Jargon Soup Glossary
Plain-English translations for business phrases that often make normal people wonder whether they have missed a meeting.
This glossary is organised by theme, because jargon usually arrives in clusters. A finance phrase often brings three more with it. A marketing proposal can hide five assumptions in one paragraph. Use the sections below to decode the conversation, then ask better questions before committing time, money or control.
Nothing here is legal, tax or financial advice. It is a practical translation layer for founders and operators who want to understand what a phrase usually means in real business life.
Evidence and Sources
Evidence Basis
Definition: the kind of material used to support a PathwaysHQ page, such as research papers, primary sources, practitioner writing and PathwaysHQ interpretation.
In plain English: what the page is leaning on when it makes its argument.
Watch out for: treating every source as if it proves the same thing. Research may support a general pattern, practitioner sources may explain how people use the idea in real business life and PathwaysHQ interpretation is our judgement about how the idea applies to founders and operators.
PathwaysHQ Interpretation
Definition: the view or practical reading PathwaysHQ adds after looking at evidence, examples and business context.
In plain English: our judgement, not a claim that a source has proved every sentence.
Watch out for: confusing interpretation with fact. Good interpretation should be useful and honest about its limits.
Practitioner Source
Definition: material written from professional or business practice, such as founder letters, adviser articles, industry reports, playbooks or field guides.
In plain English: a source from people doing or advising the work, rather than mainly academic research.
Watch out for: useful does not always mean neutral. Practitioner sources can be insightful, but they may carry commercial bias, fashion or a narrow context.
Research Source
Definition: material based on academic research, formal studies or primary research evidence.
In plain English: a source trying to study the issue systematically.
Watch out for: assuming research always transfers perfectly into your business. A study can support a pattern without telling you exactly what to do next Tuesday.
Finance and Cash
Balance Sheet
Definition: a snapshot of what the business owns, what it owes and what is left for the owners at a specific point in time.
In plain English: the business’s financial position on one date.
Watch out for: treating it like a trading report. It does not show whether this month went well; it shows the shape of the business after everything recorded so far.
Break-even
Definition: the point where income covers costs, before the business starts making profit.
In plain English: the moment the business stops losing money on normal activity.
Watch out for: calculating break-even using optimistic sales, missing costs or a founder salary of zero.
Burn Rate
Definition: how quickly a business is spending cash.
In plain English: how fast the money is leaving.
Watch out for: measuring growth while ignoring whether cash runs out first.
Cash Flow
Definition: the movement of money in and out of the business.
In plain English: whether money arrives in time to pay what needs paying.
Watch out for: confusing profit on paper with cash in the bank.
Cost of Goods Sold
Definition: the direct cost of producing or buying what was sold. Often shortened to COGS.
In plain English: the obvious cost attached to the thing the customer bought.
Watch out for: leaving out packaging, payment fees, wasted stock, delivery costs or contractor time that clearly belongs to the sale.
Contribution Margin
Definition: the money left from a sale after the direct costs of making that sale.
In plain English: what each order actually contributes after obvious costs.
Watch out for: forgetting postage, payment fees, packaging, refunds or support time.
Debtor Days
Definition: the average number of days it takes customers to pay invoices.
In plain English: how long your money sits in someone else’s bank account.
Watch out for: celebrating sales that quietly turn into a cash problem because payment terms are loose or chasing is weak.
Gross Margin
Definition: the percentage of sales left after direct costs are removed.
In plain English: how much room each sale has before overheads arrive.
Watch out for: treating gross margin as actual profit.
Gross Profit
Definition: sales minus the direct costs of producing or delivering what was sold.
In plain English: what is left after the obvious cost of the product or service, before overheads such as rent, software, wages, marketing and admin.
Watch out for: forgetting that a business can have healthy gross profit and still lose money once the rest of the business is paid for.
Net Profit
Definition: the profit left after costs, overheads, interest, tax and other deductions are accounted for.
In plain English: what is left after the business has taken the full financial hit, not just the easy-to-see costs.
Watch out for: assuming net profit is the same as cash. A business can show profit while cash is tied up in stock, unpaid invoices or bills coming due.
Operating Profit
Definition: profit from normal business activity before some financing and tax effects.
In plain English: how the core business is performing before things like interest and tax complicate the picture.
Watch out for: comparing operating profit between businesses without checking what each business includes, excludes or calls “normal”.
Overheads
Definition: the ongoing costs of running the business that are not directly tied to one sale.
In plain English: the bills that keep arriving whether today is busy or quiet.
Watch out for: adding software, subscriptions, office costs or management layers slowly enough that no single choice looks expensive.
