What is a Limited Liability Company (LLC)? A limited liability company (LLC) is a business structure for private companies in the United States, one that combines aspects of partnerships and corporations. Limited liability companies benefit from the flexibility and flow-through taxation of partnerships and sole proprietorships, while maintaining the limited liability status of corporations. If…
What is a Sole Proprietorship? A sole proprietorship is an unincorporated business that one person owns and manages. As the business and the owner are not legally separate, it is the simplest form of business structure. It is also known as individual entrepreneurship, sole trader, or simply proprietorship. The business owner, also known as a…
What is High Low Pricing? High low pricing is a pricing strategy in which a firm relies on sale promotions to encourage consumer purchases. In other words, it is a pricing strategy where a firm initially charges a high price for a product and then subsequently decreases the price through promotions, markdowns, or clearance sales….
What is Full Ratchet? Full ratchet is a provision that protects an option holder, or convertible holder, from any dilution of their investment in subsequent rounds of funding. The provision guarantees that if an equity investment sold in a subsequent funding round decreases the original investor’s equity ownership percentage, then they will be compensated by…
What is Bait and Switch? Bait and switch is a fraudulent activity whereby a company advertises goods at an incredibly low price with the aim of substituting for them with inferior or pricier alternatives at the time of purchase. Just like the worm at the end of a fishing rod, companies use lower pricing to…
What is Strategic Planning? Strategic planning is the art of creating specific business strategies, implementing them, and evaluating the results of executing the plan, in regard to a company’s overall long-term goals or desires. It is a concept that focuses on integrating various departments (such as accounting and finance, marketing, and human resources) within a…
What is a Special Purpose Vehicle (SPV)? A Special Purpose Vehicle (SPV) is a separate legal entity created by an organization. The SPV is a distinct company with its own assets and liabilities, as well as its own legal status. Usually, they are created for a specific objective, often to isolate financial risk. As it…
What is Ramp-Up? In business, ramp-up is a term that describes a significant increase in the output of a company’s products or services. Essentially, ramp-up implies bringing the company’s capacity utilization close to maximum. It can be achieved through substantial capital expenditures or improvements in product development, and triggered by a company entering new markets…
What is a Non-Profit Business Plan? A non-profit business plan is simply a roadmap for a non-profit organization, one which outlines the organization’s goals and objectives, and how it plans to attain them. A non-profit is a business entity that is started for any specified purpose other than making a profit. The most common reason…
