under antitrust laws. In the transportation industry, firms with antitrust immunity are permitted—under certain conditions—to set schedules and sometimes prices for the public benefit.
Applied research: Scientific study targeted for use in a product or process.
Asians: A minority category used by the U.S. Bureau of the Census to represent a diverse group that includes Aleuts, Eskimos, American Indians, Asian Indians, Chinese, Japanese, Koreans, Vietnamese, Filipinos, Hawaiians, and other Pacific Islanders.
Assets: Anything of value owned by a company.
Audit: The verification of accounting records and business procedures conducted by an outside accounting service.
Average cost: Total production costs divided by the quantity produced.
Balance Sheet: A financial statement listing the total assets and liabilities of a company at a given time.
Bankruptcy: (See also Chapter 7 of the 1978 Bankruptcy Act; Chapter 11 of the 1978 Bankruptcy Act)
The condition in which a business cannot meet its debt obligations and petitions a federal district court either for reorganization of its debts (Chapter 11) or for liquidation of its assets (Chapter 7).
Basic research: Theoretical scientific exploration not targeted to application.
Basket clause: A provision specifying the amount of public pension funds that may be placed in investments not included on a state's legal list (see separate citation).
BBS: See Bulletin Board Service
BDC: See Business development corporation
Benefit: Various services, such as health care, flextime, day care, insurance, and vacation, offered to employees as part of a hiring package. Typically subsidized in whole or in part by the business.
BIDCO: See Business and industrial development company
Billing cycle: A system designed to evenly distribute customer billing throughout the month, preventing clerical backlogs.
Birth: See Business birth
Blue chip security: A low-risk, low-yield security representing an interest in a very stable company.
Blue sky laws: A general term that denotes various states' laws regulating securities.
Bond: (See also General obligation bond; Taxable bonds; Treasury bonds)
A written instrument executed by a bidder or contractor (the principal) and a second party (the surety or sureties) to assure fulfillment of the principal's obligations to a third party (the obligee or government) identified in the bond. If the principal's obligations are not met, the bond assures payment to the extent stipulated of any loss sustained by the obligee.
Bonding requirements: Terms contained in a bond (see separate citation).
Bonus: An amount of money paid to an employee as a reward for achieving certain business goals or objectives.

Brainstorming: A group session where employees contribute their ideas for solving a problem or meeting a company objective without fear of retribution or ridicule.
Brand name: The part of a brand, trademark, or service mark that can be spoken. It can be a word, letter, or group of words or letters.
Bridge financing: A short-term loan made in expectation of intermediate-term or long-term financing. Can be used when a company plans to go public in the near future.
Broker: One who matches resources available for innovation with those who need them.
Budget: An estimate of the spending necessary to complete a project or offer a service in comparison to cash-on-hand and expected earnings for the coming year, with an emphasis on cost control.
Bulletin Board Service (BBS): An online service enabling users to communicate with each other about specific topics.
Business and industrial development company (BIDCO): A private, for-profit financing corporation chartered by the state to provide both equity and long-term debt capital to small business owners (see separate citations for equity and debt capital).
Business birth: The formation of a new establishment or enterprise. The appearance of a new establishment or enterprise in the Small Business Data Base (see separate citation).
Business conditions: Outside factors that can affect the financial performance of a business.
Business contractions: The number of establishments that have decreased in employment during a specified time.
Business cycle: A period of economic recession and recovery. These cycles vary in duration.
Business death: The voluntary or involuntary closure of a firm or establishment. The disappearance of an establishment or enterprise from the Small Business Data Base (see separate citation).
Business development corporation (BDC): A business financing agency, usually composed of the financial institutions in an area or state, organized to assist in financing businesses unable to obtain assistance through normal channels; the risk is spread among various members of the business development corporation, and interest rates may vary somewhat from those charged by member institutions. A venture capital firm in which shares of ownership are publicly held and to which the Investment Act of 1940 applies.
Business dissolution: For enumeration purposes, the absence of a business that was present in the prior time period from any current record.
Business entry: See Business birth
Business ethics: Moral values and principles espoused by members of the business community as a guide to fair and honest business practices.
Business exit: See Business death
Business expansions: The number of establishments that added employees during a specified time.
Business failure: Closure of a business causing a loss to at least one creditor.
Business format franchising: (See also Franchising)
The purchase of the name, trademark, and an ongoing business plan of the parent corporation or franchisor by the franchisee.
Business license: A legal authorization issued by municipal and state governments and required for business operations.

Business name: (See also Business license; Trademark)
Enterprises must register their business names with local governments usually on a "doing business as" (DBA) form. (This name is sometimes referred to as a "fictional name.") The procedure is part of the business licensing process and prevents any other business from using that same name for a similar business in the same locality.
Business norms: See Financial ratios
Business permit: See Business license
Business plan: A document that spells out a company's expected course of action for a specified period, usually including a detailed listing and analysis of risks and uncertainties. For the small business, it should examine the proposed products, the market, the industry, the management policies, the marketing policies, production needs, and financial needs. Frequently, it is used as a prospectus for potential investors and lenders.
Business proposal: See Business plan
Business service firm: An establishment primarily engaged in rendering services to other business organizations on a fee or contract basis.
Business start: For enumeration purposes, a business with a name or similar designation that did not exist in a prior time period.
Cafeteria plan: See Flexible benefit plan
Capacity: Level of a firm's, industry's, or nation's output corresponding to full practical utilization of available resources.
Capital: Assets less liabilities, representing the ownership interest in a business. A stock of accumulated goods, especially at a specified time and in contrast to income received during a specified time period. Accumulated goods devoted to production. Accumulated possessions calculated to bring income.
Capital expenditure: Expenses incurred by a business for improvements that will depreciate over time.
Capital gain: The monetary difference between the purchase price and the selling price of capital. Capital gains are taxed at a rate of 28% by the federal government.
Capital intensity: (See also Debt capital; Equity midrisk venture capital; Informal capital; Internal capital; Owner's capital; Secondhand capital; Seed capital; Venture capital)
The relative importance of capital in the production process, usually expressed as the ratio of capital to labor but also sometimes as the ratio of capital to output.
Capital resource: The equipment, facilities and labor used to create products and services.
Caribbean Basin Initiative: An interdisciplinary program to support commerce among the businesses in the nations of the Caribbean Basin and the United States. Agencies involved include: the Agency for International Development, the U.S. Small Business Administration, the International Trade Administration of the U.S. Department of Commerce, and various private sector groups.
Catastrophic care: Medical and other services for acute and long-term illnesses that cost more than insurance coverage limits or that cost the amount most families may be expected to pay with their own resources.
CDC: See Certified development corporation
CD-ROM: Compact disc with read-only memory used to store large amounts of digitized data.
Certified development corporation (CDC): A local area or statewide corporation or authority (for profit or nonprofit) that packages U.S. Small Business Administration (SBA), bank, state, and/or private money into financial assistance for existing business capital improvements. The SBA holds the second lien on its maximum share of 40 percent involvement. Each state has at least one certified development corporation. This program is called the SBA 504 Program.

