List of Terms

1-Page Tear Sheet

A 1-page summary of the business and its offering – value proposition, business model, financial model, the capital ask, contact information, logo


There are five types of accountants:  An Enrolled Agent is a federally licensed Tax Agent with the IRS; a Certified Public Accountant is a state licensed person that can provide tax, financial services and accounting.  An “accountant” is normally not a CPA but rather an expert in financial statements.  A Controller is a senior accountant in a company and a bookkeeper is a person that keeps recordkeeping.  Based on the size and scope of a company, there may be one or more of these positions.  Good bookkeeping is the best way to combat cash flow challenges. A weekly assessment of receipts, accounts payable and receivables is a vital aspect of running a successful business. Though bookkeeping can be managed by the owner, it is best to hire a bookkeeper or an independent contractor. Constant communication with the bookkeeper and the accountant is mandatory. The bookkeeper is the internal financial manager while the accountant acts as the intermediary between the business and government agencies that oversee business finances. One investment that can help is accounting software programs such as QuickBooks, Microsoft Money, Peachtree or others.


Accounts Payable/Aging Report
Accounts Payable is a list of all the bills that are due, including the balance. An aging report is an extension of the accounts payable report. This states what the company owes right now and what’s being paid for. 30 days beyond 60 days beyond 90 days behind on bills. 


Accreditation Forms
Ensure that any investor that is investing is qualified to do so. You have to confirm that the accreditation is valid. Letter from the accountant, attorney. 


Adaptive and Predictive Methodologies
Known projects can usually rely upon a predictive method of planning. Predictive planning provides a linear, specific development plan structured around producing a pre-determined end result within a specific timeframe.  New companies in new industries, sectors and subsectors are evolving projects that face changing conditions that are best suited for adaptive planning. Adaptive planning involves breaking a project into small components over an undetermined timeline to allow ultimate flexibility in directing the course of the project.


Angel Investors
Angel investors are broadly defined as individuals who invest in an entrepreneurial company.[2] Angel investors usually have some interest in seeing the entrepreneur or company succeed. This long-term growth plan emphasizes long-term investments for research, product development and testing. Typically, the product/service(s) are still in the idea phase. For investing at such an early stage of development, Angel Investors have options to receive a large share of ownership in the company.


Included right after a statement: ex: (Smith pg. 472).

Articles of Incorporation (Organization)                               

Confirmation of organizational documents which can be located at Secretary of State/ Corporate Commission. Describes how the entity plans to operate. 


Assumptions are explanations with supporting data and research (not guessing).  It should be outlined as a “bullet-point” explanation of relevant assumptions for receivables, sales, average day’s outstanding, inventory levels, debt levels, assets, reserves and amortization schedules.


If the company is doing anything with Regulatory commissions, FINRA, FEC, M&A the company will have to have an audit. 


Audit, Review & Representation
A financial “review” is required to be placed on a funding portal.  An audit is required for financial packages seeking equity at or above $1,000,000 (on a Portal, or through a self-directed Private Placement Memorandum). A financial review by a Qualified CPA is included in the 10-point fee process. 


Automation (Bots/Scripts)
What aspects of the company are automated with bots and scripts? 3= A detailed description of the aspects of the company that are automated, how the company is utilizing automation and a log of their bots/scripts, 2= a description of how the company is using automation, 1= automation is said to have been used but no bots or scripts have been provided, 0= automation has not been addressed. 


Background Checks
Necessary for PPM, Reg A+, Title III, Going Public – any other type of capital it is most often not required.


Balance Sheet
An indicator of a company’s financial health. Assets at the top. Liabilities in the middle. Owner Equity at bottom. Assets should equal liabilities and owners’ equity. 


A business account cannot be established without all the proper documentation. While the types of business accounts and requirements vary, typically the minimum documentation includes the establishment of a business entity and the identity of the owners. It is wise therefore, to open a separate personal checking account used temporarily for business until the necessary business documentation is in order. This temporary account will provide a record of expenses as well as documentation for an accountant and taxes. Having this account will also help to keep the business on budget. Once a business account is established (step 44), close the personal account and transfer all the funds to the new business account.


Barriers to Entry
The factors that would make it hard for a competitor enter into the market.


