If you don’t know the difference between the EEOC and OSHA, no one can blame you. There are tons of acronyms business owners may come across or need to know in their career. From government agencies to laws to business processes, there are many acronyms you can probably not worry about, but there are a handful that are very important. Here are some of the important acronyms business owners need to know.
1. SBA
The U.S. Small Business Administration is best known as the SBA. That is synonymous with a long list of government programs, grants, offices, and resources specifically for small businesses. One of the most important SBA programs is the SBA Loan, which is a government backed loan program that helps keep interest rates low and make loans available to new and small companies.
2. DUNS
While DUNS is cleverly similar to the name of the founding and administering company, Dun & Bradstreet, it is actually an acronym for the Data Universal Numbering System. It is used by the United States government, European Commission, and even Apple computers when approving new vendors to release apps for iPhones and Mac computers. The nine digit number is also part of a system used to track your business credit score, so it is very important for your business.
3. SBDC
America’s Small Business Development Centers are an SBA program that bring small business expertise to hundreds of offices around the country. You can find a local SBDC in all 50 states and territories including Guam, Puerto Rico, American Samoa, and the Virgin Islands. Located at many universities and economic development agencies, they offer free resources and some low-cost training sessions that are sure to boost your business chops and help feed your bottom line.
4. DPO
Days Payable Outstanding is a ratio that explains how long it takes a company to pay outstanding invoices. To help manage cash flow, CFOs and treasury managers set targets that extend how long it takes to pay, while conversely working to get paid faster. As a small business, you may find yourself a supplier of a large company. Hopefully they offer a low DPO average and you’ll get paid in a jiffy. But don’t be surprised if it takes 30 days or longer to get paid depending on the industry.
5. CAN-SPAM
CAN-SPAM is a shortened name for the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, a government regulation that prevents unwanted email messages from showing up in your inbox. As you know from opening your inbox every day, it is only partially effective. Still, it’s an important law that regulates how your business is allowed to collect email addresses and handle unsubscribe requests.
6. ACH
The Automated Clearing House is a system maintained by the Federal Reserve that allows electronic fund transfers from one financial account to another. Using your bank’s routing number and your unique account number, you can send and receive funds, often at no cost, through this secure and trusted system.
7. GAAP
If you touch your accounting books, you should do your best to be compliant with Generally Accepted Accounting Principles, or GAAP. Managed by the FASB (Financial Accounting Standards Board), GAAP accounting standards are the standard for accounting at any business looking to list its stock on an American stock exchange. While there has been grumbling about switching to IAS (International Accounting Standards), GAAP is essentially the law of the land when it comes to accounting in the United States.
8. EBITDA
If you pull up a public company’s financial statements, you’ll most likely find some mention of EBITDA (sometimes EBIT), which stands for Earnings Before Interest, Taxes, Depreciation and Amortization. This term is often interchanged with net profit, profit, or profit before taxes, but using the specific term EBITDA makes it very clear what you are talking about. When applying for a loan or selling a small business, EBITDA is an important metric used to value the company and show its earnings.
9. SEO
If your business doesn’t have a website in the 2010s and beyond, it might as well not exist. Even brick and mortar businesses like restaurants and retail stores need a website, or your competitors may eclipse you when potential customers are hunting for a place to eat or shop. Whatever your business does, you want it to show up first in Google and other search engines when someone wants to buy whatever you are selling. Search Engine Optimization, or SEO, is the set of practices used to help you reach the top, or hopefully at least the first page.
10. SLA
A Service Level Agreement is essentially a contracted or agreed upon timeline or quality level for a business service. The term is most common in B2B (business to business) arrangements where one company is providing a service to another. You don’t want to miss your SLAs, or you could find yourself with an angry customer on your hands.
11. LTV
Whether you are on the hunt for a business loan or a personal one, if it is a secured loan, it has a Loan to Value ratio, or LTV. This is a quick calculation that compares the secured asset to the total loan value. For example, if you buy a home with a mortgage and put 20% down, the home has an LTV of 80%, which is the percent of the home value loaned. The same is true of business property and equipment when getting an SBA loan or any other type of business loan. I would explain what SBA means, but you already learned that above!
Don’t get tongue tied
There are so many confusing business acronyms out there that it would be understandable if you couldn’t keep them all straight. What is important is that you know your own business inside and out. If you come across an acronym you don’t know, there is no shame in asking or Googling. As long as you know the lingo of your business, you are good to go.
This article was originally written on March 28, 2018 and updated on September 24, 2019.
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