Certified lenders: Banks that participate in the SBA guaranteed loan program (see separate citation). Such banks must have a good track record with the U.S. Small Business Administration (SBA) and must agree to certain conditions set forth by the agency. In return, the SBA agrees to process any guaranteed loan application within three business days.
Champion: An advocate for the development of an innovation.
Channel of distribution: The means used to transport merchandise from the manufacturer to the consumer.
Chapter 7 of the 1978 Bankruptcy Act: Provides for a court-appointed trustee who is responsible for liquidating a company's assets in order to settle outstanding debts.
Chapter 11 of the 1978 Bankruptcy Act: Allows the business owners to retain control of the company while working with their creditors to reorganize their finances and establish better business practices to prevent liquidation of assets.
Closely held corporation: A corporation in which the shares are held by a few persons, usually officers, employees, or others close to the management; these shares are rarely offered to the public.
Code of Federal Regulations: Codification of general and permanent rules of the federal government published in the Federal Register.
Code sharing: See Computer code sharing
Coinsurance: (See also Cost sharing)
Upon meeting the deductible payment, health insurance participants may be required to make additional health care cost-sharing payments. Coinsurance is a payment of a fixed percentage of the cost of each service; copayment is usually a fixed amount to be paid with each service.
Collateral: Securities, evidence of deposit, or other property pledged by a borrower to secure repayment of a loan.
Collective ratemaking: (See also Antitrust immunity)
The establishment of uniform charges for services by a group of businesses in the same industry.
Commercial insurance plan: See Underwriting
Commercial loans: Short-term renewable loans used to finance specific capital needs of a business.
Commercialization: The final stage of the innovation process, including production and distribution.
Common stock: The most frequently used instrument for purchasing ownership in private or public companies. Common stock generally carries the right to vote on certain corporate actions and may pay dividends, although it rarely does in venture investments. In liquidation, common stockholders are the last to share in the proceeds from the sale of a corporation's assets; bondholders and preferred shareholders have priority. Common stock is often used in first-round start-up financing.
Community development corporation: A corporation established to develop economic programs for a community and, in most cases, to provide financial support for such development.
Competitor: A business whose product or service is marketed for the same purpose/use and to the same consumer group as the product or service of another.
Computer code sharing: An arrangement whereby flights of a regional airline are identified by the two-letter code of a major carrier in the computer reservation system to help direct passengers to new regional carriers.
Consignment: A merchandising agreement, usually referring to secondhand shops, where the dealer pays the owner of an item a percentage of the profit when the item is sold.

Consortium: A coalition of organizations such as banks and corporations for ventures requiring large capital resources.
Consultant: An individual that is paid by a business to provide advice and expertise in a particular area.
Consumer price index: A measure of the fluctuation in prices between two points in time.
Consumer research: Research conducted by a business to obtain information about existing or potential consumer markets.
Continuation coverage: Health coverage offered for a specified period of time to employees who leave their jobs and to their widows, divorced spouses, or dependents.
Contractions: See Business contractions
Convertible preferred stock: A class of stock that pays a reasonable dividend and is convertible into common stock (see separate citation). Generally the convertible feature may only be exercised after being held for a stated period of time. This arrangement is usually considered second-round financing when a company needs equity to maintain its cash flow.
Convertible securities: A feature of certain bonds, debentures, or preferred stocks that allows them to be exchanged by the owner for another class of securities at a future date and in accordance with any other terms of the issue.
Copayment: See Coinsurance
Copyright: A legal form of protection available to creators and authors to safeguard their works from unlawful use or claim of ownership by others. Copyrights may be acquired for works of art, sculpture, music, and published or unpublished manuscripts. All copyrights should be registered at the Copyright Office of the Library of Congress.
Corporate financial ratios: (See also Industry financial ratios)
The relationship between key figures found in a company's financial statement expressed as a numeric value. Used to evaluate risk and company performance. Also known as Financial averages, Operating ratios, and Business ratios.
Corporation: A legal entity, chartered by a state or the federal government, recognized as a separate entity having its own rights, privileges, and liabilities distinct from those of its members.
Cost containment: Actions taken by employers and insurers to curtail rising health care costs; for example, increasing employee cost sharing (see separate citation), requiring second opinions, or preadmission screening.
Cost sharing: The requirement that health care consumers contribute to their own medical care costs through deductibles and coinsurance (see separate citations). Cost sharing does not include the amounts paid in premiums. It is used to control utilization of services; for example, requiring a fixed amount to be paid with each health care service.
Cottage industry: (See also Home-based business)
Businesses based in the home in which the family members are the labor force and family-owned equipment is used to process the goods.
Credit Rating: A letter or number calculated by an organization (such as Dun & Bradstreet) to represent the ability and disposition of a business to meet its financial obligations.
Customer service: Various techniques used to ensure the satisfaction of a customer.
Cyclical peak: The upper turning point in a business cycle.
Cyclical trough: The lower turning point in a business cycle.
DBA: See Business name
Death: See Business death

Debenture: A certificate given as acknowledgment of a debt (see separate citation) secured by the general credit of the issuing corporation. A bond, usually without security, issued by a corporation and sometimes convertible to common stock.
Debt: (See also Long-term debt; Mid-term debt; Securitized debt; Short-term debt)
Something owed by one person to another. Financing in which a company receives capital that must be repaid; no ownership is transferred.
Debt capital: Business financing that normally requires periodic interest payments and repayment of the principal within a specified time.
Debt financing: See Debt capital
Debt securities: Loans such as bonds and notes that provide a specified rate of return for a specified period of time.
Deductible: A set amount that an individual must pay before any benefits are received.
Demand shock absorbers: A term used to describe the role that some small firms play by expanding their output levels to accommodate a transient surge in demand.
Demographics: Statistics on various markets, including age, income, and education, used to target specific products or services to appropriate consumer groups.
Demonstration: Showing that a product or process has been modified sufficiently to meet the needs of users.
Deregulation: The lifting of government restrictions; for example, the lifting of government restrictions on the entry of new businesses, the expansion of services, and the setting of prices in particular industries.
Desktop Publishing: Using personal computers and specialized software to produce camera-ready copy for publications.
Disaster loans: Various types of physical and economic assistance available to individuals and businesses through the U.S. Small Business Administration (SBA). This is the only SBA loan program available for residential purposes.
Discrimination: The denial of the rights and privileges of employment based on factors such as age, race, religion, or gender.
Diseconomies of scale: The condition in which the costs of production increase faster than the volume of production.
Dissolution: See Business dissolution
Distribution: Delivering a product or process to the user.
Distributor: One who delivers merchandise to the user.
Diversified company: A company whose products and services are used by several different markets.
Doing business as (DBA): See Business name
Dow Jones: An information services company that publishes the Wall Street Journal and other sources of financial information.
Dow Jones Industrial Average: An indicator of stock market performance.
Earned income: A tax term that refers to wages and salaries earned by the recipient, as opposed to monies earned through interest and dividends.
Economic efficiency: The use of productive resources to the fullest practical extent in the provision of the set of goods and services that is most preferred by purchasers in the economy.
Economic indicators: Statistics used to express the state of the economy. These include the length of the average work week, the rate of unemployment, and stock prices.