Branding the business is vital. Create a plan that will give the business a special identity which generates a positive energy about the business with buyers. Branding and advertising work together. Advertisements should include the logo, tag lines and a consistent message to buyers. The website, business name, logo and even the phone number (if possible) should all reflect the same message.


Business Address and/or Mailing Address
An official business address, even before the permanent address is established, is an important step. A business address will be needed when registering the business and filing forms and applications for permits and licenses. Because your business address will be posted for public display, lots of marketing material will be mailed to it. So, it is a good idea to not use your home address. Use a “virtual office” or P.O. Box instead.


Business Entity
S-Corporation, C-Corporation, Joint Venture or Partnership. To keep company assets from being confused with personal assets, it is best to file for a business entity using a business name other than a personal name. The exception would be if the business owner’s name is in the business name. An attorney and accountant should be consulted in order to determine which business entity to file.


Business License
Business licenses are permits issued by government agencies that allow individuals or companies to conduct business within the government’s geographical jurisdiction. It is the authorization to start a business issued by the local government.


Business Model Canvas
1-page summary – Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Activities, Key Resources, Key Partners, Cost Structure


Business Plan
Most Business Plans include a purpose, business plan definition, financial model, value proposition, minimum viable product, definition of products and services, marketing plan, operational plan, and management team with staffing requirements.  


Business Profile
This shall include a brief history of the who, what, when, where, how and why of the business, including major milestones achieved. 


Bylaws or Op Agreement
By-Laws (INC) and Operating Agreement (LLC) an agreement that defines rules within the company, defines how the company will be operated i.e. managers, managers/employees


While lenders seek a balance of the five “Cs” of credit, capacity to repay is often the most critical. The prospective lender will want to know exactly how the borrower intends to repay the loan. The lender will consider the cash flow from the business, the timing of the repayment and the probability of successful repayment of the loan. Payment history on existing credit relationships – personal and commercial – is considered an indicator of future payment performance. Prospective lenders will also want to know contingent sources of repayment in the event of business failure. The business plan should address this through well formulated assumption worksheets and pro forma profit and loss statements.


Capital is the money an owner personally has invested in the business and is an indication of how much the owner will lose should the business fail. Prospective lenders and investors will expect the owner to contribute his own assets and to undertake personal financial risk to establish the business before asking them to commit any funding. If an owner has a significant personal investment in the business he is more likely to do everything in his power to make the business successful. The latest qualifying standard from Wells Fargo, Citibank, Bank of America, Certified Federal and others is a request that up to 30-50% of the capital needed for the business comes from the owners, based on the business model, industry, collateral and an assessment of the other considerations. A rule of thumb is that as owner equity goes down, risk to the lender goes up, thereby requiring a higher qualification standard for borrowing.


Capital Amount
How much money are you raising? Standard: 75% of clients will say they need a Million because they have a Billion company.


Capital Marketing Plan
Email blast to all potential investors to data room, list of investors


Capital Offering Documents
1st pre-legal review draft of the offering documents outlining the opportunity, summary of the offering, subscription process


Capital Raise Compliance
A legal review of the compliance around that type of capital. Subjective score. (i.e. REG D requirements).            


Capital Stack
Tranche, Staggered money. Just means how the money is coming to you and how the money will be used over a period. 


Capital Structure Plan
Type of capital, amount of capital, capital stack and tranches, increases in valuation


Capitalization Table
List of all equity owners, amount paid, and ownership percentage


Capital Type
Look at our website( and on the services tab, you will find all the various ways to raise capital. 3 basic types of capital (Debt, Equity, Royalty) 0=if unsure 1=if identified (borrow money, sell stock)2= type of capital with strategy explained 3= type of capital with strategy explained and it matches the business. Royalty is where an investor takes 2-15% off the top of the gross revenue because the investor doesn’t trust the company to turn a profit. Equity is the selling of ownership. Debt is the borrowing of money. 46 different capital types.


Cash Flow
Shows post money how the money came in from investors lenders revenue, what were the expenses (one-time cost, variable cost, direct cost). Does the company have cash left over?


