8 Commonly Confused Business Terms Explained

Do you remember watching Charlie Brown as a kid? 

If so, you know the all-too-familiar scenes where his school teacher lectures the class in the most monotonous way. 

While she was probably saying some important (although boring) stuff, what the kids (and the audience watching) heard was…


If business words, phrases, and terminology sound like this to you, it’s time we have a chat.

You’re not alone in feeling swamped by all the acronyms and stuffy corporate lingo, and you can totally learn how to navigate these terms without feeling like you have to download the business edition of Rosetta Stone to learn an entirely new language!

I genuinely believe YOU can successfully run the creative business of your dreams (NO formal business experience required). There are so many opportunities for creatives to share their talents with the world and earn a living doing the work they love. 

So it seriously bums me OUT when creatives hesitate to pursue their business ambitions because they find all of the confusing business jargon and seemingly complicated terms that flood the online entrepreneurship world to be DAUNTING.

The good news: Business terms don’t have to be as COMPLEX as they seem. And if they’re perplexing at first, it has nothing to do with you or your business sense, even if you sometimes feel like an imposter. 

The tricky news: TONS of business-related terms are regularly mixed up and misused! Yes, even by the industry “pros.” And if you’re like me and went to art school instead of business school, you probably weren’t introduced to any of these terms before starting your business, so it can be tough to distinguish fact from fiction. 

Business terms can be confusing, especially when you’re just getting started. This blog will explain how to use these terms correctly so that you can communicate effectively with clients, team members, and colleagues.

I’ll help you sift through these commonly confused and misused terms so that you know the key differences, can confidently lead your creative business as CEO, and ultimately feel as prepared and knowledgeable as a newly minted MBA (Master’s in Business Administration) graduate— without needing to actually go to business school. 

8 Commonly Misused Business Terms

You’ll find that you’ve probably heard most of these business terms and acronyms, but they are so frequently misused or incorrectly interchanged that they lose their meaning! Let’s get some clarity around each of these commonly confused business terms.

Revenue vs. Profit 

First, let’s talk about money! Empowering yourself with the correct and accurate business terms can help you develop your financial literacy and how you approach money as a creative business owner. 

So what’s the difference between revenue and profit? These two financial terms get mixed up WAY more often than they should. It’s a shame because when misused (intentionally or not), they can be misleading! 

Business gurus often share their flashy REVENUE numbers as a marketing ploy meant to impress their audience and prospective clients. While they may indeed earn significant revenue, what really matters at the end of the day is their PROFIT.

Revenue and Profit are NOT the same!

What’s Revenue?

Revenue is the total money your business is bringing in BEFORE expenses. To get this number, you simply add up every sale. 

When business owners ONLY share their revenue numbers they may be misleading their audience and implying that this is the money they’re taking home after expenses, when that’s not actually true. 

If you as a business owner are only looking at your revenue, you may be lying to yourself too! If you only look at the money coming in but not the money going out, you may be painting a false picture for yourself. It’s important to get comfortable with ALL of your financial numbers no matter how long you’ve been in business! 

What is Profit?

Profit is the total amount of money you actually make when all is said and done. This is the number you calculate after costs (a.k.a. cash in your pocket). You find this number by subtracting your expenses from your revenue, which will tell you how much you can “take home.”

PROFIT matters more than REVENUE because a business could bring in a million dollars of revenue but not make much profit (relatively speaking). While a million dollars sounds wonderful, if they’re paying $800,000 in production costs, salaries, or materials, they’re only actually earning a profit of $200,000. 

On the other hand, A business may earn a revenue of $250,000 and only spend $50,000 on expenses, leaving them with the SAME profit as the 7-figure business. Sometimes it is better to build and scale a lean business, meaning your expenses are only a small portion of your overall revenue. 

Expenses vs. Expense vs. Investment 

Speaking of money going OUT of your business, it’s time to shift your perspective around spending money. 


Because not all spending is a loss! 

Every business will incur expenses. Some are necessary simply to be operational (i.e., materials, office space, software subscriptions), while others are more strategic (i.e., growing your team, marketing)!

So what’s the difference between business expenses, an expense, and an investment


Business expenses are the total money going out of your business*. Add up anything your company pays for to get this number!

*In this context, we are including both true expenses and investments because it is money going out (keep reading to learn more about why investments are unique and strategic).