Economically disadvantaged: See Socially and economically disadvantaged
Economies of scale: See Scale economies
EEOC: See Equal Employment Opportunity Commission
8(a) Program: A program authorized by the Small Business Act that directs federal contracts to small businesses owned and operated by socially and economically disadvantaged individuals.
Electronic mail (e-mail): The electronic transmission of mail via phone lines.
E-mail: See Electronic mail
Employee leasing: A contract by which employers arrange to have their workers hired by a leasing company and then leased back to them for a management fee. The leasing company typically assumes the administrative burden of payroll and provides a benefit package to the workers.
Employee tenure: The length of time an employee works for a particular employer.
Employer identification number: The business equivalent of a social security number. Assigned by the U.S. Internal Revenue Service.
Enterprise: An aggregation of all establishments owned by a parent company. An enterprise may consist of a single, independent establishment or include subsidiaries and other branches under the same ownership and control.
Enterprise zone: A designated area, usually found in inner cities and other areas with significant unemployment, where businesses receive tax credits and other incentives to entice them to establish operations there.
Entrepreneur: A person who takes the risk of organizing and operating a new business venture.
Entry: See Business entry
Equal Employment Opportunity Commission (EEOC): A federal agency that ensures nondiscrimination in the hiring and firing practices of a business.
Equal opportunity employer: An employer who adheres to the standards set by the Equal Employment Opportunity Commission (see separate citation).
Equity: (See also Common Stock; Equity midrisk venture capital)
The ownership interest. Financing in which partial or total ownership of a company is surrendered in exchange for capital. An investor's financial return comes from dividend payments and from growth in the net worth of the business.
Equity capital: See Equity; Equity midrisk venture capital
Equity financing: See Equity; Equity midrisk venture capital
Equity midrisk venture capital: An unsecured investment in a company. Usually a purchase of ownership interest in a company that occurs in the later stages of a company's development.
Equity partnership: A limited partnership arrangement for providing start-up and seed capital to businesses.
Equity securities: See Equity
Equity-type: Debt financing subordinated to conventional debt.
Establishment: A single-location business unit that may be independent (a single-establishment enterprise) or owned by a parent enterprise.
Establishment and Enterprise Microdata File: See U.S. Establishment and Enterprise Microdata File
Establishment birth: See Business birth

Establishment Longitudinal Microdata File: See U.S. Establishment Longitudinal Microdata File
Ethics: See Business ethics
Evaluation: Determining the potential success of translating an invention into a product or process.
Exit: See Business exit
Experience rating: See Underwriting
Export: A product sold outside of the country.
Export license: A general or specific license granted by the U.S. Department of Commerce required of anyone wishing to export goods. Some restricted articles need approval from the U.S. Departments of State, Defense, or Energy.
Failure: See Business failure
Fair share agreement: (See also Franchising)
An agreement reached between a franchisor and a minority business organization to extend business ownership to minorities by either reducing the amount of capital required or by setting aside certain marketing areas for minority business owners.
Feasibility study: A study to determine the likelihood that a proposed product or development will fulfill the objectives of a particular investor.
Federal Trade Commission (FTC): Federal agency that promotes free enterprise and competition within the U.S.
Federal Trade Mark Act of 1946: See Lanham Act
Fictional name: See Business name
Fiduciary: An individual or group that hold assets in trust for a beneficiary.
Financial analysis: The techniques used to determine money needs in a business. Techniques include ratio analysis, calculation of return on investment, guides for measuring profitability, and break-even analysis to determine ultimate success.
Financial intermediary: A financial institution that acts as the intermediary between borrowers and lenders. Banks, savings and loan associations, finance companies, and venture capital companies are major financial intermediaries in the United States.
Financial ratios: See Corporate financial ratios; Industry financial ratios
Financial statement: A written record of business finances, including balance sheets and profit and loss statements.
Financing: See First-stage financing; Second-stage financing; Third-stage financing
First-stage financing: (See also Second-stage financing; Third-stage financing)
Financing provided to companies that have expended their initial capital, and require funds to start full-scale manufacturing and sales. Also known as First-round financing.
Fiscal year: Any twelve-month period used by businesses for accounting purposes.
504 Program: See Certified development corporation
Flexible benefit plan: A plan that offers a choice among cash and/or qualified benefits such as group term life insurance, accident and health insurance, group legal services, dependent care assistance, and vacations.
FOB: See Free on board

Format franchising: See Business format franchising; Franchising
401(k) plan: A financial plan where employees contribute a percentage of their earnings to a fund that is invested in stocks, bonds, or money markets for the purpose of saving money for retirement.
Four Ps: Marketing terms referring to Product, Price, Place, and Promotion.
Franchising: A form of licensing by which the owner—the franchisor—distributes or markets a product, method, or service through affiliated dealers called franchisees. The product, method, or service being marketed is identified by a brand name, and the franchisor maintains control over the marketing methods employed. The franchisee is often given exclusive access to a defined geographic area.
Free on board (FOB): A pricing term indicating that the quoted price includes the cost of loading goods into transport vessels at a specified place.
Frictional unemployment: See Unemployment
FTC: See Federal Trade Commission
Fulfillment: The systems necessary for accurate delivery of an ordered item, including subscriptions and direct marketing.
Full-time workers: Generally, those who work a regular schedule of more than 35 hours per week.
Garment registration number: A number that must appear on every garment sold in the U.S. to indicate the manufacturer of the garment, which may or may not be the same as the label under which the garment is sold. The U.S. Federal Trade Commission assigns and regulates garment registration numbers.
Gatekeeper: A key contact point for entry into a network.
GDP: See Gross domestic product
General obligation bond: A municipal bond secured by the taxing power of the municipality. The Tax Reform Act of 1986 limits the purposes for which such bonds may be issued and establishes volume limits on the extent of their issuance.
GNP: See Gross national product
Good Housekeeping Seal: Seal appearing on products that signifies the fulfillment of the standards set by the Good Housekeeping Institute to protect consumer interests.
Goods sector: All businesses producing tangible goods, including agriculture, mining, construction, and manufacturing businesses.
GPO: See Gross product originating
Gross domestic product (GDP): The part of the nation's gross national product (see separate citation) generated by private business using resources from within the country.
Gross national product (GNP): The most comprehensive single measure of aggregate economic output. Represents the market value of the total output of goods and services produced by a nation's economy.
Gross product originating (GPO): A measure of business output estimated from the income or production side using employee compensation, profit income, net interest, capital consumption, and indirect business taxes.
HAL: See Handicapped assistance loan program
Handicapped assistance loan program (HAL): Low-interest direct loan program through the U.S. Small Business Administration (SBA) for handicapped persons. The SBA requires that these persons demonstrate that their disability is such that it is impossible for them to secure employment, thus making it necessary to go into their own business to make a living.

