Summary
Business plans have their own vocabulary, and lenders, investors and government programs expect founders to use it correctly. This glossary explains more than 60 business planning terms in plain English, grouped into six areas: plan structure, market and customers, strategy, operations and risk, funding, and Canadian business structures and registration, including the CRA business number (BN) and BN registration. Use the search tool to find a term quickly, and see the tables comparing funding types and business structures.
The first time a loan officer asks for your "sources and uses," an investor mentions a "SAFE with a cap," or a program officer wants your "SOM," it's easy to nod along and hope the meaning becomes clear later. Many founders do. The trouble is that misunderstanding a term usually means leaving something out of the plan that the reader specifically expected.
This glossary covers the language of business planning itself: how a plan is structured, how markets are sized, how strategy and operations are described, how funding works and how businesses are set up and registered in Canada. It complements our financial modeling glossary, which covers ratios and model mechanics in depth.
If you'd rather have someone translate it all into a finished plan, Ledgerive's business plan services work with founders across Canada.
Need help turning the jargon into a plan?
Our CPA-backed team prepares business plans and financial models that use these terms the way lenders and investors expect. Book a free 30-minute call.
1. Why the Vocabulary Matters
- Readers scan for specific sections: a lender looks for "sources and uses"; if it's called something else or missing, the plan looks incomplete.
- Precision builds credibility: confusing revenue with profit, or TAM with SOM, signals inexperience.
- Canadian specifics matter: registration, tax and program terms differ from US guides found online.
2. Search the Glossary
Type a word or pick a category to filter the terms below.
3. Plan Structure Terms
- Executive summary
- A one- to two-page overview of the whole plan, including the funding request. Many readers decide whether to keep reading based on this page alone.
- Business model
- How the company creates value and makes money: customers, offering, channels, revenue streams and cost structure.
- Business model canvas
- A one-page template that maps a business model across nine building blocks, such as customer segments and key partners.
- Lean (one-page) plan
- A short plan summarizing the essentials, used to guide decisions and updated often; not usually enough for lenders on its own.
- Traditional business plan
- A full plan with market analysis, operations, management and financial projections, typically required by lenders and programs.
- Mission and vision
- The mission states what the business does and for whom; the vision describes what it aims to become. Keep both short.
- Milestones
- Dated, measurable goals such as opening a location, hiring a manager or reaching a revenue level.
- Financial projections
- Forecast income statement, balance sheet and cash flow, usually three to five years with monthly detail for year one. Our financial modeling services build them.
- Appendix
- Supporting documents at the end of the plan: quotes, leases, résumés, letters of intent and detailed financial schedules.
- Funding request (the "ask")
- The exact amount, type and term of financing sought, and what it will be used for.
4. Market and Customer Terms
Market sizing funnel: illustrative Ontario meal-prep business
Not to scale; figures are hypothetical
- TAM (total addressable market)
- Total demand for your type of product or service, in dollars or units.
- SAM (serviceable available market)
- The part of TAM your model, location and channels can actually reach.
- SOM (serviceable obtainable market)
- The share of SAM you can realistically win in a set period; the number readers care about most.
- Target market
- The specific group of customers you'll focus on first, defined by location, demographics, industry or needs.
- Customer persona
- A short profile of a typical customer: who they are, what they need and how they buy.
- Market segmentation
- Dividing a market into groups with similar needs, so you can price and market to each.
- Competitive analysis
- A comparison of direct and indirect competitors on price, features, location and reputation.
- Market penetration
- The share of your target market you've captured; also a strategy of selling more to an existing market.
- Primary vs. secondary research
- Primary research is gathered yourself (interviews, surveys); secondary research comes from published sources such as Statistics Canada.
- Letter of intent (LOI)
- A non-binding letter from a prospective customer or partner showing serious interest; strong evidence in a plan.
5. Strategy Terms
- Value proposition
- The problem you solve, for whom, and why customers should choose you over alternatives.
- Unique selling proposition (USP)
- The specific feature or benefit that sets you apart from competitors.
