Toolbox
Glossary
Every hard word used in this manual, defined in plain language. Each entry links back to where it is taught in full and to related terms.
A
Access Controls
The rules deciding who can log into, change, or control the business's digital assets: bank access, social media, domains, email, shared files. Never register these to a personal account; keep a central, secured Access Register.
Accountability
Owning an outcome and following through on commitments, distinct from blame, which punishes the person instead of fixing the system. A healthy culture demands accountability while refusing blame.
Accounts Payable
Money the business owes to its own suppliers, the mirror image of accounts receivable. Tracked weekly alongside cash and receivables to give a complete picture of real cash health.
Accounts Receivable
Money owed to the business by customers who bought on credit (real, but not yet cash). Created by every credit sale and tracked on a running Receivables Log until paid.
Approval Authority
A written limit on how much a role can spend, refund, or purchase alone before requiring a higher level of sign-off: Responsibility vs Authority turned into an explicit number for every role that touches money.
Articles of Association
The company's public constitution, filed at registration: which share classes exist, and the basic rules for how decisions are made. The private, detailed rulebook layered on top of it is the Shareholders' Agreement.
Asset
Anything the business owns that has value: machines, computers, furniture, stock, cash in the bank, vehicles. When a business closes, its assets are sold to pay its debts.
Authority
What a person is actually allowed to decide, as opposed to what they are expected to get done (Responsibility). A role with high responsibility and low authority is blamed for outcomes it has no power to shape.
B
Backup
A redundant copy of business data, stored so that losing one device, file, or location can never destroy the only record. The 3-2-1 rule: 3 total copies, on 2 different media types, with 1 stored offsite.
Board Resolution
The formal, minuted record of one major company decision: issuing shares, approving a buy-back, taking a loan. The "decision receipt" that authorizes ownership events.
Brand
What customers expect from you (and say about you) when you are not in the room. Built from every promise kept or broken; the logo is only its reminder.
Brand Guidelines
The written rules that keep every piece of content looking and sounding like it came from the same business, regardless of who created it: logo usage, colour palette, voice and tone, and imagery style.
Break-Even
The point where cash recovered from sales exactly equals the capital originally spent; no profit has been made yet, but none of the original money has been lost either.
Budget
A plan for what a business intends to earn and spend over a period; a target, set once and held, as opposed to a forecast, which is continuously revised as reality unfolds. Comparing budget to actual results turns vague feelings about performance into specific, checkable facts.
Business
A system that takes in money, materials, and people, runs them through a process, and produces something customers will pay for, at a price higher than it cost to make.
Business Books
The complete set of official records documenting who owns a business, how its money moves, what it owns and owes, and what decisions have been made: a five-drawer cabinet (corporate, financial, operational, HR, asset and customer and supplier records), not one notebook.
Business Email
The business's official email address, registered to the business itself, not a single employee's personal details, and reachable by more than one person, per Volume 11's access rule.
Business Model
The written answer to how money ends up in the business's account: who we serve, what we offer, how we charge, and what it costs to deliver.
Business OS
The idea that a business is really an information system with departments as modules, not "a shop that sells things." Designing software (or organizing paper) becomes a matter of asking, per module: what information enters, who needs it, where it is stored, who can edit or see it, and when it leaves.
Business Registration
The formal legal process of making a business officially exist: choosing a structure, registering the name and company, obtaining a tax ID, and (where relevant) sector-specific licenses. Unlocks limited liability, business banking, and eligibility for formal investment.
Buy-Back Clause
A clause giving the company (or founder) the right, sometimes the duty, to repurchase an investor's shares at defined triggers (exit, death, breach, departure), at a defined price or formula, over a defined payment window. It makes equity reversible by design.
C
Campaign
A planned, time-bound marketing effort with a specific goal, a fixed budget ceiling, a defined channel and timeframe, and a checkable success metric, never open-ended spending in the hope something works.
Cap Table
Short for capitalization table: a single table listing every owner of a business, how many shares each owns, and what percentage that represents. It is the master record of who owns what, and changes every time shares are issued, sold, or bought back.
Capital
The money put into a business to buy the things it sells. Selling goods first returns capital to cash form; it does not create profit by itself. Only money left after capital is fully recovered and every expense is paid counts as real profit.