Health maintenance organization (HMO): Organization of physicians and other health care professionals that provides health services to subscribers and their dependents on a prepaid basis.
Health provider: An individual or institution that gives medical care. Under Medicare, an institutional provider is a hospital, skilled nursing facility, home health agency, or provider of certain physical therapy services.
Hispanic: A person of Cuban, Mexican, Puerto Rican, Latin American (Central or South American), European Spanish, or other Spanish-speaking origin or ancestry.
HMO: See Health maintenance organization
Home-based business: (See also Cottage industry)
A business with an operating address that is also a residential address (usually the residential address of the proprietor).
Hub-and-spoke system: A system in which flights of an airline from many different cities (the spokes) converge at a single airport (the hub). After allowing passengers sufficient time to make connections, planes then depart for different cities.
Human Resources Management: A business program designed to oversee recruiting, pay, benefits, and other issues related to the company's work force, including planning to determine the optimal use of labor to increase production, thereby increasing profit.
Idea: An original concept for a new product or process.
Import: Products produced outside the country in which they are consumed.
Income: Money or its equivalent, earned or accrued, resulting from the sale of goods and services.
Income statement: A financial statement that lists the profits and losses of a company at a given time.
Incorporation: The filing of a certificate of incorporation with a state's secretary of state, thereby limiting the business owner's liability.
Incubator: A facility designed to encourage entrepreneurship and minimize obstacles to new business formation and growth, particularly for high-technology firms, by housing a number of fledgling enterprises that share an array of services, such as meeting areas, secretarial services, accounting, research library, on-site financial and management counseling, and word processing facilities.
Independent contractor: An individual considered self-employed (see separate citation) and responsible for paying Social Security taxes and income taxes on earnings.
Indirect health coverage: Health insurance obtained through another individual's health care plan; for example, a spouse's employer-sponsored plan.
Industrial development authority: The financial arm of a state or other political subdivision established for the purpose of financing economic development in an area, usually through loans to nonprofit organizations, which in turn provide facilities for manufacturing and other industrial operations.
Industry financial ratios: (See also Corporate financial ratios)
Corporate financial ratios averaged for a specified industry. These are used for comparison purposes and reveal industry trends and identify differences between the performance of a specific company and the performance of its industry. Also known as Industrial averages, Industry ratios, Financial averages, and Business or Industrial norms.
Inflation: Increases in volume of currency and credit, generally resulting in a sharp and continuing rise in price levels.
Informal capital: Financing from informal, unorganized sources; includes informal debt capital such as trade credit or loans from friends and relatives and equity capital from informal investors.

Initial public offering (IPO): A corporation's first offering of stock to the public.
Innovation: The introduction of a new idea into the marketplace in the form of a new product or service or an improvement in organization or process.
Intellectual property: Any idea or work that can be considered proprietary in nature and is thus protected from infringement by others.
Internal capital: Debt or equity financing obtained from the owner or through retained business earnings.
Internet: A government-designed computer network that contains large amounts of information and is accessible through various vendors for a fee.
Intrapreneurship: The state of employing entrepreneurial principles to nonentrepreneurial situations.
Invention: The tangible form of a technological idea, which could include a laboratory prototype, drawings, formulas, etc.
IPO: See Initial public offering
Job description: The duties and responsibilities required in a particular position.
Job tenure: A period of time during which an individual is continuously employed in the same job.
Joint marketing agreements: Agreements between regional and major airlines, often involving the coordination of flight schedules, fares, and baggage transfer. These agreements help regional carriers operate at lower cost.
Joint venture: Venture in which two or more people combine efforts in a particular business enterprise, usually a single transaction or a limited activity, and agree to share the profits and losses jointly or in proportion to their contributions.
Keogh plan: Designed for self-employed persons and unincorporated businesses as a tax-deferred pension account.
Labor force: Civilians considered eligible for employment who are also willing and able to work.
Labor force participation rate: The civilian labor force as a percentage of the civilian population.
Labor intensity: (See also Capital intensity)
The relative importance of labor in the production process, usually measured as the capital-labor ratio; i.e., the ratio of units of capital (typically, dollars of tangible assets) to the number of employees. The higher the capital-labor ratio exhibited by a firm or industry, the lower the capital intensity of that firm or industry is said to be.
Labor surplus area: An area in which there exists a high unemployment rate. In procurement (see separate citation), extra points are given to firms in counties that are designated a labor surplus area; this information is requested on procurement bid sheets.
Labor union: An organization of similarly-skilled workers who collectively bargain with management over the conditions of employment.
Laboratory prototype: See Prototype
LAN: See Local Area Network
Lanham Act: Refers to the Federal Trade Mark Act of 1946. Protects registered trademarks, trade names, and other service marks used in commerce.
Large business-dominated industry: Industry in which a minimum of 60 percent of employment or sales is in firms with more than 500 workers.
LBO: See Leveraged buy-out

Leader pricing: A reduction in the price of a good or service in order to generate more sales of that good or service.
Legal list: A list of securities selected by a state in which certain institutions and fiduciaries (such as pension funds, insurance companies, and banks) may invest. Securities not on the list are not eligible for investment. Legal lists typically restrict investments to high quality securities meeting certain specifications. Generally, investment is limited to U.S. securities and investment-grade blue chip securities (see separate citation).
Leveraged buy-out (LBO): The purchase of a business or a division of a corporation through a highly leveraged financing package.
Liability: An obligation or duty to perform a service or an act. Also defined as money owed.
License: (See also Business license)
A legal agreement granting to another the right to use a technological innovation.
Limited partnerships: See Venture capital limited partnerships
Liquidity: The ability to convert a security into cash promptly.
Loans: See Commercial loans; Disaster loans; SBA direct loans; SBA guaranteed loans; SBA special lending institution categories
Local Area Network (LAN): Computer networks contained within a single building or small area; used to facilitate the sharing of information.
Local development corporation: An organization, usually made up of local citizens of a community, designed to improve the economy of the area by inducing business and industry to locate and expand there. A local development corporation establishes a capability to finance local growth.
Long-haul rates: Rates charged by a transporter in which the distance traveled is more than 800 miles.
Long-term debt: An obligation that matures in a period that exceeds five years.
Low-grade bond: A corporate bond that is rated below investment grade by the major rating agencies (Standard and Poor's, Moody's).
Macro-efficiency: (See also Economic efficiency)
Efficiency as it pertains to the operation of markets and market systems.
Managed care: A cost-effective health care program initiated by employers whereby low-cost health care is made available to the employees in return for exclusive patronage to program doctors.
Management Assistance Programs: See SBA Management Assistance Programs
Management and technical assistance: A term used by many programs to mean business (as opposed to technological) assistance.
Mandated benefits: Specific treatments, providers, or individuals required by law to be included in commercial health plans.
Market evaluation: The use of market information to determine the sales potential of a specific product or process.
Market failure: The situation in which the workings of a competitive market do not produce the best results from the point of view of the entire society.
Market information: Data of any type that can be used for market evaluation, which could include demographic data, technology forecasting, regulatory changes, etc.
Market research: A systematic collection, analysis, and reporting of data about the market and its preferences, opinions, trends, and plans; used for corporate decision-making.
Market share: In a particular market, the percentage of sales of a specific product.

