The term ‘goodwill’ refers to the set of intangible assets that a company has on its balance sheet including its: brand recognition, customer and employee relations, and any patents or proprietary technology. To find the value of the goodwill that a company recognizes, subtract the book value of the company from its purchase price. Examples of companies with the largest recognized levels of goodwill include: Microsoft, Amazon, Apple and Alphabet (Google).
Grant awards are essentially monetary gifts provided to companies that do not need to be paid back. They are typically awarded by government organizations such as the SBA, but they are also provided by other organizations who host pitch competitions.
Gross Burn Rate
The monthly gross burn rate of an organization is equal to its total expenses for said month including its rent, salaries, and other overhead.
The monthly gross income of a business is the total of its revenues for said month before any expenses, depreciation, or taxes. The gross income of a business is also known as its gross profit.
The gross margin of a product or service is a percentage that is calculated by subtracting the cost of goods sold from revenue, then dividing said figure by the revenue. The gross margin for software businesses is typically much higher than businesses that sell products.
Growth At Any Cost
The strategy of growing at any cost indexes almost exclusively on driving sales or users, without much regard for the quality of said users or the cost associated with securing them. Oftentimes a ‘growth at any cost’ strategy results in an insanely high burn rate, because the cost of acquiring the new customers is more than what they are worth to the business.
Growth capital is injected into businesses at critical points in their lifecycle, enabling them to acquire more customers and hire more team members—ultimately resulting in an accelerated period of growth. Growth capital comes in many forms, but the most common include: venture capital, venture debt and revenue based financing.
The term ‘growth rate’ refers to the percentage change of a specific variable within a specific time period—for example: users, customers, and valuation. The growth rate of a business is calculated by subtracting the ending value in question from the starting value, and dividing the result by the starting value. It is used by investors to predict future performance.
Startups reach the growth stage when they have acquired a fair amount of customers, generate a steady source of income, and have proven product-market fit.
While there are a variety of growth strategies, one thing remains constant—the goal: to convert more customers or get more users. The three most common growth strategies include market penetration, market expansion, and market development.
The term ‘guarantor’ describes an individual who promises to pay for the company’s debt in the event that the company defaults on its loan obligation, by pledging their own assets as collateral against the loans. There are two forms of guarantors: limited and unlimited—limited guarantors are typically only responsible for a portion of a loan, whereas unlimited guarantors are responsible for the loan in its entirety.