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small businesses get loans. They don’t issue loans themselves but instead work with lenders to overcome obstacles to business lending, such as guaranteeing loans, reducing risk, and sourcing capital. On a deeper level, the SBA funds, licenses, and regulates investment funds that lend to small businesses.
You need to negotiate fees, repayments, collateral, interest, and so on with the lender. The SBA limits what the lender can charge, but rest assured the lender will seek the best outcome for themselves. Don’t be afraid to negotiate the terms, especially if you’re in a position of strength, such as having a good credit rating.
Annual Recurring Revenue (ARR)
Churn
Customer Acquisition Cost (CAC) The CAC measures how much you spend on acquiring new customers.
Demo-to-Close Ratio/Rate This is the number of people who buy your product or service, expressed as a percentage of those to whom you demonstrate your product
Earnout An earnout is an agreement where you take a lower acquisition price for your business in return for future payments, should the business meet certain financial goals.
Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) This demonstrates the health of your business. It’s one of the key metrics buyers use when determining whether or not to buy your business and at what price.
Ideal Customer Profile (ICP)
Lien A lien is an agreement where you stake property in return for financing or a loan.
Lifetime Value of Customer (LTV)
Lead-to-MQL/SQL Ratio/Rate This is the number of customers in your ideal customer bracket (called market-qualified leads, or MQL for short) against the customers who’ve entered contact information into an online form.
Letter of Intent (LOI) An LOI is an official expression of interest that a buyer provides a seller.
Monthly Recurring Revenue (MRR) This is your total revenue (income) from all subscribed customers per month.
MQL/SQL-to-Demo Ratio Market-qualified leads (MQLs) are those that fit your ideal customer profile. The MQL-to-demo ratio is an expression (usually a percentage) of how many of those leads then agree to a product demonstration with a salesperson.
Nondisclosure Agreement (NDA) An NDA is an agreement between you and a third party stating you will not disclose the information shared between you to any other parties.
The purchase agreement is the final legal agreement that stipulates the transfer of ownership, price to be paid, conditions, and so on of an acquisition.
Seller Discretionary Earnings (SDE) This is your profit after deducting operating expenses and cost of goods from revenue and then adding in your compensation.
Stock Swap If you’re selling a business to a large, profitable company with a history of doing great things post-acquisition, you might want a slice of that future money pie.
Visitor-to-Lead Ratio This is a measure of how many of the people visiting your website go on to become leads.