Marketing: Promotion of goods or services through various media.
Master Establishment List (MEL): A list of firms in the United States developed by the U.S. Small Business Administration; firms can be selected by industry, region, state, standard metropolitan statistical area (see separate citation), county, and zip code.
Maturity: (See also Term)
The date upon which the principal or stated value of a bond or other indebtedness becomes due and payable.
Medicaid (Title XIX): A federally aided, state-operated and administered program that provides medical benefits for certain low-income persons in need of health and medical care who are eligible for one of the government's welfare cash payment programs, including the aged, the blind, the disabled, and members of families with dependent children where one parent is absent, incapacitated, or unemployed.
Medicare (Title XVIII): A nationwide health insurance program for disabled and aged persons. Health insurance is available to insured persons without regard to income. Monies from payroll taxes cover hospital insurance and monies from general revenues and beneficiary premiums pay for supplementary medical insurance.
MEL: See Master Establishment List
MESBIC: See Minority enterprise small business investment corporation
MET: See Multiple employer trust
Metropolitan statistical area (MSA): A means used by the government to define large population centers that may transverse different governmental jurisdictions. For example, the Washington, D.C. MSA includes the District of Columbia and contiguous parts of Maryland and Virginia because all of these geopolitical areas comprise one population and economic operating unit.
Mezzanine financing: See Third-stage financing
Micro-efficiency: (See also Economic efficiency)
Efficiency as it pertains to the operation of individual firms.
Microdata: Information on the characteristics of an individual business firm.
Mid-term debt: An obligation that matures within one to five years.
Midrisk venture capital: See Equity midrisk venture capital
Minimum premium plan: A combination approach to funding an insurance plan aimed primarily at premium tax savings. The employer self-funds a fixed percentage of estimated monthly claims and the insurance company insures the excess.
Minimum wage: The lowest hourly wage allowed by the federal government.
Minority Business Development Agency: Contracts with private firms throughout the nation to sponsor Minority Business Development Centers which provide minority firms with advice and technical assistance on a fee basis.
Minority Enterprise Small Business Investment Corporation (MESBIC): A federally funded private venture capital firm licensed by the U.S. Small Business Administration to provide capital to minority-owned businesses (see separate citation).
Minority-owned business: Businesses owned by those who are socially or economically disadvantaged (see separate citation).
Mom and Pop business: A small store or enterprise having limited capital, principally employing family members.
Moonlighter: A wage-and-salary worker with a side business.

MSA: See Metropolitan statistical area
Multi-employer plan: A health plan to which more than one employer is required to contribute and that may be maintained through a collective bargaining agreement and required to meet standards prescribed by the U.S. Department of Labor.
Multi-level marketing: A system of selling in which you sign up other people to assist you and they, in turn, recruit others to help them. Some entrepreneurs have built successful companies on this concept because the main focus of their activities is their product and product sales.
Multimedia: The use of several types of media to promote a product or service. Also, refers to the use of several different types of media (sight, sound, pictures, text) in a CD-ROM (see separate citation) product.
Multiple employer trust (MET): A self-funded benefit plan generally geared toward small employers sharing a common interest.
NAFTA: See North American Free Trade Agreement
NASDAQ: See National Association of Securities Dealers Automated Quotations
National Association of Securities Dealers Automated Quotations: Provides price quotes on over-the-counter securities as well as securities listed on the New York Stock Exchange.
National income: Aggregate earnings of labor and property arising from the production of goods and services in a nation's economy.
Net assets: See Net worth
Net income: The amount remaining from earnings and profits after all expenses and costs have been met or deducted. Also known as Net earnings.
Net profit: Money earned after production and overhead expenses (see separate citations) have been deducted.
Net worth: (See also Capital)
The difference between a company's total assets and its total liabilities.
Network: A chain of interconnected individuals or organizations sharing information and/or services.
New York Stock Exchange (NYSE): The oldest stock exchange in the U.S. Allows for trading in stocks, bonds, warrants, options, and rights that meet listing requirements.
Niche: A career or business for which a person is well-suited. Also, a product which fulfills one need of a particular market segment, often with little or no competition.
Nodes: One workstation in a network, either local area or wide area (see separate citations).
Nonbank bank: A bank that either accepts deposits or makes loans, but not both. Used to create many new branch banks.
Noncompetitive awards: A method of contracting whereby the federal government negotiates with only one contractor to supply a product or service.
Nonmember bank: A state-regulated bank that does not belong to the federal bank system.
Nonprofit: An organization that has no shareholders, does not distribute profits, and is without federal and state tax liabilities.
Norms: See Financial ratios
North American Free Trade Agreement (NAFTA): Passed in 1993, NAFTA eliminates trade barriers among businesses in the U.S., Canada, and Mexico.
NYSE: See New York Stock Exchange