Cash Flow Forecast
The point of this worksheet is to plan how much you need before start-up, for preliminary expenses, operating expenses and reserves. You should keep updating it and using it after start-up. It will enable you to foresee shortages in time to do something about them—perhaps cut expenses or perhaps negotiate a loan. The cash flow projection is just a forward look at your checking account. Your cash flow will show you whether your working capital is adequate. If your projected cash balance ever goes negative, you will need more start-up capital. This plan will also predict just when and how much you will need to borrow. 


“Character” is the technical term used by lenders about credit and history on the borrower such as employment, training and education. These are both objective and subjective decisions made by lenders and are constantly changing based on the market and the type of borrowing. The lender decides objectively/subjectively whether or not the borrower is sufficiently trustworthy to repay the loan or generate a return on funds invested in the company. The quality of past successes, references, background and experience of the borrower, partners with more than 10% ownership, management and key employees may all be considered.


Cited in whatever format they cited it. Reference to bibliography, figure, chart, graph clearly linked =3


Not necessarily compensated but those who help you work towards the company’s goals


Collateral or guarantees are additional forms of security a borrower can provide the lender. If the business cannot repay its loan, the bank wants to know there is a second source of repayment. Assets such as equipment, buildings, accounts receivable and in some cases, inventory, are considered possible sources of repayment if they are sold by the bank for cash. Both business and personal assets can be sources of collateral for a loan. A guarantee, on the other hand, is just that – someone else signs a guarantee document promising to repay the loan if the borrower cannot. Some lenders may require such a guarantee in addition to collateral as security for a loan.


Competitive Advantages
What are the major competitive advantages of your product or service over your direct and indirect competition? 


Competitive Analysis
A competitive analysis will provide an overview of the competition from the standpoint of the total competitive outlook.  The analysis should review the total market potential, how the company’s differentiation provides a competitive advantage over both direct and indirect competition based on a number of factors including: features, benefits, and price.  This should only be an overview as the details of competition are further discussed in the plan.  What are the value propositions of the company so that we can identify competitors more clearly? Who are the direct competitors what are you values that define you and why is the competition your competition? 


Conditions include macroeconomics (global/national), micro (state/local) economics and the business itself. Conditions focus on the intended purpose of the loan. Will the money be used for working capital, additional equipment or inventory? The lender will also consider the economic climate and conditions both within the industry and in other industries that could affect the business. The strength of the business plan and use of funds is important in this regard. How the money is used and the strength of the return on investment argument is high.   


Corporate Credit Rating Agencies
There are three major business credit reporting agencies that are key to the entrepreneur’s success: Dun & Bradstreet, Experian Business and Equifax Small Business. In order to build corporate credit, a company must first be in “compliance.”  There are nearly 20 checklist items to comply for corporate credit. The short list includes verification of the entity, tax identification number, business license, insurance, phone number, website, email address, state registrations, current financial statements and current tax filings.  Building corporate credit includes management of compliance, as well as applying for membership with Dunn & Bradstreet, the Better Business Bureau, and applications for credit cards. It also includes a strategy of applying for credit with vendors that file with the agencies that report such transactions. By improving and maximizing personal and business credit scores, entrepreneurs will make much more capital (cash) and resources available to their business at better rates, terms and pricing.


Corporate Governance
Documentation that supports the entity is in order. Requirements by the state that the entity needs to complete in order to do business. If documentation and requirements are in order=3.  Registered w/ state, state req’s annual meetings, in corp docs, etc.


Customer Acquisition Cost
CAC. How much does it cost to acquire a customer? Also known as Cost per Acquisition (CPA).  Total new business revenue divided by the number of customers.


The ability for a Company to gain access to debt capital, commercial bank loans, vendor credit, lines of credit and credit cards is highly determinate upon the personal credit of the entrepreneurs that own the majority of equity in the Company. Equally important is for the Company to qualify for debt through corporate credit. Corporate credit has much less to do with the entrepreneur’s personal credit as it has on the credit worthiness of the business.  


Customer Retention Management (CRM)
Customer retention management is a key aspect of marketing which many companies fail to focus on. Once brand loyalty is built through branding, keeping the customer over the lifespan of the business is the challenge.  To put it plainly, branding means recognition, advertising is a call to action and CRM keeps your customers coming back. 