- Competitive advantage
- Something that lets you outperform competitors over time, such as location, cost, expertise or relationships.
- Go-to-market (GTM) strategy
- How you'll reach customers and make first sales: channels, pricing, marketing and sales process.
- Pricing strategy
- How prices are set: cost-plus (cost plus a markup), competitive (based on rivals) or value-based (based on customer value).
- Sales channels
- The routes products reach customers: direct, online, retail partners, distributors or marketplaces.
- SWOT analysis
- A summary of internal strengths and weaknesses and external opportunities and threats.
- PESTLE analysis
- A review of political, economic, social, technological, legal and environmental factors affecting the business.
- KPIs
- Key performance indicators: the few numbers you track to judge progress, such as gross margin, customer count or utilization.
- Exit strategy
- How owners or investors eventually realize value: sale, merger, family succession or management buyout.
6. Operations and Risk Terms
- Operating plan
- How the business runs day to day: location, suppliers, equipment, processes, staffing and hours.
- Capacity
- The maximum output the business can produce or serve with current resources, such as chairs, machines or staff hours.
- Supply chain
- The sequence of suppliers and logistics that gets inputs to you and products to customers.
- Organizational chart
- A diagram of roles and reporting lines, showing who is responsible for what.
- Key person risk
- The risk that the business suffers if one essential person leaves or becomes unavailable.
- Advisory board
- Informal advisers who lend experience and credibility, without the legal duties of a board of directors.
- Risk register
- A list of key risks with their likelihood, impact and how you'll reduce them.
- Contingency plan
- What you'll do if a major risk happens, such as losing a large customer or a supplier failing.
- Operating roadmap
- A 12-month schedule turning the plan into quarterly actions, owners and budgets.
- Variance analysis
- Comparing actual results with the plan each month and explaining the differences; our bookkeeping services provide the monthly actuals.
7. Funding Terms
| Type | Examples | Repay? | Give up ownership? |
|---|---|---|---|
| Debt | Term loan, line of credit, CSBFP loan, BDC loan | Yes, with interest | No |
| Equity | Angel investors, venture capital, partners | No | Yes |
| Non-dilutive | Grants, tax credits such as SR&ED | Usually no (conditions apply) | No |
- Sources and uses of funds
- A table showing where project money comes from and exactly how it's spent; both sides must total the same.
- Owner equity (owner's contribution)
- Your own money invested in the business; lenders want to see it at risk.
- Term loan
- A lump-sum loan repaid over a set period, usually for equipment, renovations or acquisitions.
- Line of credit
- A flexible borrowing limit for short-term working capital; you pay interest only on what you use.
- Working capital
- The money needed to run day-to-day operations, such as inventory and receivables, before customers pay.
- Angel investor
- An individual who invests personal money in early-stage companies, often with mentoring.
- Venture capital (VC)
- Professional funds that invest in high-growth companies in exchange for equity.
- SAFE
- Simple agreement for future equity: money now that converts to shares at a later priced round, usually with a valuation cap or discount.
- Convertible note
- A loan that converts into equity at a future round, typically with interest and a maturity date.
- Term sheet
- A short, mostly non-binding summary of the main terms of an investment or loan before final documents.
- Due diligence
- The investigation a lender, investor or buyer carries out to verify your claims, finances and legal position.
- Data room
- An organized, secure folder of documents prepared for due diligence.
- Non-dilutive funding
- Funding that doesn't require giving up ownership, such as grants, tax credits and most loans.
- Bootstrapping
- Growing with founder money and customer revenue instead of outside funding.
For lender-specific programs such as BDC, CSBFP and Futurpreneur, see our guide to business plans for Canadian lenders, and our explainer on why most business plans fail lenders.
8. Canadian Structure, Registration and BN Terms
| Structure | Liability | Tax filing | CRA business number |
|---|---|---|---|
| Sole proprietorship | Owner personally liable | Personal return | Needed for GST/HST, payroll or import-export |
| Partnership | Partners generally liable (limited partnerships differ) | Partners' returns; partnership information return in some cases | Needed for GST/HST, payroll or import-export |
| Corporation | Generally limited to the corporation | Corporate return (T2) | Assigned at incorporation |
- CRA business number (BN)
- A nine-digit business number the Canada Revenue Agency uses to identify your business across federal tax programs.