We drop the “s,” and the whole meaning of the word changes! Stick with me for a moment! When we say expense, we are referring to spending money on something that will NOT generate or contribute to an increase in profit OR will only generate or contribute to short-term profitability (generally one year or less with no lasting impact). An expense will NOT pay for itself; it will drain your resources.


While we deduct both investments and our expenses to calculate our true profitability as a business, investments are very different from expenses. When you invest, you are spending money on something that will generate or contribute to an increase in long-term profit. An investment will pay for itself –and then some– over time! 

COO Tip: While some people consider salaries an expense, I believe when done right they are an investment in hiring and retaining the very best talent to help your business flourish and scale. 


Ever hear someone say, 

“Make sure you consider your ROI!” …

…and wonder what in the world they’re talking about? You’re not alone!

Under the umbrella of investments, you’ve probably encountered the acronym “ROI.” This stands for Return on Investment. It’s a measure to help you better understand the money you make (your return) on an investment. It shows your investment’s effectiveness by comparing the amount paid vs. the amount earned. 

Early on this is especially helpful so you can flag where your money is going and make sure your investments are truly profitable. 

But people throw this term around loosely, without using it correctly. Technically, it’s a calculation used to measure the profitability of an investment and it’s usually represented as a percentage. At its core, it’s a number or a metric that requires a simple calculation.  

But if you’re math-phobic, don’t panic! Calculating your ROI is easy!

ROI = (Profit / Cost of Investment) x 100

For example, Imagine you’ve invested in hiring a copywriter (Not sure what a copywriter is? Keep reading I’ll explain below) to write the sales emails for your upcoming product launch. While you invested $2k in this service, the ROI was high. Within just 6 months you recouped this initial investment and made over $3k profit (take-home after expenses) in product purchases.

This is what the math would look like (calculators are WELCOME):

ROI = ($3,000 Profit / $2,000 Cost of Investment) x 100 = 150% ROI

While ROI has some limitations, it is a great way to compare investment options and assess the success and efficiency of any business investment. Knowing your copywriter gave you a 150% ROI will likely make your decision to hire one next time around a whole lot easier! You’ll feel confident in your investment now and in the future!

PM System vs. CRM System

So how do you begin keeping track of these expenses, investments, ROI, and all the other things you need to manage as CEO?

As you take on more work and, as a result, acquire more duties and responsibilities, you’ll realize you need systems to help you keep track of your finances, communication, task management, and more! This is where PM Systems and CRM Systems step in. 

But what do these business acronyms even mean?!

In theory, acronyms are intended to make things EASIER. But more often than not, they make things harder to define early on as we fumble to remember, “what exactly do each of those letters stand for again?!” 

Complicating things even further, PM systems and CRMs are different, but confusing the two is common and understandable as some of their capabilities overlap. 

PM System

PM is an abbreviation for Project Management. Project management systems and software are used to oversee your projects. These business tools often manage tasks, projects, deliverables, automations, team, time, scope, and budget.

Just like the brand name Kleenex is often used in place of the word tissue (even though not all tissues are actually Kleenex brand), many PMs are used the same way. This can confuse online business newbies. In lieu of “PM,” you may hear people use these brand names as phrases instead:

  • ClickUp *Please note this is an affiliate link, which means you get a discount, and I may earn a small commission when you click the link at no additional cost to you.
  • Trello
  • Asana

CRM System

CRM stands for Customer Relationship Management. Customer Relationship Management Systems or Software (often shortened to just CRM) refer to the software you use to manage client relationships and information. CRMs are often used to track client data including important information, communication, contracts, payments, projects, team members, and more. The goal is to allow you to serve your clients better and help convert leads to sales and retain current clients as a loyal fan base! Plus, they allow you to automate recurring tasks related to your work for a more consistent and manageable client experience. 

Like PM Systems, people often use brand names in place of the term CRM System. Some of the most popular brand name CRMs include:

COO Tip: I created a value-packed freebie to help you decide which of the two most popular CRMs among creative entrepreneurs,  Honeybook or Dubsado, is right for you (especially if you’re in the early stages of your creative business). Click here to access it now!

