Small business glossary: a phone book of business terms to know

Acquisition

An acquisition is a situation in which one company purchases a majority of another company’s stock to gain control over that company.

Affiliates

Affiliates are companies that are related to one another through ownership, typically involving one company holding a minority stake, less than 50 percent, in another. This relationship can take various forms, including partnerships or subsidiaries under a common parent company. In the context of business and finance, affiliates may also be defined as entities that share control or have a significant influence over each other, but do not meet the criteria for being classified as subsidiaries. In marketing, an affiliate is an individual or company that earns a commission for selling another person’s or company’s products or services.

Best and Final Offer

A best and final offer is a term used in negotiation and procurement processes to signify the last offer that a party is willing to make before a decision is made.

Certificate of Competency

A certificate of competency (COC) is a Small Business Administration (SBA) certification that verifies a small business’ suitability to be awarded a government contract.

Certified 8(a) Firm

A certified 8(a) firm is a business that is a participant in the SBA’s 8(a) Business Development Program, which is designed to assist small businesses that are at least 51percent owned and controlled by socially and economically disadvantaged U.S. citizens.

Contract

A contract in business establishes a legally binding agreement between two parties, often involving the purchase of products or services.

Contracting

Contracting refers to the process of buying, renting, or leasing products or services from a non-government source.

Contracting Officer

A contracting officer is a person with the authority to sign, oversee and end contracts for a business.

Defense Acquisition Regulatory Council (DARC)

The Defense Acquisition Regulatory Council (DARC) is a group of federal government and military representatives that helps to oversee and develop the rules for awarding purchasing contracts to businesses.

Defense Contractor

A defense contractor is any person or entity that enters a contract with the United States government for the production of materials or the performance of services related to national defense.

Electronic Data Interchange

Electronic data interchange (EDI) is the computer-to-computer exchange of business documents. This process replaces traditional paper-based methods such as postal mail and fax, allowing for more efficient and streamlined communication.

Equity

Equity is the net worth of a business, calculated by subtracting its financial liabilities from the value of its assets.

Federal Acquisition Regulation (FAR)

The Federal Acquisition Regulation (FAR) is a comprehensive set of rules that govern the process by which federal agencies procure goods and services from businesses. The FAR establishes uniform policies and procedures for procurement across all federal agencies, ensuring that acquisitions are conducted in a fair, transparent and efficient manner.

Intermediary Organization

An intermediary organization is an entity that helps to connect businesses with each other. For example, a chamber of commerce might encourage local businesses to work together to plan local events and promotions.

Joint Venture

A joint venture is a strategic alliance in which two or more parties, typically businesses, come together to undertake a specific project or business activity while remaining independent entities. This includes partnerships between certified 8(a) firms and their mentors.

Mentor

A mentor is an individual who provides support, guidance and advice to a less experienced person or a business that does the same for a smaller business.

Negotiation

Negotiation is a discussion that resolves a disagreement or question in a way that both parties can accept. In the context of business contracts, it’s also a process in which a contract may be agreed upon without a bidding process.

Prime Contract

A prime contract in federal government contracting is a contract awarded directly by the government to a contractor for supplies and services.

Protégé

In the context of business and professional development, a protégé refers to an individual or small business guided and supported by a mentor.

Request for Proposal (RFP)

A request for proposal (RFP) is a formal document issued by a government or business entity seeking bids from potential contractors for a specific project. The RFP will outline the requirements that a bidder must be able to satisfy and the process for submitting bids.

SCORE

SCORE is a nonprofit organization associated with the U.S. Small Business Administration (SBA) that was established in 1964 to provide business training and mentoring workshops to entrepreneurs. SCORE, originally an acronym for Service Corps of Retired Executives, offers most of its services at no cost.

Small Business

A small business is defined as an independently owned and operated enterprise that is limited in revenue and size. To be classified as a small business by the SBA, a business must meet size standards that vary by number of employees, industry and revenue.

Small Business Development Centers (SBDCs)

Small Business Development Centers (SBDCs) are centers that provide advice and education for small businesses and aspiring entrepreneurs. They are designed to promote the growth and development of start-ups and existing small businesses.

Small Business Innovative Research (SBIR) Contract

An SBIR contract is a contract awarded to small businesses that successfully propose innovative projects that meet the needs of federal agencies. The five contracting agencies that participate in the SBIR program include the Department of Defense, the National Aeronautics and Space Administration, the Environmental Protection Agency, the Department of Homeland Security and the Department of Transportation.

Small Disadvantaged Business Concern

A small disadvantaged business concern is defined as a small business that is 51 percent or more owned and operated by one or more individuals who are socially and economically disadvantaged. In general, those considered to be disadvantaged have experienced racial or ethnic prejudice within American society.

Subcontract

A subcontract is a legally binding agreement in which a primary contractor, the main party responsible for completing a project, delegates part of their contractual obligations to another party, known as the subcontractor.

Additional resources:

• Glossary of Business Terms
• Financial Terminology: 20 Financial Terms to Know
• Glossary of Business and Financial Terms
• 25 Essential Business Terms to Know
• Business Terms Glossary
• Business Terms
• Small Business Lingo 101: Essential Terms to Know
• 35 Terms to Enhance Your Business English Vocabulary
• 16 Important Legal Requirements for Starting a Small Business
• 10 steps to start your business
• Small Business Phone Systems
• How to Start a Small Business: Must-Have Checklist to Spark Success
• The fundamentals of starting a small business