- BN registration
- Getting a CRA business number and opening the program accounts your business needs; corporations receive a BN when they incorporate.
- Program accounts (RT, RP, RC, RM)
- Accounts attached to your BN: GST/HST (RT), payroll (RP), corporate income tax (RC) and import-export (RM).
- Small supplier threshold
- $30,000 of taxable sales in four consecutive calendar quarters; above it, you generally must register for GST/HST.
- Payroll remittances
- Income tax, CPP and EI deducted from pay and sent to the CRA on a set schedule; see our guide to CRA payroll remittance schedules.
- Ontario Business Registry
- Ontario's online system for registering business names and corporations and filing annual returns.
- Master Business Licence (MBL)
- The document Ontario issues when a sole proprietorship or partnership registers a business name.
- Federal vs. provincial incorporation
- Incorporating federally (Corporations Canada) gives name protection across Canada; provincial incorporation registers in one province, with extra-provincial registration needed elsewhere.
- Shareholders' agreement
- A contract among owners covering decisions, share transfers, buyouts and disputes; essential when there's more than one owner.
- CCPC
- Canadian-controlled private corporation; this status generally gives access to the small business deduction and enhanced SR&ED credits.
- Franchise disclosure document
- In Ontario, the Arthur Wishart Act requires franchisors to give prospective franchisees a disclosure document at least 14 days before signing or paying.
- Gross vs. net lease
- In a gross lease, rent includes most property costs; in a net lease, the tenant also pays a share of taxes, insurance and maintenance.
For practical advice on putting these terms to work, read our top business planning tips for Canadian founders. Growing companies often add part-time senior finance help through our fractional CFO services.
9. Frequently Asked Questions
What is the difference between a business plan and a business model?
A business model describes how a company creates value and makes money: who its customers are, what it sells, through which channels and at what cost. A business plan is the document that explains that model in detail, along with the market, operations, team, milestones, funding needs and financial projections.
What are TAM, SAM and SOM in a business plan?
TAM (total addressable market) is the total demand for a product or service. SAM (serviceable available market) is the part of that market your business model and geography can actually serve. SOM (serviceable obtainable market) is the share you can realistically win in a set period, which is the figure lenders and investors care most about.
What is the difference between a lean business plan and a traditional business plan?
A lean or one-page plan summarizes the key elements, such as value proposition, customers, channels, revenue, costs and milestones, and is used to guide decisions and change quickly. A traditional business plan is longer and more detailed, with full market analysis and financial projections, and is usually needed for lenders, investors and government programs.
Do I need to register my business name in Ontario?
Generally, a sole proprietorship or partnership operating under a name other than the owner's own legal name must register the business name with the Ontario Business Registry, which issues a Master Business Licence. Corporations register their names when they incorporate, either provincially or federally.
What is a CRA business number and when do I need one?
A business number is a nine-digit identifier the Canada Revenue Agency assigns for federal tax programs. You need one when you incorporate, register for GST/HST (required once taxable sales exceed $30,000 in four consecutive calendar quarters), hire employees and open a payroll account, or import or export commercial goods.
Summary
Knowing business planning vocabulary helps you give lenders, investors and program officers exactly what they expect. Structure the plan with a clear executive summary and funding request, size the market honestly with TAM, SAM and SOM, state your value proposition and go-to-market strategy, show operations and risks, understand debt, equity and non-dilutive funding, and complete BN registration so your CRA business number and program accounts are in order.
Turn the terms into a fundable plan
Ledgerive provides business plans, financial models, bookkeeping and fractional CFO support for founders across Canada. Book a free 30-minute call or reach us directly.
Note: Definitions are general explanations for Canadian founders. Market sizing figures are hypothetical. Registration, tax and legal requirements vary by province and situation.