Doing Business As (DBA)
A DBA, meaning “doing business as” (also known as a fictitious business name, trade name, or assumed name) is when a business has the need or desire to do business under a different name other than what name they have registered their business under.  All types of businesses can use a dba, it simply requires registering that name with the County, City or State in which the company is organized.  


EIN – Federal Tax Identification Number
For tax purposes, a business needs to have its own federal tax identification number. A number can be easily accessed by going to It may be a good idea to have an accountant or enrolled agent assist in filling out the forms. 


Elevator Pitch
Attention grabbing differentiation – mission, strategic – tactics – Why, what when where, how why, amount of capital being sought.  


Entitlements, zoning and environmental issues
It is important to consider the hurdles that may be encountered in obtaining the rights to do business. If the business is fortunate enough to buy, lease or rent a location that is permitted and entitled for its use, then this step may be skipped. An example would be opening a restaurant in a location which was previously a restaurant and the entitlements and zoning have not changed in the meantime. However, if building, remodeling, rebuilding, expanding or rezoning plans exist then investigate to ensure the business is protected before investing any time and money. Entitlements and zoning are “red flag” issues to protect the interests of business owners and investors. 


Entity Registration
What date was the company registered? Is the company’s registration current? When you go to the Secretary of State/ Corporate Commission you should be able to see Date of registration, Officers/Directors, Authorized Share of Stock, Amendments, what equity have they been offered to issue. 


A third party harboring the money to make sure all circumstances are completed. Commissions, referrals help track money. If necessary is there an escrow, is there an agreement? Is it signed and executed?     


Executive Summary (Transaction Summary)
A  5-7-page written summary of the marketing plan, strategic plan, tactical plan, 1-page financial summary, summary of the offering


Exit Strategy
The exit strategy is a one-page written document that addresses the long-term plan for investors, lenders and founders to have a positive exit. This may be defined as a Public Offering, an acquisition, a legacy plan, an EBO (Employee Buyout), MBO (Management Buy Out), or other alternatives. The exit should also define a succession plan if a key executive can longer serve the company.


Fatal Flaw
Of the 334 attributes, some are deemed “Fetal Flaws” meaning that such attributes must have a score of 3 out of 3 or the entire business loses its continuity.  Consider the factors that cause the majority of businesses to fail: (1) Undercapitalized; (2) There are disconnects and disputes between partners, founders, etc.; (3) Life changing circumstances occur within the first year (sickness, illness, injury, divorce, death); (4) Competition; (5) Supply chain issues; (6) Business ideas are sold; (7) Litigation and lawsuits occur; (8) Patent or IP applications are denied; (9) Permits, certifications, registration are denied; (10) Macro & micro economic conditions alter the playing field; (11) Legislation changes the playing field; (12) Poor management decisions; (13) Lack of established sales channels.


Financial Model (Break-even Calculation)
The financial model should take into account the revenue, minus cost of goods, expenses with a forecasted profit based on a “best-case scenario” that gives the reader a good indication of how the financial model of the business works.  It should be simple and to the point without all the details.  It should show “0” at the bottom for profit.  A break-even analysis predicts the sales volume, at a given price, required to recover total costs. Assumptions used are a key in this report and should be provided immediately following the report.  


Financial Modeling – Fixed Costs
Payroll worksheets, marketing worksheets, Sales & General Administrative Worksheets


Financial Modeling – Revenues & Costs
Worksheets are built and linked for each revenue streams with direct (Variable Expenses & Cost of Goods) and indirect (Fixed Expenses) costs


Financial Performance Review (historical review)
A comparison of the performance to industry standards is helpful as well.  For instance, if you are in the restaurant business but your cost of goods is only 22% instead of the industry standard of 35%, then that is a good argument that must be explained.  


Financial plan
Provide an overview of the financial model, historical data, and capital required as well as forecast information and the nuts/bolts of the cash flow plan.  What research was used to substantiate claims of growth?  How will you finance ongoing operations?  Do you need lines of credit, or accounts receivable loans or other financing methods particular to your business?  This should all be discussed in the overview.


Text includes little number by it which can Reference to a text. Must have the text easily accessible and clearly related.


