General SME and Business Terms: A Glossary

Part of the Five Stones knowledge base - 42 terms on general SME and business terms, in plain English.

Part of the Five Stones knowledge base - 42 terms on general sme and business terms, in plain English.

SME (Small and Medium Enterprise) - A business below a defined size threshold (varying by country and sector), the category most grants, schemes and this glossary are aimed at.
Micro-enterprise - The smallest tier of SME, typically defined by very low headcount or revenue, often eligible for specific micro-focused grants.
P&L (Profit and Loss statement) - The financial report showing a business's revenue, costs and resulting profit or loss over a period, the "one number at the bottom" every cost eventually shows up in.
Cash flow - The actual movement of money in and out of a business, which can be tight even when the business is profitable on paper.
Overhead - A business's ongoing operating costs (rent, utilities, admin staff) not directly tied to producing a specific product or service.
Gross margin - The percentage of revenue left after subtracting the direct cost of delivering a product or service, before overheads.
Net margin - The percentage of revenue left as actual profit after every cost, including overheads and tax, has been deducted.
Working capital - The cash and short-term assets a business has available to fund its day-to-day operations.
Break-even point - The level of sales at which a business's revenue exactly covers its costs, with neither profit nor loss.
Scaling - Growing a business's revenue and output significantly faster than its costs, usually requiring better systems, not just more staff.
Growing pains - The operational strain (missed enquiries, overworked owners, inconsistent service) that appears as a business outgrows its manual processes.
Bottleneck (business) - The single limiting factor holding back a business's overall growth or output, often a person or manual process rather than demand.
Owner-dependency - A business's excessive reliance on its founder or owner for day-to-day decisions and tasks, limiting how much it can grow or how well it can be sold.
Succession planning - Preparing a business to continue operating successfully without its current owner or key staff, often requiring documented, automatable processes.
Digital maturity - How far along a business is in adopting digital tools and data-driven processes, relative to what is possible in its industry.
Competitive advantage - Whatever lets a business consistently outperform its direct competitors, increasingly shaped by how well it uses AI and automation.
Unfair advantage - A specific edge a business has that competitors cannot easily copy, whether from technology, relationships, timing or knowledge.
First-mover advantage - The benefit gained by being among the first in a market or industry to adopt a new tool or approach.
Market fit - How well a product or service actually matches what a specific group of customers genuinely wants and will pay for.
Value proposition - The clear, specific reason a customer should choose a business over its alternatives.
Operating model - The overall way a business organises its people, processes and systems to deliver its product or service.
Vendor - A company or individual supplying a product or service to a business, such as a software provider or an agency.
Consultant - An outside expert brought in temporarily to advise on or help solve a specific business problem.
Outsourcing - Paying an external company or individual to handle a business function instead of hiring for it in-house.
In-house - A function, skill or team kept and managed internally within the business, rather than outsourced.
Freelancer / gig worker - An independent worker hired for specific projects or periods, rather than employed permanently.
Business continuity plan - A documented plan for how a business will keep operating through a disruption, such as a system outage or a key staff member leaving.
Risk assessment - A structured review of what could go wrong in a business process or decision, and how likely and costly each risk is.
Due diligence - Careful research and verification carried out before making a significant business decision, such as hiring a vendor or signing a contract.
Contract negotiation - The process of agreeing terms, price and obligations between a business and a vendor or partner before signing.
Statement of work (SOW) - A document defining exactly what a vendor or contractor will deliver, by when, and for how much.
Case study - A detailed, real account of how a specific business achieved a specific result, used to demonstrate credibility to prospective customers.
Testimonial - A direct quote from a satisfied customer used as evidence of a business's quality or results.
Referral - A new customer who comes to a business because an existing customer recommended them, historically one of the highest-converting sources of new business.
Word of mouth - Organic recommendation between customers, still one of the strongest trust signals a small business can earn, and one AI cannot manufacture.
Brand reputation - The overall perception the public holds of a business, built over time through service quality, reviews and visible presence.
Family business - A business owned and often run across generations of the same family, a large share of the SME base in Singapore and Malaysia.
Business continuity through generations - The specific challenge of passing a family or founder-run business, and its know-how, to the next generation of leadership.
Bootstrapped business - A business funded from its own revenue or the founder's own money, rather than external investment.
Runway - How long a business can keep operating on its current cash reserves before it runs out, at its current rate of spending.
Burn rate - How quickly a business is spending its cash reserves over a given period, usually tracked monthly.
Economies of scale - The cost advantage a business gains as it grows and produces more, spreading fixed costs across a larger output.

Looking for a different topic? Browse the full knowledge base, or tell us what's missing.