Copyright vs. Copywriting

Ohhh, the English language! Write and right sound so alike; it makes sense that these two terms are mind-boggling! If you are new to marketing for your business, this one has likely tripped you up at one point or another! Most of us are familiar with the term copyright (I think of the bold copyright infringement disclaimers that would pop up when you pressed play on a VHS tape– I may be dating myself here!) but copywriting very well may be a brand new term for you. 


Copyrights are legal protections for your work. Copyright can be secured for your business branding/logo, marketing materials, and website. If you have proprietary business materials like a trademarked process or an online course, you may want to explore getting them protected under copyright law to avoid someone stealing your intellectual property. 


Copywriting has nothing to do with the legal world. A copywriter is a person who writes copy and text for the marketing and promotion of a business, person, or idea. All businesses NEED copywriting or “copy”, no matter how big or small! You can hire a copywriter to write a variety of things for your business, such as sales pages, emails, the words on your website, and ads. Some copywriters are also content writers that write the captions, scripts, or materials for your social media posts (like Instagram and TikTok), blogs, or even what you plan to share in a Youtube video!

BONUS Glossary of terms you need to know

Aside from these commonly misused pairs, there are several other terms you will want to know when it comes to overseeing your creative business. Consider this a dictionary of sorts to help you sift through the noise and get to the meanings that matter! 


As an outsourced COO and business coach for creatives, systems, rhythms, processes, procedures, and SOPs are the lifeblood of my work! Each piece serves a unique, impactful role in our creative businesses. However, they tend to be used interchangeably and incorrectly. While they are indeed related, systems, processes, procedures, and SOPs are not synonyms and have very different functions!

Systems are clusters of recurring tasks made up of several pieces:

  • Rhythms (when something is done and how frequently)
  • Processes (the general steps)
  • SOPs (the uber detailed directions that specify precisely how these processes should be done)
  • Software (the tech tools that support your systems) 

You can learn all about the difference between these terms in my previous blog post, “Operations Rhythms: The Fuel Your Business Needs.”


ICA stands for Ideal Client Avatar. No, not the blue people from the Disney movie. These avatars are a bit different! In marketing, an ideal client avatar is a profile or description of your perfect dream customer. The customer you are trying to reach and serve. It is used for direct marketing and product development so that your offers solve a specific need and your marketing efforts speak directly to the people you’ve set out to support!


KPI is an acronym that stands for Key Performance Indicators. KPIs typically refer to numbers that tell you how successful your business is in a specific area of your work. You can set KPIs for sales, finances, marketing initiatives, customer experience, team management, and more! KPIs will help you set, track, and assess your progress towards specific goals in a measurable and subjective way! 

I like to say, “what we can measure, we can manage.” 


Your capacity as a business is the maximum output you and your team can produce. It measures how much you’re able to achieve within a set period. Ultimately it is connected to your time! 

Capacity is influenced by several factors that I refer to as Capacity Levers:

  • Your goals (Financial, Personal, and Business)
  • Your daily and weekly schedule (how many hours of each 24-hour day you are able to commit to your business and how many hours per week you want to work)
  • The time it takes for you to deliver your service, offer, or product
  • Your offers and pricing

You can move each of these Capacity Levers up, down, and within a range. The objective is to get all of your levers lined up in a way that supports your goals.

Want to learn about assessing and optimizing your capacity? Be sure to check out my previous blog post, “Does Your Creative Business Add Up?”

COO Tip: Conducting a time audit is a great place to start when assessing your capacity. I created this free Time Audit template for you! Click here to start auditing your time for the next seven days.

From Theory To Practice

Fancy business jargon isn’t just meant to be spewed at stuffy corporate meetings! Once you understand the meaning and value of these terms they can be empowering to you as a small business owner or entrepreneur! They’re meant to be understood and applied to help you operate smoothly, efficiently, and confidently within your creative online business. 

Tell me, did you learn something new from reading this blog post? Or, is there a business term I didn’t cover that you WISH you could better understand? 

Shoot me an email and let me know if you’re getting what you need from these weekly blogs. How can I continue to support you as a creative entrepreneur? Click here to share your thoughts so I can serve only the best and most helpful content each week!


PLUS, I have something REALLY special in the works. If you’ve been wanting to lay a strong foundation for your creative business, but aren’t quite ready to invest in 1:1 coaching, you’re in luck. I’m curating a course specifically for creative entrepreneurs like YOU. Click here to join the no-obligation waitlist and be the first to know about all the details, launch dates, and bonuses!

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