Profit and Loss
Definition: a report showing income, costs and profit over a period of time. Often shortened to P&L.
In plain English: the story of whether the business made or lost money during a month, quarter or year.
Watch out for: reading it without checking cash flow. The P&L may say sales happened before the money has actually arrived.
Runway
Definition: how long the business can keep going before cash runs out.
In plain English: how many months you have before money becomes the loudest problem.
Watch out for: calculating runway from hopeful sales instead of committed costs.
Unit Economics
Definition: the financial reality of one sale, customer or order.
In plain English: whether the basic transaction works.
Watch out for: hoping volume will fix a sale that loses money every time.
Working Capital
Definition: the money tied up in day-to-day trading, including stock, unpaid invoices and bills waiting to be paid.
In plain English: the cash the business needs just to keep operating between paying out and getting paid.
Watch out for: growing sales while working capital gets tighter. More orders can mean more stock, more staff time and more unpaid invoices before the cash arrives.
Marketing and Sales
Agency
Definition: an outside business hired to do specialist work, such as marketing, design, recruitment or operations.
In plain English: people you pay to help, but still have to manage.
Watch out for: assuming an agency will understand your margins, customer promise or capacity without you explaining them.
Average Order Value
Definition: the average amount a customer spends in one order. Often shortened to AOV.
In plain English: roughly how big each basket or booking is.
Watch out for: increasing average order value with discounts or bundles that quietly damage margin.
Brand Awareness
Definition: how familiar people are with a business, product or name.
In plain English: whether the right people have heard of you.
Watch out for: spending heavily so people recognise the name, but still have no reason to buy.
Conversion Rate
Definition: the percentage of people who take a desired action, such as buying, enquiring or booking.
In plain English: how many people move from interest to action.
Watch out for: improving the percentage while attracting fewer useful people overall.
Customer Acquisition Cost
Definition: what it costs to win a customer. Often shortened to CAC.
In plain English: the money spent to get someone to buy.
Watch out for: counting ad spend but ignoring discounts, agency fees, returns or your own time.
Customer Lifetime Value
Definition: the total value a customer is expected to bring over their relationship with the business. Often shortened to LTV.
In plain English: what a customer might be worth if they come back, renew or keep buying.
Watch out for: using lifetime value as a fantasy number before you have enough real repeat-purchase or retention data.
Funnel
Definition: the path people move through from first hearing about the business to becoming a customer.
In plain English: the steps between “never heard of you” and “paid you”.
Watch out for: drawing a tidy funnel that ignores trust, timing, word of mouth, refunds or the founder doing heroic follow-up.
Lead
Definition: a person or business that may become a customer.
In plain English: someone who might buy, but has not yet done so.
Watch out for: treating every email address, form fill or social media comment as equal quality.
Positioning
Definition: how the business wants to be understood by the people it serves.
In plain English: the answer to “why this, for whom, instead of what else?”
Watch out for: confusing positioning with a slogan. It should shape pricing, product choices, sales conversations and who you say no to.
Retention
Definition: how well a business keeps customers over time.
In plain English: whether people come back or stay.
Watch out for: hiding weak retention behind constant new-customer spending.
Return on Ad Spend
Definition: the revenue generated for each pound spent on advertising. Often shortened to ROAS.
In plain English: how much sales income the ads appear to produce.
Watch out for: calling a campaign successful before checking margin, returns, payment fees, fulfilment pressure and customers who would have bought anyway.
Traction
Definition: evidence that customers, users or the market are responding.
In plain English: proof that something is starting to work.
Watch out for: mistaking attention, likes, meetings or compliments for paying demand.
Operations and Delivery
Bottleneck
Definition: the part of the business that slows everything else down.
In plain English: the narrowest doorway in the system.
Watch out for: fixing the visible queue while the real constraint sits in approvals, supplier lead times, founder decisions or rework.
Capacity
Definition: how much work, demand or volume the business can handle without breaking quality, people or cash.
In plain English: what the business can realistically take on.
Watch out for: selling more than the team, suppliers, systems or founder energy can deliver.
Fulfilment
Definition: the process of getting the promised product or service to the customer.
In plain English: making the order actually happen.
Watch out for: treating fulfilment as admin when it is often where customer trust is won or lost.
Inventory
Definition: stock or materials the business holds before selling or using them.
In plain English: money sitting on shelves, in boxes or in a warehouse.
Watch out for: buying too much because unit prices look better, then discovering cash, storage and waste are the real problem.
Key Performance Indicator
Definition: a number used to track performance. Often shortened to KPI.
In plain English: a measure you watch because it should tell you something useful.
