The Owner's Dictionary: Fourteen Terms That Explain Where Your Money Goes

cash conversion cyclen. (finance)

The number of days between paying for what your business needs and collecting cash from selling the result. Formula: days inventory sits + days customers take to pay − days you take to pay suppliers.

Why it matters: It's why profitable businesses run out of money — 84% of growing companies hit a cash gap yearly. Shorten it and you fund growth without borrowing. (Post 35)

DSO — days sales outstandingn. (finance)

How long, on average, customers take to pay you after a sale. Every unpaid day is an interest-free loan you're extending.

Why it matters: Ten days of DSO reduction frees meaningful cash in any business — through faster invoicing and automated reminders, not aggression. (Posts 35, 27)

normalized EBITDAn. (valuation)

Your earnings before interest, taxes, depreciation, and amortization — cleaned of one-time costs and personal expenses run through the business. The number buyers multiply to value your company.

Why it matters: Multiples run 2–4× for micro businesses to 7–15×+ for well-run mid-market firms — and 93% of PE buyers say early preparation measurably improves the multiple you get. (Post 30)

gross margin vs. net marginn. pair (finance)

Gross: what's left after the direct costs of delivering your product or service. Net: what's left after everything. Gross margin funds the business; net margin is what the business was for.

Why it matters: Owners who price and pay commissions on revenue instead of margin (see Victor, Post 53) reliably grow the top line while shrinking the bottom one.

LTV : CAC ration. (growth)

Customer lifetime value divided by customer acquisition cost — what a customer is worth over the relationship versus what it cost to win them, by channel.

Why it matters: It's the number that reveals which marketing actually builds the business. A cheap channel producing churning customers loses to a pricier one producing loyal ones — invisible to anyone tracking cost-per-lead. (Posts 37, 10)

whale curven. (profitability)

The chart produced by ranking customers from most to least profitable and plotting cumulative profit — rising steeply, cresting above 100%, then sliding down through the unprofitable tail. Shaped like a whale's back.

Why it matters: Your top 20% of customers typically generate 150–180% of profits while the bottom 20% destroy 50–80%. Until you've drawn yours, you're subsidizing your worst relationships with your best. (Post 46)

cost of poor quality (COPQ)n. (operations)

Everything not-right-the-first-time costs you: rework, scrap, re-inspection, complaints, returns, and the customers quietly lost. Hidden costs typically run 4× the visible ones.

Why it matters: COPQ consumes 15–20% of sales at many businesses — and $1 of prevention saves roughly $10 in internal fixes and $100 in customer-facing failures. (Post 41)

BATNAn. (negotiation)

Best Alternative To a Negotiated Agreement — what you'll do if this deal doesn't happen. The true source of negotiating power.

Why it matters: 80%+ of sales negotiators enter talks without one, which is how discounts get given instead of traded. Knowing your BATNA is what made Ruth's price increase (Post 58) calm instead of terrifying. (Post 40)

carrying costn. (inventory)

The annual bill for owning inventory: tied-up capital, storage, insurance, handling, shrinkage, obsolescence. Typically 20–30% of the stock's value, every year, invisible on the P&L.

Why it matters: It's why "dead stock" is never neutral — a back room of unsold goods is an asset on paper and a lease payment in reality. (Posts 57, 35)

scope creepn. (client services)

The gradual, unbilled expansion of a project beyond its agreed boundaries — arriving as forty small reasonable requests rather than one big billable one.

Why it matters: 57% of agencies lose $1,000–$5,000 monthly to it; only 1% bill for all of it. The antidote is a graceful sentence: "Great idea — let me price that." (Post 56)

technical debtn. (systems)

The compounding cost of past quick fixes: aging software, manual workarounds, the spreadsheet only one person understands. Like financial debt, it charges interest until paid down.

Why it matters: SMBs spend ~70% of IT budgets just keeping old systems alive — resources maintaining the past instead of building the future. (Post 39)

time-to-valuen. (customer experience)

How long a new customer waits between buying and experiencing their first real win with you. The most predictive number in onboarding.

Why it matters: Cutting it 20% lifted revenue growth 18% in one major study — and 74% of customers will leave for a competitor if the start feels complicated. (Post 34)

owner-dependency discountn. (valuation)

The reduction buyers apply to a business that can't run without its founder — because what they'd be buying isn't a company; it's your job.

Why it matters: It's the single largest discount to exit multiples — and every SOP written, manager equipped, and relationship transferred shrinks it while making your life easier now. (Posts 30, 5, 38, 55)

service recovery paradoxn. (loyalty)

The documented phenomenon in which a customer whose problem was handled brilliantly ends up more loyal than one who never had a problem at all.

Why it matters: 72% of customers leave after one mishandled failure; 78% stay after a satisfying resolution. Your worst moments are auditions — and they're winnable. (Post 59)

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