Capital Expenditure (CapEx)
Money spent buying something that will keep providing value for years (a machine, a vehicle, a building), recorded as an asset and spread across its useful life via depreciation, rather than expensed all at once.
Cash Controls
Segregation of duties applied specifically to physical and bank cash: the person who counts, banks, or reconciles cash is never the only person who verifies it was handled correctly.
Cash Flow
The actual movement of cash in and out of a business over time, distinct from profit, which can exist on paper (in unsold stock or unpaid invoices) without any cash having moved at all.
Collateral
A specific asset (machines, a vehicle, land) legally pledged to a lender: if the loan is not repaid, the lender can take and sell that asset. A loan backed by collateral is a secured loan.
Commission
Pay tied to sales performance, added into an employee's payroll. Best calculated on margin rather than raw revenue, so it does not quietly reward over-discounting.
Competitive Advantage
The specific reason a customer picks you instead of the alternative, again and again. Real ones pass three tests: customers care, it is hard to copy, and you can sustain it profitably.
Compounding
A small, consistent advantage that builds on top of itself over time, producing a gap that looks tiny at first and enormous after years: the reason delayed-gratification choices (documentation, reserves, training) usually beat short-term ones.
Consumer Protection
The body of law setting the legal minimum for how customers must be treated: honest advertising, product safety, a right to redress for faulty goods, and fair contract terms. A floor, not a ceiling; many businesses deliberately exceed it.
Convertible Loan
Money that arrives as a loan but can convert into shares at an agreed trigger (usually the next investment round), often at a discount. Used to postpone a valuation disagreement until a real round prices the company.
Copyright
Legal protection over an original creative work, arising automatically once it is fixed in a tangible form, often the most relevant protection for a pattern's specific creative expression.
Core Values
The rules of behavior a business refuses to break, even when breaking them would pay. A value only exists once keeping it has cost something.
Cost
Money spent directly tied to making a specific product or delivering a specific service; it rises and falls with production volume, unlike an expense, which runs the business generally.
Credit Sale
A sale where goods or services are delivered now and paid for later, creating accounts receivable. Functions as a small loan to the customer and deserves the same deliberate approval and written limits.
Creditor
A person or organization the business owes money to: suppliers, the landlord, the tax authority, staff with unpaid wages, and lenders. When a business closes, creditors are paid before shareholders.
CRM (Customer Relationship Management)
The discipline (paper or software) of recording every customer conversation in one shared place, so no interaction depends on one person's memory. A CRM is a habit first; software only makes the same record faster to search.
Customer
The specific kind of person or organization who pays the business for its product or service.
Customer Acquisition Cost (CAC)
What it actually costs to win one new customer: total marketing and sales spend divided by new customers gained in the period. Should always be read alongside average order value; a lower CAC means little if new customers are also worth less.
Customer History
Everything that accumulates about a customer after registration: every order, preference, and interaction, recorded so no repeat visit ever starts from zero.
Customer Segment
A group of customers who share the same need, budget, and buying behavior, and can therefore be served by one offer. "Everyone" is never a segment.
D
Dashboard
A small, curated set of KPIs assembled into one view (usually one or two per major area of the business) so its health can be checked at a glance instead of hunting through separate reports.
Data Protection
The legal obligation to collect, store, and use personal information (customer and employee data) responsibly, securely, and only for purposes people reasonably expect. Applies to businesses of any size that hold personal data.
Debt
Money the business owes and must pay: supplier balances, unpaid wages, taxes, loans, rent. Debts are paid from the business's assets before owners receive anything.
Default
Breaking the terms of a loan, most often by missing payments. Default lets the lender demand the full balance, seize and sell any collateral, and pursue recovery costs.
Defect
Any output that fails a business's own documented quality standard. Every defect gets classified (critical, major, or minor) and resolved as a rework, a rejection, or a documented concession.
Delegation
Handing off a task or decision to someone else, matched with real authority to make it, refused surprisingly often for psychological reasons (control, identity, an untested belief) rather than any tested business fact.
Depreciation
The accounting method that spreads the cost of a long-lasting asset across the years it is actually used, instead of counting the whole cost in the single month it was bought. Straight-line depreciation: (Cost minus Salvage Value) divided by Useful Life.
Dilution
What happens to an existing owner's percentage of a company when new shares are issued to someone else. The company gets divided into more slices, so each existing slice becomes a smaller share of the whole, even though the size of the whole pizza may have grown.