Occupational Safety & Health Administration (OSHA): Federal agency that regulates health and safety standards within the workplace.
Optimal firm size: The business size at which the production cost per unit of output (average cost) is, in the long run, at its minimum.
Organizational chart: A hierarchical chart tracking the chain of command within an organization.
OSHA: See Occupational Safety & Health Administration
Overhead: Expenses, such as employee benefits and building utilities, incurred by a business that are unrelated to the actual product or service sold.
Owner's capital: Debt or equity funds provided by the owner(s) of a business; sources of owner's capital are personal savings, sales of assets, or loans from financial institutions.
P & L: See Profit and loss statement
Part-time workers: Normally, those who work less than 35 hours per week. The Tax Reform Act indicated that part-time workers who work less than 17.5 hours per week may be excluded from health plans for purposes of complying with federal nondiscrimination rules.
Part-year workers: Those who work less than 50 weeks per year.
Partnership: Two or more parties who enter into a legal relationship to conduct business for profit. Defined by the U.S. Internal Revenue Code as joint ventures, syndicates, groups, pools, and other associations of two or more persons organized for profit that are not specifically classified in the IRS code as corporations or proprietorships.
Patent: A grant made by the government assuring an inventor the sole right to make, use, and sell an invention for a period of 17 years.
PC: See Professional corporation
Peak: See Cyclical peak
Pension: A series of payments made monthly, semiannually, annually, or at other specified intervals during the lifetime of the pensioner for distribution upon retirement. The term is sometimes used to denote the portion of the retirement allowance financed by the employer's contributions.
Pension fund: A fund established to provide for the payment of pension benefits; the collective contributions made by all of the parties to the pension plan.
Performance appraisal: An established set of objective criteria, based on job description and requirements, that is used to evaluate the performance of an employee in a specific job.
Permit: See Business license
Plan: See Business plan
Pooling: An arrangement for employers to achieve efficiencies and lower health costs by joining together to purchase group health insurance or self-insurance.
PPO: See Preferred provider organization
Preferred lenders program: See SBA special lending institution categories
Preferred provider organization (PPO): A contractual arrangement with a health care services organization that agrees to discount its health care rates in return for faster payment and/or a patient base.
Premiums: The amount of money paid to an insurer for health insurance under a policy. The premium is generally paid periodically (e.g., monthly), and often is split between the employer and the employee. Unlike deductibles and coinsurance or copayments, premiums are paid for coverage whether or not benefits are actually used.
Prime-age workers: Employees 25 to 54 years of age.

Prime contract: A contract awarded directly by the U.S. Federal Government.
Private company: See Closely held corporation
Private placement: A method of raising capital by offering for sale an investment or business to a small group of investors (generally avoiding registration with the Securities and Exchange Commission or state securities registration agencies). Also known as Private financing or Private offering.
Pro forma: The use of hypothetical figures in financial statements to represent future expenditures, debts, and other potential financial expenses.
Proactive: Taking the initiative to solve problems and anticipate future events before they happen, instead of reacting to an already existing problem or waiting for a difficult situation to occur.
Procurement: (See also 8(a) Program; Small business set asides)
A contract from an agency of the federal government for goods or services from a small business.
Prodigy: (See also America Online)
An online service which is accessible by computer modem. The service features Internet access, bulletin boards, online periodicals, electronic mail, and other services for subscribers.
Product development: The stage of the innovation process where research is translated into a product or process through evaluation, adaptation, and demonstration.
Product franchising: An arrangement for a franchisee to use the name and to produce the product line of the franchisor or parent corporation.
Production: The manufacture of a product.
Production prototype: See Prototype
Productivity: A measurement of the number of goods produced during a specific amount of time.
Professional corporation (PC): Organized by members of a profession such as medicine, dentistry, or law for the purpose of conducting their professional activities as a corporation. Liability of a member or shareholder is limited in the same manner as in a business corporation.
Profit and loss statement (P & L): The summary of the incomes (total revenues) and costs of a company's operation during a specific period of time. Also known as Income and expense statement.
Proposal: See Business plan
Proprietorship: The most common legal form of business ownership; about 85 percent of all small businesses are proprietorships. The liability of the owner is unlimited in this form of ownership.
Prospective payment system: A cost-containment measure included in the Social Security Amendments of 1983 whereby Medicare payments to hospitals are based on established prices, rather than on cost reimbursement.
Prototype: A model that demonstrates the validity of the concept of an invention (laboratory prototype); a model that meets the needs of the manufacturing process and the user (production prototype).
Prudent investor rule or standard: A legal doctrine that requires fiduciaries to make investments using the prudence, diligence, and intelligence that would be used by a prudent person in making similar investments. Because fiduciaries make investments on behalf of third-party beneficiaries, the standard results in very conservative investments. Until recently, most state regulations required the fiduciary to apply this standard to each investment. Newer, more progressive regulations permit fiduciaries to apply this standard to the portfolio taken as a whole, thereby allowing a fiduciary to balance a portfolio with higher-yield, higher-risk investments. In states with more progressive regulations, practically every type of security is eligible for inclusion in the portfolio of investments made by a fiduciary, provided that the portfolio investments, in their totality, are those of a prudent person.

Public equity markets: Organized markets for trading in equity shares such as common stocks, preferred stocks, and warrants. Includes markets for both regularly traded and nonregularly traded securities.
Public offering: General solicitation for participation in an investment opportunity. Interstate public offerings are supervised by the U.S. Securities and Exchange Commission (see separate citation).
Quality control: The process by which a product is checked and tested to ensure consistent standards of high quality.
Rate of return: (See also Yield)
The yield obtained on a security or other investment based on its purchase price or its current market price. The total rate of return is current income plus or minus capital appreciation or depreciation.
Real property: Includes the land and all that is contained on it.
Realignment: See Resource realignment
Recession: Contraction of economic activity occurring between the peak and trough (see separate citations) of a business cycle.
Regulated market: A market in which the government controls the forces of supply and demand, such as who may enter and what price may be charged.
Regulation D: A vehicle by which small businesses make small offerings and private placements of securities with limited disclosure requirements. It was designed to ease the burdens imposed on small businesses utilizing this method of capital formation.
Regulatory Flexibility Act: An act requiring federal agencies to evaluate the impact of their regulations on small businesses before the regulations are issued and to consider less burdensome alternatives.
Research: The initial stage of the innovation process, which includes idea generation and invention.
Research and development financing: A tax-advantaged partnership set up to finance product development for start-ups as well as more mature companies.
Resource mobility: The ease with which labor and capital move from firm to firm or from industry to industry.
Resource realignment: The adjustment of productive resources to interindustry changes in demand.
Resources: The sources of support or help in the innovation process, including sources of financing, technical evaluation, market evaluation, management and business assistance, etc.
Retained business earnings: Business profits that are retained by the business rather than being distributed to the shareholders as dividends.
Revolving credit: An agreement with a lending institution for an amount of money, which cannot exceed a set maximum, over a specified period of time. Each time the borrower repays a portion of the loan, the amount of the repayment may be borrowed yet again.
Risk capital: See Venture capital
Risk management: The act of identifying potential sources of financial loss and taking action to minimize their negative impact.
Routing: The sequence of steps necessary to complete a product during production.
S corporations: See Sub chapter S corporations

