Starting a business in Midland—or anywhere in Michigan—can feel like learning a new language. Words like equity, cash flow, and margin get tossed around fast, and understanding them early helps you make sharper decisions, talk confidently with investors, and avoid costly missteps.
If you’re joining the Midland Business Alliance, you’re already surrounded by mentors and resources designed to help you succeed. This guide distills the essential vocabulary every new entrepreneur should know—and how each term connects to your day-to-day operations.
TL;DR
If you remember nothing else:
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Cash flow keeps you alive.
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Revenue isn’t profit.
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Equity means ownership.
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Your break-even point is where you stop losing money.
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Always know what your margins are.
Key Business Terms in Everyday Language
|
Term |
What It Means |
Why It Matters |
|
Revenue |
Total money your business brings in before costs. |
It’s your top line—the first number on every income statement. |
|
Profit |
What’s left after you pay all expenses. |
It shows whether your business model actually works. |
|
Cash Flow |
The movement of money in and out of your business. |
A profitable business can still fail if it runs out of cash. |
|
Equity |
Ownership stake in the business. |
If you own 60% equity, you own 60% of the company. |
|
Assets |
Anything of value your company owns (cash, equipment, property). |
Assets help you get loans or show your company’s strength. |
|
Liabilities |
Money your company owes (loans, accounts payable). |
The fewer liabilities, the healthier your balance sheet. |
|
ROI (Return on Investment) |
A measure of gain versus cost. |
Used by investors and owners to evaluate success. |
|
Break-Even Point |
When revenue equals expenses. |
It tells you when your business starts making real profit. |
Checklist: How to Build a Strong Financial Foundation
Every Midland entrepreneur should:
Open a dedicated business bank account.
Track monthly income, expenses, and taxes using reliable software.
Review your profit and loss statement quarterly.
Learn the difference between gross and net profit.
Separate personal and business spending—always.
Register for an Employer Identification Number (EIN) via the IRS.
Protect your venture with insurance and proper business licenses.
Tip: The Michigan Small Business Development Center offers free one-on-one business counseling for local entrepreneurs.
Spotlight: Understanding a Letter of Intent
In business, you’ll often start discussions with a Letter of Intent (LOI). This document outlines the preliminary understanding between parties before finalizing a formal agreement. It’s a roadmap—it shows intent without yet being legally binding.
Companies use LOIs to announce new partnerships, purchases, or upcoming deals. For a full breakdown, you can explore the meaning of a letter of intent and how it fits into the negotiation process.
FAQ: Common Questions from Midland Entrepreneurs
Q1: What’s the difference between gross and net income?
Gross income is your total earnings before expenses. Net income is what remains after all costs and taxes are deducted.
Q2: Is a business plan still necessary?
Yes. Even if informal, it helps clarify your vision, attract investors, and measure progress. The U.S. Small Business Administration’s Business Plan Builder is a great starting point.
Q3: Should I form an LLC or a sole proprietorship?
An LLC offers liability protection and credibility. Check the Michigan Department of Licensing and Regulatory Affairs’ LLC filing portal for requirements.
Q4: How do I calculate my break-even point?
Divide your fixed costs by your gross margin percentage. The result tells you how much you must sell to cover expenses.
Step-by-Step: How to Read a Basic Income Statement
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Start with Revenue – The total income from sales.
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Subtract Cost of Goods Sold (COGS) – Direct costs like materials or labor.
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You Get Gross Profit – Revenue minus COGS.
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Subtract Operating Expenses – Rent, utilities, salaries, marketing.
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Now You Have Operating Profit – Also known as EBIT (Earnings Before Interest and Taxes).
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Finally, Subtract Taxes and Interest – What’s left is your Net Income—your true profit.
Additional Resources for Entrepreneurs
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Michigan Economic Development Corporation – Statewide business growth programs.
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IRS Small Business Tax Center – Guides for managing business taxes.
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Entrepreneur.com Encyclopedia – Fast reference for business terminology.
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SCORE Mentorship Network – Free mentoring for startups nationwide.
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Indeed Hiring Resources – Tools to help you scale your team confidently.
Product Spotlight: QuickBooks Online
Many Midland business owners use QuickBooks Online for tracking revenue, expenses, and invoices. It’s beginner-friendly and syncs with bank accounts, giving you real-time visibility into cash flow.
Launching a business in Midland is an adventure—equal parts risk, resilience, and reward. Knowing the language of business helps you make smarter choices, talk to lenders and partners with confidence, and spot opportunities faster.
Every great company starts with clarity—and clarity begins with understanding the words that shape your decisions.