Dividend
A payment a company makes to its shareholders out of profit, in proportion to how many shares each shareholder owns. Dividends are optional; a company is never automatically required to pay one every year unless an agreement says so.
Drag-Along Right
A clause letting a majority (for example, 75% or more) that accepts a genuine offer for the whole company compel the remaining shareholders to sell on the same terms, so a buyer can acquire 100% and no small holder can hold the sale hostage.
E
Earnings Multiple
A way of pricing a business: yearly profit multiplied by an agreed number (the multiple, commonly 2 to 5 for small businesses). The multiple rises with systems, growth, and independence from the founder, and falls with risk and owner-dependence.
Ease Allowance
The extra room intentionally added to a garment's finished measurements beyond the customer's exact body measurements, for comfort and style.
Emergency Fund
Cash deliberately set aside, separate from operating funds, held specifically to cover the business through a shock (a slow month, an unexpected repair, a delayed payment) without borrowing under pressure. Typically sized at 3 to 6 or more months of fixed expenses.
Employment Contract
The written record of a job's agreed terms: role, pay, hours, and conditions. Protects both sides (the employer's evidence and the employee's fair treatment) and should exist even for short or casual engagements.
Environmental Obligations
Legal requirements around waste disposal, hazardous materials, permits, and resource use, applicable in some form to almost every business, not just heavy industry. Waste reduction often satisfies compliance and cost control at the same time.
Equipment Inspection
Routinely confirming machines and tools are safe and working correctly, at daily, weekly, and scheduled-maintenance tiers, catching wear or drift while it is still cheap to fix, before it becomes a breakdown.
Equity
Ownership of a business, usually divided into shares. If you own equity, you own a slice of the company itself, not a debt the company owes you.
Exit Strategy
How the owner eventually leaves the business they built (sale, buyout, merger, or orderly liquidation) as distinct from an investor's exit. Every path depends on an honest valuation and clean records.
Expense
Money spent running the business generally (rent, admin salaries, marketing) whether you sell one unit or a hundred that month. Unlike a cost, an expense mostly does not scale with production volume.
Expense Category
A four-way sort of every expense by purpose, not accounting treatment: necessary (keeps the business running), growth (makes it more valuable), luxury (pleasant but not impactful), and waste (should be eliminated). A different, complementary lens to cost vs expense.
External Risk
A large-scale shock originating completely outside the business (a pandemic, political instability, a cyberattack) that cannot be prevented by the business alone. Defended through general resilience (reserves, documented systems, diversified suppliers) rather than predicting the specific event.
F
FIFO (First In, First Out)
An inventory valuation method that assumes the oldest stock is used or sold first, valued at its original purchase cost. Best suited to perishables or materials whose price rarely changes; the alternative is a weighted average.
Financial Risk
A threat that hits a business's money directly (customer non-payment, currency collapse, or a lawsuit) without necessarily touching physical property or people.
Founder
The person (or people) who started the business and, typically, held 100% ownership before anyone else ever bought in.
Fraud Triangle
The idea that fraud requires three things at once: opportunity, pressure, and rationalization. A business cannot control pressure or rationalization, but it can remove opportunity entirely, which is what every internal control does.
G
Goal
A specific, dated target that turns a vision into something checkable. Short-term (within 1 year), medium-term (1 to 3 years), and long-term (3 to 10 years) goals should each be a stepping stone toward the next, never disconnected from the vision.
Gross Profit
Revenue minus the direct Cost of Goods Sold (COGS), before operating expenses are subtracted. Tells you whether the core product itself is priced and made efficiently, distinct from Net Profit, which subtracts everything else too.
Growth Strategy
A deliberate choice of how a business will get bigger: more branches, franchise, export, online, wholesale, or a combination, selected to fit the business's actual systems, capital, and risk tolerance, not the most exciting-sounding option.
Guarantee
A specific, bounded, written promise of what happens if the work does not meet the standard, set before a problem occurs, not improvised after one. A guarantee with no checkable condition or defined remedy is not really a guarantee.
H
Health and Fire Regulations
Legally required minimum workplace safety standards: fire prevention and escape planning, first aid provision, and general workplace health conditions. A system tested only during a real emergency, so it must be built and practiced well beforehand.
