A Few Business Terms You Should Know
Let's be honest: there's weird gatekeeping that happens in business spaces where people assume you "should already know" what ROI, MRR, CAC, and LTV mean. Like there's some secret business school everyone attended where they taught you all the acronyms and what they actually mean for your business. Spoiler alert: most successful entrepreneurs didn't go to business school. They learned this vocabulary the hard way — by feeling stupid in meetings, by Googling frantically, by asking trusted friends what things meant, by piecing it together over years. Here's permission you need to hear: You don't need an MBA to build a successful business. You don't need to feel ashamed that you're still learning fundamental business vocabulary. So let's break down some essential terms in plain English and you have any other terms you think people should know, drop a comment and share! 🩵 ROI (Return on Investment) How much money you get back compared to how much you put in. Like spending $20 on groceries to make meals that would cost $60 at restaurants. MRR (Monthly Recurring Revenue) Predictable income you receive every month from subscriptions, memberships, or retainers. Like a gym's membership fees. CAC (Customer Acquisition Cost) How much you spend (money and time) to acquire each new client. Some clients find you organically (low CAC), others require significant marketing investment (higher CAC). LTV (Lifetime Value) Total amount a client will spend with you over their entire time working with you. Your favorite coffee shop doesn't see you as a "$5 customer" — you're a "$3,600 customer" over 5 years. Revenue vs. Profit Revenue is all money coming in. Profit is what's left after expenses. These are NOT the same thing. You can have a "$100K business" and be broke if expenses are too high. Vanity Metrics vs. Actionable Metrics Vanity metrics look good but don't help you make decisions (total followers, page views). Actionable metrics directly impact decisions (conversion rate, client retention).