A glossary of the key terms, acronyms, and ratios commonly considered business basics.

Finance and Metrics

  • Accrual Accounting: Records revenue when earned and expenses when incurred, regardless of cash movement. Gives a truer picture than cash accounting. (Basic accounting)
  • EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. A “cleaner” view of profitability before financial structuring. (Basic accounting)
  • CAC (Customer Acquisition Cost): Total cost to acquire a new paying customer (ads + sales + marketing overhead ÷ new customers) [100M Leads p.208].
  • Industry CAC Benchmarks: Varies heavily. Rule of thumb: aim for CAC ≤ 1/3 of LTGP [100M Leads p.208].
  • LTV (Lifetime Value): The total revenue expected from a customer over their relationship with you [100M Money Models p.226].
  • LTGP (Lifetime Gross Profit): LTV × Gross Margin %. More accurate than LTV since it accounts for cost of goods sold [100M Money Models p.228].
  • LTGP:CAC Ratio: Healthy is ~3:1 (spend $1 to acquire, get $3+ in gross profit). If <1:1, you’re losing money; if 10:1, you’re under-investing [100M Leads p.208].
  • Free Cash Flow (FCF): Cash left after operating expenses + capital expenditures. Critical because cash pays bills, not “profits” [100M Money Models p.233].
  • Gross Margin: (Revenue – Cost of Goods Sold) ÷ Revenue. High gross margin = scalable business.
  • Net Margin: Net profit ÷ Revenue. Bottom-line profitability after all costs.
  • Gross vs Net: Gross = before costs (top-line). Net = after costs (bottom-line).

Sales

  • ARPU (Average Revenue Per User): Revenue ÷ total customers. Useful in SaaS.
  • BAMFAM (Book A Meeting From A Meeting): Sales discipline: never leave a conversation without scheduling the next step [100M Closing Playbook §Closes].
  • Churn: % of customers who cancel in a given time period. Inverse of retention [100M Retention Playbook §Churn Math].

Business Models

  • B2C: Business to Consumer: Selling directly to end users. Usually higher volume, lower ticket.
  • B2B: Business to Business: Selling to other companies. Often longer sales cycles, higher ticket.
  • B2B2C: Business sells to another business that serves end consumers (e.g., Shopify → merchants → buyers).
  • Marketplace: Connects buyers and sellers, takes a cut (Airbnb, Uber).
  • Recurring/Subscription: Predictable monthly revenue. Gold standard for valuations.
  • Transactional/One-off: One-time purchases, low predictability.

Value Equation

  • Value Equation = (Dream Outcome × Perceived Likelihood of Achievement) ÷ (Time Delay × Effort & Sacrifice) [100M Offers p.47].
  • Grand Slam Offer: Offer so good people feel stupid saying no [100M Offers p.22].
  • Risk Reversal: Guarantees that shift risk from buyer to seller [Playbook – Guarantees §Hard Guarantees].
  • Scarcity/Urgency: Limiting supply or time to push action [100M Offers p.113].
  • Cost to Value: The perceived value must significantly exceed the price paid; customers buy when the benefit outweighs the cost.

Healthy Business Ratios

  • LTGP:CAC = 3:1: minimum healthy [100M Leads p.208].
  • Churn <5% monthly: strong retention [100M Retention Playbook §Churn Math].
  • Payback Period ≤ 12 months: CAC recovered within a year [100M Lifetime Value Playbook §Payback].
  • EBITDA Margin 15–30%: common range for service & SaaS businesses.