Hiring Threshold
The point at which hiring is actually justified: never exhaustion alone, but real lost opportunities plus a new hire generating at least as much value as they cost, ideally 2 to 5 times that.
I
Income
The broader total of money a business earns: revenue from its core activity, plus any other income (interest, a one-off asset sale, a grant). All revenue is income; not all income is revenue.
Insolvency
The situation where a business's debts are greater than its assets; it cannot pay everyone it owes. In an insolvent liquidation, some creditors go partly unpaid and shareholders receive nothing.
Inspection Point
A defined moment in production where output is checked against the quality standard before it is allowed to move further; incoming materials, in-process, and final inspection are the three most common points.
Institutional Memory
The accumulated why behind a business's past decisions and relationships, as vulnerable to disappearing with an unavailable owner as any password, unless captured in a Decision Log or Knowledge Base.
Insurance
A contract transferring a specific risk to an insurer in exchange for a premium, so the insurer absorbs most of the financial damage if a covered event happens. Four core types: property, liability, employee injury, business interruption. Best suited to large, rare, potentially catastrophic risks; it complements, rather than replaces, an emergency fund.
Intellectual Property
A legal category of ownership over things a person or business creates, rather than physically holds, including copyright, trademark, and patent. A well-documented pattern library is often a small business's most valuable, least protected piece of intellectual property.
Interest
The fee paid for using borrowed money, usually a percentage per year. Always ask whether a quoted rate is flat (charged on the full principal every year) or reducing balance (charged only on what is still owed); the same stated rate costs very different totals.
Internal Controls
The rules deciding who can count cash, approve an expense, sign a payment, or access an account, designed so no single person ever has complete, unchecked power over money or goods, regardless of how trusted they are.
Inventory
Everything a business owns that will eventually be sold or used up in making what it sells, at any stage between arriving and leaving, moving through three stages: raw materials, work-in-progress, and finished goods.
Inventory Valuation
Putting an honest naira figure on everything currently held as raw materials, work-in-progress, and finished goods, using a consistently applied method such as FIFO or weighted average, never guessed or assumed.
K
KPI (Key Performance Indicator)
A number or checkable fact used to measure whether a role or system is succeeding, never an opinion. "Good customer service" is not a KPI; "fewer than 2 unresolved complaints per month" is.
L
Limited Liability
The legal protection that caps a shareholder's maximum loss at the amount they invested. The company is a separate legal "person," so its debts belong to it, not to its owners personally. Exceptions: personal guarantees, fraud, and unpaid share commitments.
Limited Liability Company
A business structure where the company is a separate legal person: it owns its own assets and debts, can issue shares to investors, and continues existing when its owners change or die.
Liquidation
The process of closing a business permanently: selling everything it owns, paying the people it owes in a strict order, and giving whatever remains (if anything) to the owners.
Loan
Rented money: a lender advances the principal, the borrower pays interest for using it and returns it on a repayment schedule, owed in full whether business is good or bad. No ownership changes hands.
Lock-In Period
A contractual promise that an investor will not withdraw, sell, or demand redemption of their investment for a set number of years, giving the capital time to do its job before any exit conversation.
Loyalty Tier
A written rule deciding which customers get extra recognition or benefits, never a feeling. Movement between tiers (for example, All Customers, then Repeat, then VIP) follows a disclosed, consistent criterion.
M
Meeting Minutes
The written record of what was discussed, decided, and why, in a meeting, plus the action items it produced, each with a named owner and due date. A meeting without minutes effectively did not happen once memory fades.
Meeting Rhythm
A set of recurring meetings at different cadences (daily, weekly, monthly, annual) each with its own purpose, question, and guest list. Mixing cadences into one all-purpose meeting tends to serve every purpose poorly.
Middle Management
A layer of supervisors or managers between the owner and frontline staff, needed once the owner can no longer personally and meaningfully supervise everyone. Requires real, matched authority, not just a title.
Milestone
A specific, named checkpoint within a project timeline with a real, checkable deliverable (a signature, an inspection result, a payment received) never just a date passing with nothing verified.
Mission
What the business does every day to move toward its vision: the daily road. A good mission is concrete enough to settle a real decision when the owner is not there.
Mistake Log
A blame-free running record of what went wrong, its root cause, and what changed as a result. It exists to fix systems, never to assign blame. Reporting honestly only continues as long as the log is never used for punishment.