Supporting documents
Supporting documents are the foundation of a business plan.  Without them, there is little validity in the plan.  The supporting documents should provide summaries of the material provided in the plan.  However, the total sum of the supporting documents should not overburden the reader.  In some instances it may make sense to have the supporting documents accumulated in a separate booklet.  Within the actual business plan, the supporting documents should not exceed 10 to 20 pages. 


Only for start-ups. Not for companies already in operation. What is the budget and timeline in order to start obtaining customers?


Grass Roots Campaign
A grass-roots campaign gets your customer base excited.  The word-of-mouth method of advertising is known as “grass roots.”  


Indirect Competitive Factors
Be sure to investigate other companies which may be indirect competition in the market place, where the customer’s dollars could be split between yours and theirs. For example, a retail coffee business that sells cups of coffee may also sell bagged coffee by the pound.  Direct competitors may be other coffee shops while indirect competitors may be grocery stores or specialty coffee stores that sell coffee by the pound.


Industry Associations
What associations drive the industry? Everyone should be part of an association. Associations will help with industry information and current trends


Industry Trends
Describe your industry.  What expected changes will affect your business?  How is the company prepared to take advantage of the reported trends?  What strengths does the company have that will best serve the trends?  


Intellectual Property owned by the company
Includes trademarks, patents and/or technological advances owned by the Company. Note:  Intellectual property attorneys should be consulted, if they have not been already, if the company has, or intends to have, trademarks or patents filed.


“Key Man” insurance
In the event of a business owner’s or key manager’s death, “Key Man” insurance will provide the financing to pay off the business interests of the officer and family so the business may continue after the untimely death.


Leadership Style
One of the team – confident, open door, creative environment What is the leadership style? Lead from the front, lead from the bottom, direction, team meetings, charter, handbook, expectations defined, etc. Do they define expectations well and do they inspect those expectations? Never have more than 4-6 people reporting to you.


Management Team
Brief description of Senior Management.  This is one of the most important paragraphs in the plan.  Resumes shall be provided in the supporting documents, but a brief summary shall be presented here.  The SBA and the bankers that are SBA lenders are currently seeking clients with five years minimum experience in their chosen business sector.


Market Research Report
Market size, demand, penetration requirements, demographics, prepared written report with references, citations, footnotes


Market Feasibility Study (Or White Paper)
This is a formal document with footnotes, references and citations that defines the industry, sector, subsector and market. It should first define the purpose and scope. It should include target audience demographics, a trends analysis, quantitative survey, competitive analysis (Direct and indirect), market demand analysis, recommendations and a summary.


TAM – SAM – SOM Report: TAM: Total Addressable Market SAM: Serviceable Addressable Market;  SOM: Serviceable Obtainable Market


Marketing Plan & Budget
Includes SEO, TAM/SAM/SOM – SEO/PPC direct expenses, variable expense, budget, CAC, SWOT, pricing strategy, analyze brand, images, website


Marketing Strategy
The “four P’s” (Product, Placement, Promotion and Price) as well as a brief summary of the target market, the market potential, a brief analysis of the marketing mix, branding plan, advertising plan, customer retention management plan and the marketing budget.  A brief overview of competitors shall be included as well. 


Mastermind Alliance
Who is their mastermind group? Where do they come up with ideas, conflict resolution, how do they over challenges? Who is the sounding board?  (Clearly identify the masterminds you can address)


Minimum Viable Product
MVP. What is the product or service, the ONE, that will have the least amount of risk(money/time/resources) and effort to reach your market most easily? Usually either free or has a small “trial” fee associated with it. 


Mission Statement
In 35 words or less, explain the business’s reason for being and explain the guiding principles including who, what, when, where, how and why. 


Optimistic realism
A balance of optimism and realism. Be realistic in everything we do with the scores.


Presentation Deck
A professional-grade presentation deck (created in its final version as either a PDF or online flipbook) is a graphical display of a business plan with minimal dialog used as a clean, simply summary for early-stage presentation purposes. Finished decks will include up to 15 slides that depict the Company’s value proposition, “Who we Are.” Who we Serve”, definition of products and services, summary of the management team, market overview, the offering, value and exit.


Primary Market Research
Research conducted by your company about the market and potential customers within the market. Primary research means gathering your own data. Professional market research can be very costly; but there are many books that show small business owners how to do effective research themselves.  In your marketing plan, be as specific as possible: give statistics, numbers and sources. 