Watch out for: tracking numbers because they look professional rather than because they improve decisions.
Minimum Viable Product
Definition: a simple version used to test whether customers care. Often shortened to MVP.
In plain English: the smallest credible thing you can learn from.
Watch out for: using “minimum” as an excuse for poor quality or “viable” as an excuse for overbuilding.
Optionality
Definition: having useful choices available later.
In plain English: not trapping yourself too early.
Watch out for: paying too much today for imaginary flexibility you may never use.
Process
Definition: a repeatable way of doing work.
In plain English: the agreed steps so the business does not rely on memory and luck.
Watch out for: documenting a process nobody follows, owns or improves.
Quality Control
Definition: checks that help make sure the product or service meets the expected standard.
In plain English: catching problems before customers do.
Watch out for: only adding checks after a complaint, when prevention would have been cheaper and kinder.
Scale
Definition: growing the business so it can handle more customers, sales or operations.
In plain English: getting bigger without breaking everything.
Watch out for: increasing demand before the business can deliver consistently.
Service Level Agreement
Definition: an agreement about expected service standards, such as response times, uptime or delivery windows. Often shortened to SLA.
In plain English: what good service is supposed to look like in measurable terms.
Watch out for: promising standards the team cannot reliably meet, or accepting standards from a supplier that do not match your customer promise.
Stock Turn
Definition: how quickly stock is sold and replaced.
In plain English: how fast stock turns back into cash.
Watch out for: slow stock tying up money, taking space and becoming harder to sell.
Legal, Admin and Compliance
Companies House
Definition: the UK registrar where limited companies are incorporated and file certain public records.
In plain English: the public admin home for UK companies.
Watch out for: assuming filing is just a formality. Late, inaccurate or neglected records can create avoidable trouble.
Data Protection
Definition: rules and responsibilities around collecting, storing and using personal information.
In plain English: looking after people’s details properly.
Watch out for: collecting more data than you need, keeping it too long or letting marketing habits outrun consent and common sense.
Director Duties
Definition: legal responsibilities that come with being a company director.
In plain English: the role brings obligations, not just a title.
Watch out for: taking the title casually. If decisions carry legal consequences, get proper professional advice rather than relying on a glossary.
Due Diligence
Definition: the checks a buyer, investor or lender makes before committing.
In plain English: someone looking under the bonnet before they hand over money.
Watch out for: messy records, unclear contracts, customer-data issues and work that only the founder understands.
Intellectual Property
Definition: creations or assets such as brand names, designs, written work, software, inventions or trade marks.
In plain English: things the business has made or owns that may have value.
Watch out for: assuming the company owns work made by freelancers, agencies or employees without checking the contracts.
Insurance
Definition: cover bought to protect against certain losses, claims or risks.
In plain English: paying now so one bad event is less likely to sink you.
Watch out for: buying the cheapest policy without checking exclusions, limits, customer requirements or whether your actual activity is covered.
Limited Company
Definition: a separate legal structure for a business.
In plain English: the business becomes its own legal thing, with admin and duties attached.
Watch out for: choosing it just because it sounds serious.
Registered Office
Definition: the official address for a limited company.
In plain English: where formal company notices can be sent and where the public record points.
Watch out for: using an address without thinking about privacy, reliability or who will handle important post.
Terms and Conditions
Definition: the rules that set out how the business sells, delivers, gets paid and handles problems.
In plain English: the agreement behind the sale.
Watch out for: copying terms from another business, then discovering they do not match how you actually work.
VAT Threshold
Definition: the turnover point at which a business may need to register for VAT.
In plain English: the point where growth may create extra tax admin and pricing consequences.
Watch out for: noticing only after the business has already crossed it. For tax decisions, check current rules or speak to a qualified adviser.
Funding, Investment and Valuation
Cap Table
Definition: a record of who owns what percentage of the company.
In plain English: the map of ownership.
Watch out for: letting early promises, informal splits or old option discussions become a mess when investors or buyers start asking questions.
Convertible Loan Note
Definition: a loan that may convert into shares later, usually when a future funding round happens.
In plain English: money now, with the ownership question partly delayed.
Watch out for: focusing on the cash and missing the conversion terms, discount, valuation cap, interest and control consequences.
Debt Finance
Definition: money borrowed by the business that needs to be repaid.
In plain English: funding with a repayment clock attached.
Watch out for: using debt to cover a business model problem rather than a timing or investment need.
Dilution
Definition: the reduction in an owner’s percentage share when new shares are issued.
In plain English: your slice of the company gets smaller, even if the whole cake might become bigger.