N
NDA (Non-Disclosure Agreement)
A confidentiality contract protecting what is revealed during negotiations (books, customer lists, designs) from being used or shared beyond the stated purpose.
Negotiation Floor
The written lower limit a salesperson may concede to in price negotiation without escalating for approval, calculated in advance from the pricing policy's cost-plus method, never estimated live under pressure.
Net Profit
Gross Profit minus operating expenses: the true bottom line, and the only number that answers "did we actually make money?" Rising revenue does not guarantee rising net profit if costs grow just as fast.
O
Opening Checklist
The fixed sequence of tasks performed at the start of every business day (security, cash float, equipment, space) written down so the day starts correctly regardless of who is opening.
Opportunity Cost
The value of what is given up by choosing one option over another: real, but psychologically easy to ignore because it never arrives as a felt expense or an invoice.
Overtime
Additional hours worked beyond the normal schedule, recorded with the same discipline as any other pay component, and checked against whether it solves a genuine exception or disguises a permanent staffing shortage.
Owner
The holder of the ownership bundle: a claim on part of the business's value, a say in its big decisions, and a share of its risk. Ownership is separate from management; an owner may not run the business, and the person running it may own nothing.
Owner's Drawings
Money an owner withdraws from a sole proprietorship or partnership for personal use, the equivalent of a dividend where no shares exist. Recorded separately from any salary paid for actual work, and only taken from confirmed profit, never from capital still needed by the business.
Ownership
Having a legal right to a share of what a business is worth, and (usually) a say in how it is run. The pizza analogy: if you own a slice of the pizza, you own that fraction of the whole pizza, whatever it is worth.
P
Partnership
A business structure where two or more people share ownership by agreement. In an ordinary partnership, partners usually also share unlimited personal liability, including for each other's business decisions.
Patent
Legal protection for a genuinely novel invention or functional process. Rarely applies to a garment pattern's shape itself, but can apply to a novel construction method or mechanism.
Pattern (Mould)
The master template a product is built from: a reusable, precise design captured once so it can be reproduced accurately, again and again, without depending on memory.
Pattern Grading
Scaling a single master pattern up or down to produce a full range of sizes while keeping every part of the garment in the same proportion to every other part, rather than simply adding the same amount everywhere.
Payroll
The complete, recurring process of paying employees correctly and on time: gross pay, plus additions (overtime, bonus, commission), minus statutory and other deductions, equals net pay, every step itemized and recorded.
People Risk
A threat coming from the humans a business depends on: risks of absence (a key person's death, illness, or departure) and risks of presence (fraud by someone with unchecked access).
Personal Guarantee
A written personal promise to repay a company's loan if the company cannot. Signing one removes your limited liability for that specific debt; the lender can pursue your personal assets.
Petty Cash
A small, fixed cash float kept on hand for minor day-to-day expenses too small or urgent for full banking channels. Every withdrawal needs a signed voucher and every purchase a receipt; cash remaining plus receipts on file should always equal the original float.
Physical Risk
A threat to the tangible things a business owns and needs to operate: fire, flood, theft, or equipment breakdown. Defended through a prevent, detect, and recover structure, much of it already built via the asset register, maintenance systems, and insurance.
Physical Security
Protecting the premises, equipment, and stock through layered hardware and technology (perimeter, building access, and a restricted zone) working together rather than any single measure alone.
Post-Growth Failure
A business collapsing because of recent rapid success, not despite it. Overconfidence after growth leads owners to abandon the cash reserves and documented systems that made the growth possible in the first place, at exactly the moment those things matter most.
Post-Money Valuation
What a company is considered worth immediately after a new investment is added: Pre-Money Valuation plus Investment Amount equals Post-Money Valuation.
Pre-Money Valuation
What a company is considered worth before a new investment is added.
Principal
The original amount of money borrowed in a loan, before interest.
Product
A physical thing the customer takes away; it can be stored, counted, and quality-checked before sale.
Profit
The money left over after the business pays for everything it used to make its sales, including recovering its capital first. Profit is not the same as sales (revenue); a business can sell a lot and still lose money.
Profit Sharing
A funding structure where the investor owns nothing but receives an agreed percentage of profits for an agreed number of years: no dilution, no payment in loss months, and total dependence on honest, well-defined books.