Product or Service
A brief summary of what niche is being filled or what problem is being resolved by this company.  As one client puts it, “What is the special sauce?”  What sources (sourcing) is used to gain the raw materials.  What part of the delivery process does this company provide (manufacturing, distribution, wholesale, retail, etc.). 


Resale Number (When Appropriate)
This number is assigned by the State Board of Equalization for the collection of sales tax.  If your business is collecting sales tax, then this number is known as a “reseller’s permit.” 


Resumes & Bios
1/2-page summary/bio on each player. Name title historical background, educational background. Good balance of entrepreneurial background and industry background.


Secondary Market Research
Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data and demographic profiles. This type of information is available in public libraries, industry associations, chambers of commerce, from vendors who sell to your industry and from government agencies. 


Serviceable Addressable Market
SAM. What percentage of that market can actually use your product/ service


Serviceable Obtainable Market
SOM. From that percentage of that market that can actually use your product how much of it can you actually service

Strategic & Tactical Plan
MVP (Minimum Viable Product), value proposition, business model defined, financial model defined, mission statement, vision statement


Succession Plan
Is there someone below that person to take over the job in case a spot becomes vacated.


Sustainable competitive advantage
As the market and economic changes occur, is there a competitive advantage you will always have over your competitors?  For instance, if you have a new technology that beats the competition, how will you stay ahead of them after the technology becomes commonplace (maybe you have other research and development plans for furthering your technology or other products) or maybe your target market is different and your competition will not access them for some reason that you can explain.


Total Addressable Market
TAM. Total size of the marketplace that can buy the product.


Use of Funds
A list that is broken out on what the funds will be used for.


Cases in which the Client will be issuing securities, or valuing the company for possible merger or acquisition, a formal, empirical valuation process is required to determine the price and, if applicable, the amount of equity to be sold. Blue Moon and its related enterprises, along with industry professionals, CPAs and independent Blue Moon Advisors work with the Client to determine an appropriate valuation. A proper valuation should include a subjective and objective approach to include research, existing financial statements, forecasted projections, industry trends, surface-level comparable research. The methodology and approach to developing the valuation typically includes an assessment of the market comparing similar companies, as well as the Merger & Acquisition liquidity event trends in the industry. It may also include current book value, discounted cash flow of the net present value of the investment dollars as they relate to the pro forma forecast. In some cases, the valuation may take into consideration an Enterprise Value (EV) or Earnings before Interest, Taxes Depreciation and Amortization (EBITDA) Multiple. Here is a summary of valuation components:

  • The Valuation Utilizes a Combination of Subjective & Objective Methodologies The Valuation Includes At least two Different Methodologies Valuation Includes Discounted Cash Flow (DCF) & Net Present Value (NPV) Enterprise Value (EV) and EBITDA Multiples Were Implemented Existing Market and Industry Comparable Valuations Were Utilized References & Citations for Market Valuation Comparison are Provided Current Book Value was Included
  • A Pre-Money & Post-Money Market Cap was Included
  • The Proposed Price of Equity is in Alignment with Valuation
  • The Valuation Completed by a Valuations Expert, CPA, or a Member of IBA
  • The Company’s Capitalization Table is Complete and Accurate
  • The Capitalization Table is in Alignment with the Valuation 
  • The 1-Page Financial Model Summary Includes the Valuation
  • A Written Summary of the Valuation in Letter Form Has Been Written


Valuation (Business Value)
The methodology and approach to developing the valuation typically includes an assessment of the market comparing similar companies, as well as the Merger & Acquisition liquidity event trends in the industry.  It may also include current book value, discounted cash flow of the net present value of the investment dollars as they relate to the pro forma forecast.  In some cases, the valuation may take into consideration an Enterprise Value (EV) or Earnings before Interest, Taxes Depreciation and Amortization 


Virtual Data Room Management
A Virtual Data Room is a Web-based application that makes it possible to organize data rooms in a way that allows them to be consulted online (in a protected form) once all the documents have been scanned. E-data rooms have the advantage of being easy to use and accessible 24 hours a day by an international team of specialists without any need for travel. 


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