Watch out for: only thinking about the headline percentage today, not what several funding rounds or option pools could do later.
EBITDA
Definition: short for earnings before interest, tax, depreciation and amortisation. It is often typed or misheard as “EDITDA”, but the standard acronym is EBITDA.
In plain English: a rough measure of operating earnings before some financing, tax and accounting adjustments are taken off.
Watch out for: treating EBITDA as cash. It ignores things that can still hurt a small business, including debt payments, tax, equipment replacement, working capital, stock, late-paying customers and the founder’s real salary.
Earn-out
Definition: part of a sale price paid later if the business hits agreed targets after completion.
In plain English: the buyer says “we may pay more if the business performs after the deal”.
Watch out for: targets you cannot control once someone else owns the business.
Equity
Definition: ownership in a business.
In plain English: a slice of the company.
Watch out for: giving away control, future value or decision rights too cheaply.
Option Pool
Definition: shares or share options set aside for future employees, advisers or leadership hires.
In plain English: ownership reserved to help recruit or reward people later.
Watch out for: not knowing whether the pool dilutes founders before or after an investment round.
Post-money Valuation
Definition: the value of a company immediately after new investment is added.
In plain English: company value including the new money.
Watch out for: comparing it with pre-money valuation and thinking they mean the same thing.
Pre-money Valuation
Definition: the value of a company before new investment is added.
In plain English: company value before the investor’s money goes in.
Watch out for: celebrating a valuation without checking how much ownership, control and future dilution comes with it.
Term Sheet
Definition: a document setting out the main terms of a proposed investment, loan or deal.
In plain English: the deal shape before the full paperwork arrives.
Watch out for: treating it as harmless because it is short. Some parts may be binding and the commercial direction can be hard to unwind.
Valuation Multiple
Definition: a number applied to a financial measure, often profit or EBITDA, to estimate what a business might be worth.
In plain English: a shortcut people use to turn business performance into a possible price.
Watch out for: thinking the multiple is automatic. Buyers adjust it for risk, dependency on the founder, growth quality, customer concentration, records, contracts, margins and how transferable the business really is.
People and Management
Contractor
Definition: an external person or business brought in to do defined work without becoming an employee.
In plain English: help you buy for a job, project or specialist gap.
Watch out for: treating contractors like employees while assuming none of the responsibilities or risks apply.
Delegation
Definition: handing responsibility for work or decisions to someone else.
In plain English: letting someone capable own the task, not just hold it briefly before it comes back to you.
Watch out for: delegating the activity but keeping every decision, approval and bit of context in the founder’s head.
Employee
Definition: someone hired to work for the business under an employment relationship.
In plain English: a person joining the team with rights, responsibilities, management needs and payroll implications.
Watch out for: thinking the cost is only salary. Hiring also brings onboarding, equipment, management time, taxes, pension duties and emotional responsibility.
Founder Dependency
Definition: how much the business relies on the founder to make decisions, do work or hold knowledge.
In plain English: whether the business works when you are not in the room.
Watch out for: mistaking being needed for being scalable.
Founder Salary
Definition: the pay the founder takes for their work in the business.
In plain English: the business paying the person it depends on.
Watch out for: calling the business profitable while the founder is unpaid, underpaid or covering costs personally.
Management Rhythm
Definition: the regular meetings, reviews and decisions that keep a team aligned.
In plain English: the drumbeat that stops everything becoming urgent and improvised.
Watch out for: adding meetings without decisions, ownership or follow-through.
Organisational Chart
Definition: a diagram showing roles, reporting lines and responsibilities. Often shortened to org chart.
In plain English: who owns what and who answers to whom.
Watch out for: drawing the structure you want rather than the one the business can afford or actually uses.
Performance Management
Definition: the process of setting expectations, giving feedback and addressing work that is not meeting the required standard.
In plain English: making the job clear, then dealing with gaps fairly and promptly.
Watch out for: avoiding difficult conversations until the only options left feel harsh.
Probation Period
Definition: an initial period used to check whether a new hire and role are working out.
In plain English: an early test of fit, performance and support needs.
Watch out for: treating probation as a passive waiting period rather than actively training, checking and documenting how things are going.
Role Clarity
Definition: shared understanding of what a person is responsible for, what decisions they can make and how success is judged.
In plain English: everyone knows what the job really is.
Watch out for: hiring good people into vague roles, then blaming them for not reading the founder’s mind.
Span of Control
Definition: the number of people one manager is responsible for.
In plain English: how many direct reports someone can realistically support.
Watch out for: promoting someone into management without reducing their old workload or teaching them how to manage.