Q
Quality Complaint
A customer's report that delivered work does not meet the business's documented quality standard. Handled by investigating against the written standard itself, not by tone or gut feeling: the mirror image of a supplier return, in the opposite direction.
Quality Standard
A specific, written, checkable description of what "acceptable" means for a particular product or service, detailed enough that two different people, checking independently, reach the same pass or fail conclusion.
Quotation
A supplier's written offer to sell specific goods at a specific price, under specific terms. Should be compared on the whole deal (price, lead time, payment terms, quality), not price alone, and only between at least two genuinely equivalent offers.
R
Receiving
Confirming a delivery arrived in the right quantity, matching specification, and undamaged: the "Receives" corner of the purchase triangle, held independently of whoever placed the order.
Refund Authority
The written limit on how much of a refund any given role can approve alone, before requiring a higher level of sign-off: a refund treated as money leaving the business, following the same approval ladder as expenses and purchases.
Reorder Point
The stock quantity that triggers a new order, set high enough that a new delivery arrives before stock actually runs out: (Average Daily Use multiplied by Lead Time) plus Safety Buffer.
Repayment Schedule
The agreed timetable of a loan: how much is paid, how often, starting when, ending when.
Reserved Matters
A short list of major decisions that change the fundamental direction of the business (sell the company, issue shares, borrow big, change the business) that require special approval (a higher threshold or a named party's consent) regardless of normal voting math. Protects minorities and founders.
Responsibility
What a person is expected to get done, as opposed to authority, what they are actually allowed to decide. A healthy role matches the two; a mismatch (high responsibility, low authority) means being blamed for outcomes you cannot control.
Returns Process
The documented process for sending damaged, defective, or incorrect goods back to a supplier for replacement, credit, or refund: the buyer-side mirror of consumer protection.
Revenue
The total money coming in from a business's core sales, before any costs are subtracted. Revenue is the top of the funnel; profit is what is left at the bottom. All revenue is income; not all income is revenue.
Revenue-Based Financing
A funding structure where the investor receives a fixed percentage of monthly revenue until an agreed total cap (for example, 1.5 times the investment) is reached. Payments breathe with sales: gentle in slow months, faster in good ones; dangerous in thin-margin businesses.
Reversible Decision
A decision that can be undone or corrected if it turns out wrong, deserving fast action by whoever is accountable, rather than heavy deliberation. The key question before any decision: how hard would this be to undo?
Review Rhythm
A set schedule of performance check-ins at different time horizons: monthly (dashboard and budget vs actual), quarterly (progress toward medium-term goals), and annual (full strategic review), each asking a different question at a different level of zoom.
Rework
Fixing a defective item and re-inspecting it against the same quality standard as any first-time item: one of a defect's three possible fates, alongside rejection and documented concession.
Right of First Refusal
A transfer rule: before selling shares to any outsider, the holder must first offer them to the founder, company, or existing shareholders at the same price. Keeps control over who becomes a co-owner.
Risk Matrix
A tool crossing likelihood and impact into four quadrants (Monitor, Manage, Insure or Prepare, Urgent Action) used to prioritize which risks deserve attention first.
Risk Response Plan
A complete four-stage plan for a specific risk: prevent it, detect it early, respond when it happens, and recover afterward, with lessons learned feeding back into prevention.
S
Sales Target
A specific, dated, checkable goal a salesperson or team is expected to reach: the same discipline as any other goal or KPI in this manual, never a vague hope to "sell more."
Scaling
Growing a business's people and operations without its systems breaking down. Growth usually does not create new problems, it exposes gaps that already existed in informal systems but were too small to notice before.
Secured Loan
A loan backed by collateral; the lender holds a legal claim over specific assets and is paid first from their sale if the borrower fails.
Segregation of Duties
Splitting a complete transaction across at least two different people (for example, who orders, who receives, who pays) so no single person can both cause a loss and hide it. The single most powerful internal control.
Service
Work performed for the customer, produced at the moment it is delivered. Services cannot be stored; an unsold hour of capacity disappears.
Shrinkage
Inventory that disappears without a legitimate business reason: theft, unrecorded damage, or counting errors. Unlike waste, it cannot be traced to a specific cause, and needs an internal-controls response, not a shrug.
Silent Partner
An investor who funds the business and stays out of decisions. This is not a distinct legal structure; the arrangement is created in writing, through non-voting equity, profit sharing, or a plain loan.