SBA: See Small Business Administration
SBA direct loans: Loans made directly by the U.S. Small Business Administration (SBA); monies come from funds appropriated specifically for this purpose. In general, SBA direct loans carry interest rates slightly lower than those in the private financial markets and are available only to applicants unable to secure private financing or an SBA guaranteed loan.
SBA 504 Program: See Certified development corporation
SBA guaranteed loans: Loans made by lending institutions in which the U.S. Small Business Administration (SBA) will pay a prior agreed-upon percentage of the outstanding principal in the event the borrower of the loan defaults. The terms of the loan and the interest rate are negotiated between the borrower and the lending institution, within set parameters.
SBA loans: See Disaster loans; SBA direct loans; SBA guaranteed loans; SBA special lending institution categories
SBA Management Assistance Programs: (See also Active Corps of Executives; Service Corps of Retired Executives; Small business institutes program)
Classes, workshops, counseling, and publications offered by the U.S. Small Business Administration.
SBA special lending institution categories.: U.S. Small Business Administration (SBA) loan program in which the SBA promises certified banks a 72-hour turnaround period in giving its approval for a loan, and in which preferred lenders in a pilot program are allowed to write SBA loans without seeking prior SBA approval.
SBDB: See Small Business Data Base
SBDC: See Small business development centers
SBI: See Small business institutes program
SBIC: See Small business investment corporation
SBIR Program: See Small Business Innovation Development Act of 1982
Scale economies: The decline of the production cost per unit of output (average cost) as the volume of output increases.
Scale efficiency: The reduction in unit cost available to a firm when producing at a higher output volume.
SCORE: See Service Corps of Retired Executives
SEC: See Securities and Exchange Commission
SECA: See Self-Employment Contributions Act
Second-stage financing: (See also First-stage financing; Third-stage financing)
Working capital for the initial expansion of a company that is producing, shipping, and has growing accounts receivable and inventories. Also known as Second-round financing.
Secondary market: A market established for the purchase and sale of outstanding securities following their initial distribution.
Secondary worker: Any worker in a family other than the person who is the primary source of income for the family.
Secondhand capital: Previously used and subsequently resold capital equipment(e.g., buildings and machinery).
Securities and Exchange Commission (SEC): Federal agency charged with regulating the trade of securities to prevent unethical practices in the investor market.
Securitized debt: A marketing technique that converts long-term loans to marketable securities.
Seed capital: Venture financing provided in the early stages of the innovation process, usually during product development.

Self-employed person: One who works for a profit or fees in his or her own business, profession, or trade, or who operates a farm.
Self-Employment Contributions Act (SECA): Federal law that governs the self-employment tax (see separate citation).
Self-employment income: Income covered by Social Security if a business earns a net income of at least $400.00 during the year. Taxes are paid on earnings that exceed $400.00.
Self-employment retirement plan: See Keogh plan
Self-employment tax: Required tax imposed on self-employed individuals for the provision of Social Security and Medicare. The tax must be paid quarterly with estimated income tax statements.
Self-funding: A health benefit plan in which a firm uses its own funds to pay claims, rather than transferring the financial risks of paying claims to an outside insurer in exchange for premium payments.
Service Corps of Retired Executives (SCORE): (See also Active Corps of Executives)
Volunteers for the SBA Management Assistance Program who provide one-on-one counseling and teach workshops and seminars for small firms.
Service firm: See Business service firm
Service sector: Broadly defined, all U.S. industries that produce intangibles, including the five major industry divisions of transportation, communications, and utilities; wholesale trade; retail trade; finance, insurance, and real estate; and services.
Set asides: See Small business set asides
Short-haul service: A type of transportation service in which the transporter supplies service between cities where the maximum distance is no more than 200 miles.
Short-term debt: An obligation that matures in one year.
SIC codes: See Standard Industrial Classification codes
Single-establishment enterprise: See Establishment
Small business: An enterprise that is independently owned and operated, is not dominant in its field, and employs fewer than 500 people. For SBA purposes, the U.S. Small Business Administration (SBA) considers various other factors (such as gross annual sales) in determining size of a business.
Small Business Administration (SBA): An independent federal agency that provides assistance with loans, management, and advocating interests before other federal agencies.
Small Business Data Base: (See also U.S. Establishment and Enterprise Microdata File; U.S. Establishment Longitudinal Microdata File)
A collection of microdata (see separate citation) files on individual firms developed and maintained by the U.S. Small Business Administration.
Small business development centers (SBDC): Centers that provide support services to small businesses, such as individual counseling, SBA advice, seminars and conferences, and other learning center activities. Most services are free of charge, or available at minimal cost.
Small business development corporation: See Certified development corporation
Small business-dominated industry: Industry in which a minimum of 60 percent of employment or sales is in firms with fewer than 500 employees.
Small Business Innovation Development Act of 1982: Federal statute requiring federal agencies with large extramural research and development budgets to allocate a certain percentage of these funds to small research and development firms. The program, called the Small Business Innovation Research (SBIR) Program, is designed to stimulate technological innovation and make greater use of small businesses in meeting national innovation needs.

Small business institutes (SBI) program: Cooperative arrangements made by U.S. Small Business Administration district offices and local colleges and universities to provide small business firms with graduate students to counsel them without charge.
Small business investment corporation (SBIC): A privately owned company licensed and funded through the U.S. Small Business Administration and private sector sources to provide equity or debt capital to small businesses.
Small business set asides: Procurement (see separate citation) opportunities required by law to be on all contracts under $10,000 or a certain percentage of an agency's total procurement expenditure.
Smaller firms: For U.S. Department of Commerce purposes, those firms not included in the Fortune 1000.
SMSA: See Metropolitan statistical area
Socially and economically disadvantaged: Individuals who have been subjected to racial or ethnic prejudice or cultural bias without regard to their qualities as individuals, and whose abilities to compete are impaired because of diminished opportunities to obtain capital and credit.
Sole proprietorship: An unincorporated, one-owner business, farm, or professional practice.
Special lending institution categories: See SBA special lending institution categories
Standard Industrial Classification (SIC) codes: Four-digit codes established by the U.S. Federal Government to categorize businesses by type of economic activity; the first two digits correspond to major groups such as construction and manufacturing, while the last two digits correspond to subgroups such as home construction or highway construction.
Standard metropolitan statistical area (SMSA): See Metropolitan statistical area
Start-up: A new business, at the earliest stages of development and financing.
Start-up costs: Costs incurred before a business can commence operations.
Start-up financing: Financing provided to companies that have either completed product development and initial marketing or have been in business for less than one year but have not yet sold their product commercially.
Stock: (See also Common stock; Convertible preferred stock)
A certificate of equity ownership in a business.
Stop-loss coverage: Insurance for a self-insured plan that reimburses the company for any losses it might incur in its health claims beyond a specified amount.
Strategic planning: Projected growth and development of a business to establish a guiding direction for the future. Also used to determine which market segments to explore for optimal sales of products or services.
Structural unemployment: See Unemployment
Sub chapter S corporations: Corporations that are considered noncorporate for tax purposes but legally remain corporations.
Subcontract: A contract between a prime contractor and a subcontractor, or between subcontractors, to furnish supplies or services for performance of a prime contract (see separate citation) or a subcontract.
Surety bonds: Bonds providing reimbursement to an individual, company, or the government if a firm fails to complete a contract. The U.S. Small Business Administration guarantees surety bonds in a program much like the SBA guaranteed loan program (see separate citation).
Swing loan: See Bridge financing
Target market: The clients or customers sought for a business' product or service.

