Reference

Glossary

The terms that turn up constantly once you start building wealth, explained in plain English and linked to the techniques where they matter.

41 terms

A

Appreciation

An asset becoming worth more over time.

Arbitrage

Buying something in one market and selling it in another where it is worth more.

B

Bootstrapping

Funding a business from its own revenue instead of outside investment.

Burn rate

How much more money a business spends each month than it brings in.

C

Cap rate

A property’s annual net income divided by its price.

Cash flow

The money actually moving in and out of a business, as opposed to the profit on paper.

Churn

The percentage of subscribers who cancel in a given period.

Compound interest

Returns that themselves earn returns, so growth accelerates over time.

Conversion rate

The share of visitors who do the thing you wanted.

D

Diversification

Spreading money across assets so no single failure ruins you.

Dollar-cost averaging

Investing a fixed amount at fixed intervals regardless of price.

Due diligence

Verifying that what you are buying is what the seller says it is.

E

Equity

Ownership of an asset, as opposed to income from working on it.

F

FIRE

Financial Independence, Retire Early - living off investments rather than work.

H

High-income skill

A capability that reliably commands well above-average pay.

I

Index fund

A fund that mechanically holds every company in a market index.

L

Lead magnet

Something useful given away in exchange for an email address.

Leverage

Using something you do not own - money, people, code or audience - to multiply your output.

Lifestyle business

A business optimised for the owner’s income and freedom rather than for growth.

Liquidity

How quickly an asset can become cash without losing value.

LTV:CAC ratio

What a customer is worth over their lifetime, divided by what it cost to acquire them.

M

Margin

The share of revenue left after costs, expressed as a percentage.

Moat

The reason a competitor cannot simply copy what you are doing.

MRR (monthly recurring revenue)

Predictable subscription revenue that arrives every month.

Multiple

The number you multiply earnings by to get what a business is worth.

MVP (minimum viable product)

The smallest thing you can build that tests whether anyone wants this.

N

Net worth

Everything you own minus everything you owe.

Niche

A narrow, specific audience you serve better than any generalist can.

O

Opportunity cost

What you gave up by choosing this instead of the next best thing.

P

Passive income

Income that continues without proportional ongoing work - and never without any.

Product-market fit

The point where demand starts pulling harder than you are pushing.

R

Retainer

A recurring fee for ongoing access to your work.

ROI (return on investment)

What you got back divided by what you put in, expressed as a percentage.

Runway

How many months your cash lasts at your current burn rate.

S

Savings rate

The share of your take-home pay you do not spend.

Scalability

Whether serving ten times more customers costs ten times more.

SDE (seller's discretionary earnings)

What a small business actually earns for a single owner-operator.

Seller financing

The seller of a business lets you pay them over time out of the profits.

SEO (search engine optimisation)

Getting pages to rank in search results for what people are actually typing.

Survivorship bias

Drawing conclusions from winners while the failures stay invisible.

Sweat equity

Ownership earned through work rather than bought with money.