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A visual dictionary of business essentials. New concepts posted weekly
Showing 38 concepts
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Anchoring
The first number you hear quietly sets the price for everything that follows. Your brain calls it a starting point. Your wallet calls it expensive.
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Brand Equity
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Break Even Point
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Cash Flow vs. Profit
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Competitive Advantage
A competitive advantage is the specific reason customers choose you over the alternatives, sustained long enough that competitors cannot easily copy it. Without one, every dollar of profit attracts someone else trying to take it.
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Confirmation Bias
Your brain is a defense attorney for what you already believe. It collects every piece of evidence that supports your case and discreetly forgets the rest.
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Customer Acquisition Cost (CAC)
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Customer Lifetime Value (CLC)
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Differentiation
Differentiation is being meaningfully different from your competitors in ways customers actually care about. Almost every business claims to be differentiated. Almost none of them can pass the only test that matters.
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Disruption
Disruption is one of the most overused and least understood words in business. Most things called disruptive are not. The real version is rarer, slower, and more dangerous than the popular version makes it sound.
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EBITDA
EBITDA is earnings before interest, taxes, depreciation, and amortization. It is one of the most widely used numbers in finance. It is also one of the most misused. Knowing what it includes — and what it conveniently leaves out — is the difference between reading a business honestly and being sold a story.
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Elasticity
Elasticity is the measure of how much customers change their behaviour when prices change. Some products are tightly tied to the price tag. Others barely notice. Knowing which one you sell is the difference between thoughtful pricing and gambling.
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Endowment Effect
The moment you own something, you start to value it more than the person who wants to buy it from you. The thing has not changed. You have.
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Equity Financing
Equity financing is raising money by selling pieces of your company. The money does not have to be paid back. What you give up instead is ownership, control, and a share of every future dollar the business ever earns. The trade-off is the entire story.
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Expenses
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First Mover Advantage
Being first sometimes wins you the market. Sometimes it just means you spent the most money teaching customers what they actually want, and someone else built it later. The difference matters.
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Loss Aversion
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Market Research
Market research is the discipline of finding out what is actually true before you spend money on what you think is true. Most companies do the opposite. They build first and learn second, and the learning is expensive.
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Market Segmentation
Everyone is not your customer. The market is a crowd of very different people, and the first job of marketing is to figure out which slice of that crowd is actually yours.
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Marketing Mix: The 4Ps
The marketing mix is four decisions in sequence — product, then price, then place, then promotion. Each one builds on the one before it. Each one has to serve the same two masters: what the customer should perceive about the brand, and what makes the business a profit.
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Minimally Viable Product (MVP)
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Moats
A moat is the structural barrier that protects a business from competition. Warren Buffett popularized the term. The idea is medieval. The lesson is that profit without a moat is temporary, and temporary profit is just a head start.
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Net Present Value
A dollar today is worth more than a dollar a year from now. Net Present Value is the math that lets you compare them honestly. It's also the math that determines whether almost any business decision is worth making.
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Network Effect
A network effect is when each new user makes the product more valuable for every existing user. It is the rarest and most powerful moat in modern business. It is also the most over-claimed.
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Opportunity Cost
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Positioning
Positioning is not what you say about your product. It is the small, specific place your product occupies in your customer's mind. Get it right and selling becomes easier. Get it wrong and you spend forever shouting.
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Pricing Strategy
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Profit
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Return on Investment (ROI)
ROI is the simplest formula in business and the most often misused. It asks one question: for every dollar I put in, how many came back? The math is easy. Picking what to count is where most people get it wrong.
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Revenue
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Risk and Return
The fundamental trade-off in finance: investors require higher potential returns to compensate for taking on higher levels of risk. Simple to state, mathematically precise, and almost universally ignored when people get excited.
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SWOT Analysis
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Scalability
A scalable business can serve a hundred customers, then a thousand, then a million, without proportionally scaling its costs. It is not the same as growth. It is not always desirable. Knowing the difference is the difference between building a business and building a job.
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Status Quo Bias
Doing nothing feels like the safe choice. It almost never is. The default is making a decision for you, whether you noticed it or not.
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Sunk Costs
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Supply and Demand
Supply and demand is the most famous diagram in economics, and the one most often misunderstood. It is not a rule about how things should work. It is a description of how prices actually emerge when buyers and sellers meet.
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Targeting
You have segmented the market. Now you have to choose. Targeting is the decision about which group you are actually going to fight for, and which groups you are willing to let go.
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Working Capital
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