Sinking Fund
Money set aside monthly, in advance, toward a known future expense (annual rent, insurance, licenses, taxes) turning a predictable bill into a non-event instead of a scramble. Distinct from an emergency fund, which covers unplanned shocks.
Sole Proprietorship
A business structure where the owner and the business are legally the same person. Simplest to start, but the business's debts are the owner's personal debts, and there are no shares to sell.
SOP (Standard Operating Procedure)
The written "how" of a system: numbered steps clear enough that a competent stranger could perform the task correctly using only the document.
Special Order
An order significant enough (in value, complexity, or stakes) that it needs its own dedicated timeline and milestones, rather than flowing through the ordinary daily workflow.
Succession Planning
Deliberately preparing for what happens if the owner cannot run the business tomorrow: naming backups for critical functions (payroll, bank access, suppliers, digital access) and choosing and preparing a successor, well before an emergency forces the question.
Successor
The person deliberately identified and prepared to run the business (management succession) if the owner cannot, a separate question from who owns the equity (ownership succession), and not necessarily the same person.
Supplier Approval
The deliberate process of vetting a supplier (on price, quality, reliability, and reputation) before the first real order, rather than defaulting to "we have always used them."
SWOT
A single-page framework crossing internal vs external with helpful vs harmful, producing four boxes: Strengths, Weaknesses (internal, today) and Opportunities, Threats (external, future). Only useful when every entry is specific and paired with a next action.
System
A recurring task written down so completely that a competent person who has never done it could do it correctly without asking anyone. A complete system answers six questions: why, who owns it, when, how, how success is measured, and what happens if it fails.
T
Tacit Knowledge
What an experienced person knows but has never written down: a knack, a workaround, a judgment call made by feel. Disappears the moment its holder becomes unavailable, unless documented in a Knowledge Base entry.
Tag-Along Right
A clause letting minority shareholders join a majority's sale of shares on the same price and terms: protection against being left behind co-owning with a stranger.
Tax
Money the law requires a business to pay to government authorities, commonly on profit, sales, payroll, or property. Tax collected from customers (like sales tax) was never really the business's own money; set it aside in a dedicated reserve the moment it is earned.
Trademark
Legal protection for a brand name, logo, or distinctive mark that identifies a business: protecting the brand around a design, not the shape of the design itself.
Training Library
A central, findable collection of training manuals, videos, and FAQs, so new-hire training is consistent regardless of who happens to be available to teach it.
U
Unsecured Loan
A loan backed only by the borrower's promise to repay, no collateral. If the business fails, the unsecured lender waits in the general creditors' queue and may recover only part of what is owed.
Utility Continuity
Keeping the business running, or recovering fast, when the grid or another basic utility stops without warning, treated as a routine daily-operations discipline, not a rare disaster plan.
V
Valuation
An estimate of what a whole business is worth in money, before dividing it into ownership percentages. Four estimating methods: assets (the floor), earnings times multiple (the workhorse), comparables (the reality check), and future-based (the argument). Valuation is agreed, not discovered.
Vesting
Ownership earned gradually over time: for example, 25% of promised shares per full year over four years. Leave early, keep only what vested. Essential protection with co-founders and employee shares.
Vision
Where the business is trying to arrive, years from now: the destination on the signpost. It changes rarely and gives every smaller decision a direction to point at.
Voting Rights
The power attached to a share that lets its owner vote on major company decisions (for example, one vote per ordinary share is common). Not every type of share carries voting rights.
Voting Threshold
The percentage of voting shares needed to pass a decision: typically more than 50% for ordinary decisions, 75% or more (supermajority) for major changes, and more than 25% is a blocking minority. Counted on voting shares only, not all shares.
W
Waste
Inventory legitimately consumed or discarded as a normal part of production: offcuts, spoilage, defective output. Some level is expected; the fix is a documented, checkable rate and better systems, not a control review.
Work-in-Progress (WIP)
Partially completed items (a garment cut but not yet sewn, a job mid-print run), the middle of the three inventory stages between raw materials and finished goods. It represents real money and labour already spent, even though it is not sellable yet.
Workflow Scheduling
Planning the day's sequence of tasks (who works on what, in what order) based on actual deadlines, so work moves smoothly instead of everyone converging on the same job while other work waits untouched.