Targeted Jobs Tax Credit: Federal legislation enacted in 1978 that provides a tax credit to an employer who hires structurally unemployed individuals.
Tax number: (See also Employer identification number)
A number assigned to a business by a state revenue department that enables the business to buy goods without paying sales tax.
Taxable bonds: An interest-bearing certificate of public or private indebtedness. Bonds are issued by public agencies to finance economic development.
Technical assistance: See Management and technical assistance
Technical evaluation: Assessment of technological feasibility.
Technology: The method in which a firm combines and utilizes labor and capital resources to produce goods or services; the application of science for commercial or industrial purposes.
Technology transfer: The movement of information about a technology or intellectual property from one party to another for use.
Tenure: See Employee tenure
Term: (See also Maturity)
The length of time for which a loan is made.
Terms of a note: The conditions or limits of a note; includes the interest rate per annum, the due date, and transferability and convertibility features, if any.
Third-party administrator: An outside company responsible for handling claims and performing administrative tasks associated with health insurance plan maintenance.
Third-stage financing: (See also First-stage financing; Second-stage financing)
Financing provided for the major expansion of a company whose sales volume is increasing and that is breaking even or profitable. These funds are used for further plant expansion, marketing, working capital, or development of an improved product. Also known as Third-round or Mezzanine financing.
Time deposit: A bank deposit that cannot be withdrawn before a specified future time.
Time management: Skills and scheduling techniques used to maximize productivity.
Trade credit: Credit extended by suppliers of raw materials or finished products. In an accounting statement, trade credit is referred to as "accounts payable."
Trade name: The name under which a company conducts business, or by which its business, goods, or services are identified. It may or may not be registered as a trademark.
Trade periodical: A publication with a specific focus on one or more aspects of business and industry.
Trade secret: Competitive advantage gained by a business through the use of a unique manufacturing process or formula.
Trade show: An exhibition of goods or services used in a particular industry. Typically held in exhibition centers where exhibitors rent space to display their merchandise.
Trademark: A graphic symbol, device, or slogan that identifies a business. A business has property rights to its trademark from the inception of its use, but it is still prudent to register all trademarks with the Trademark Office of the U.S. Department of Commerce.
Translation: See Product development
Treasury bills: Investment tender issued by the Federal Reserve Bank in amounts of $10,000 that mature in 91 to 182 days.

Treasury bonds: Long-term notes with maturity dates of not less than seven and not more than twenty-five years.
Treasury notes: Short-term notes maturing in less than seven years.
Trend: A statistical measurement used to track changes that occur over time.
Trough: See Cyclical trough
UCC: See Uniform Commercial Code
UL: See Underwriters Laboratories
Underwriters Laboratories (UL): One of several private firms that tests products and processes to determine their safety. Although various firms can provide this kind of testing service, many local and insurance codes specify UL certification.
Underwriting: A process by which an insurer determines whether or not and on what basis it will accept an application for insurance. In an experience-rated plan, premiums are based on a firm's or group's past claims; factors other than prior claims are used for community-rated or manually rated plans.
Unfair competition: Refers to business practices, usually unethical, such as using unlicensed products, pirating merchandise, or misleading the public through false advertising, which give the offending business an unequitable advantage over others.
Unfunded accrued liability: The excess of total liabilities, both present and prospective, over present and prospective assets.
Unemployment: The joblessness of individuals who are willing to work, who are legally and physically able to work, and who are seeking work. Unemployment may represent the temporary joblessness of a worker between jobs (frictional unemployment) or the joblessness of a worker whose skills are not suitable for jobs available in the labor market (structural unemployment).
Uniform Commercial Code (UCC): A code of laws governing commercial transactions across the U.S., except Louisiana. Their purpose is to bring uniformity to financial transactions.
Uniform product code (UPC symbol): A computer-readable label comprised of ten digits and stripes that encodes what a product is and how much it costs. The first five digits are assigned by the Uniform Product Code Council, and the last five digits by the individual manufacturer.
Unit cost: See Average cost
UPC symbol: See Uniform product code
U.S. Establishment and Enterprise Microdata (USEEM) File: A cross-sectional database containing information on employment, sales, and location for individual enterprises and establishments with employees that have a Dun & Bradstreet credit rating.
U.S. Establishment Longitudinal Microdata (USELM) File: A database containing longitudinally linked sample microdata on establishments drawn from the U.S. Establishment and Enterprise Microdata file (see separate citation).
U.S. Small Business Administration 504 Program: See Certified development corporation
USEEM: See U.S. Establishment and Enterprise Microdata File
USELM: See U.S. Establishment Longitudinal Microdata File
VCN: See Venture capital network
Venture capital: (See also Equity; Equity midrisk venture capital)
Money used to support new or unusual business ventures that exhibit above-average growth rates, significant potential for market expansion, and are in need of additional financing to sustain growth or further research and development; equity or equity-type financing traditionally provided at the commercialization stage, increasingly available prior to commercialization.

Venture capital company: A company organized to provide seed capital to a business in its formation stage, or in its first or second stage of expansion. Funding is obtained through public or private pension funds, commercial banks and bank holding companies, small business investment corporations licensed by the U.S. Small Business Administration, private venture capital firms, insurance companies, investment management companies, bank trust departments, industrial companies seeking to diversify their investment, and investment bankers acting as intermediaries for other investors or directly investing on their own behalf.
Venture capital limited partnerships: Designed for business development, these partnerships are an institutional mechanism for providing capital for young, technology-oriented businesses. The investors' money is pooled and invested in money market assets until venture investments have been selected. The general partners are experienced investment managers who select and invest the equity and debt securities of firms with high growth potential and the ability to go public in the near future.
Venture capital network (VCN): A computer database that matches investors with entrepreneurs.
WAN: See Wide Area Network
Wide Area Network (WAN): Computer networks linking systems throughout a state or around the world in order to facilitate the sharing of information.
Withholding: Federal, state, social security, and unemployment taxes withheld by the employer from employees' wages; employers are liable for these taxes and the corporate umbrella and bankruptcy will not exonerate an employer from paying back payroll withholding. Employers should escrow these funds in a separate account and disperse them quarterly to withholding authorities.
Workers' compensation: A state-mandated form of insurance covering workers injured in job-related accidents. In some states, the state is the insurer; in other states, insurance must be acquired from commercial insurance firms. Insurance rates are based on a number of factors, including salaries, firm history, and risk of occupation.
Working capital: Refers to a firm's short-term investment of current assets, including cash, short-term securities, accounts receivable, and inventories.
Yield: (See also Rate of return)
The rate of income returned on an investment, expressed as a percentage. Income yield is obtained by dividing the current dollar income by the current market price of the security. Net yield or yield to maturity is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity.