Common Industry Terms

Doing a little research to hone your internet knowledge? Let us help you speed the process with some definitions for common terms used in our industry. Below are many of the key terms that will come up during your website sale or purchase transaction, a dictionary definition of the term and a layman’s road map to what they really mean. Read on, enlightenment is just ahead!

AdSense

ad • sense

noun

definition

AdSense is a program run by Google that allows publishers or website owners to join the Google Network of content sites and serve automatic text, image, video, or interactive media advertisements, that are targeted to match site content and audience. These advertisements are administered, sorted, and maintained by Google and they can generate revenue on either a per-click or per-impression basis for the site that servers them.

in layman’s terms

Google Adsense is a cost-per-click or CPC advertising program that allows advertising to be placed on or served to a website. It is one of the most common ways people monetize their blog or portal website. It can even act as a secondary revenue stream for an e-commerce business.

Website owners sign up for the Adsense program and then place Google JavaScript (small snippets of website programing code) at various locations in their website content. When the pages are requested by a web browser the embedded Google JavaScript code requests an advertisement from the Google servers in real time and then embeds the ad in the webpage. If a user selects or clicks on one of the advertisements shown on the site, Google charges the advertiser for the “click” and pays the site owner a fee for displaying the advertisement. This type of arrangement is known as a CPC or cost-per-click service.

Some advertising schemes charge on a per-ad displayed basis. Each ad shown is called an impression, a term used in the traditional printed newspaper and magazine advertisement industry. In this case the advertisers pay a fee per thousands of ads severed and the site owner is paid a small fee whenever their site displays an ad.

Cost per click is the most common type of advertising system in use today on the Internet as it is a pay for performance style of pricing model. Websites for sale on the Website Properties site whose category is “Advertising Portal” are website businesses that make the majority of their revenue by placing CPC ads in their website content.

AdWords

noun \ˈad\ /wərds/

definition

AdWords is an online advertising service that places advertising copy above, below, or beside the list of search results Google displays for a particular search query. The choice and placement of the ads is based on a proprietary algorithm called the Google AdWords Auction. It determines which ads will be displayed based on relevance to the keywords searched, ad price bid by the advertisers and click-through rate (the historical performance) of the various competing ads. This service is the primary revenue source for Google.

in layman’s terms

AdWords is the name of Google’s pay-per-click (PPC) advertising program. In the beginning, Google entered the internet as a search provider. They wrote programs (called spiders) that traverse (called crawling) the internet’s various websites, blogs and other sites to create an index of all the resources on the net. Their service allowed users to search for resources on the internet by entering keywords that they would match to websites indexed in there database. Initially all results shown for specific searches were organic. Organic is a term that means that the websites shown are displayed purely because of their relevance to the keywords searched. Google’s search engine, spiders and indexing system was so effective it became the predominate tool for finding stuff on the internet.

Leveraging their success in the organic search market, Google began to offer advertisers the opportunity to have their website advertisements placed alongside the organic search result s for a fee. Shown at the top, right and sometimes the bottom of the search results, this product was the foundation of Google’s monetization of their search engine product and was the revenue stream that made Google one of the largest and most profitable companies in the world.

Early versions of the AdWords program allowed advertisers to place their ads with any keywords they wished to pay for. Competition for ad placement was essentially a price based auction and key ad spots went to the highest bidder. Unfortunately, unscrupulous advertisers quickly took advantage of this system and began to place ads for products against unrelated keywords in the rush to have their products reach as many customers as possible. This arrangement made many of the advertisements displayed for a given search query irrelevant. The situation put the client experience while using the Google search engine at risk, and as this service formed the basis of the Google Empire, the rules were quickly changed.

Today’s Google AdWords is a sophisticated advertising product that allows advertiser to bid for ad placement against various keywords or keyword combinations. The system for deciding which ad should be displayed for a given search string is called the Google AdWords Auction. This auction is a proprietary algorithm that takes into account the advertisement’s (and it associated landing page’s) relevance to the keyword, the amount of money bid by the advertiser to have their ad shown and the historical performance of the advertisement-keyword combination (call the click thru rate). This auction process is designed to maximize both the user experience and Googles revenues attained by the AdWords product.

By ensuring the ads and landing pages are relevant to the keywords (i.e. searching for “lawn mowers” does not display an ad for cars, or worse, an ad for lawn mowers that points to a car centric landing page) Google helps ensure users are only shown ads relevant to their search criteria. Factoring in CTR is intended to favor ads that are popular and hence more likely to be relevant. This also ensures that ads shown are historically more likely to be clicked, which is good for Google as this is a requirement which must be met in order for Google to charge the advertiser. Finally each advertiser enters a maximum bid they will pay for any particular ad placement. The bid price is weighted against the other criteria to determine which ads are displayed.

The Keyword Auction is a real-time process that for each search term entered, reviews all of the advertisements competing for the given search term. For each advertisement it calculates an Ad Rank. Ad Rank is a number determined by a formula that multiplies the advertiser’s max bid by something called the advertisement’s Quality Score. The Quality Score is in turn a number determined by the advertisement’s relevancy to the search term, the advertisement quality, its landing page’s relevance and the ads historical CTR. Although the Quality score does contain many factors, most SEO specialists agree the most heavily weighted factor is the advertisement’s CTR.

The advertisement with the best Ad Rank gets the best position on the search results page. Second place gets the next spot and so on until all the advertisement spots on the page are filled. The combination of bid price and quality score is intended to balance the price an advertiser is willing to pay for an ad with the user experience. Poor ads (i.e. low quality score) will have a tough time creating a high page rank even with higher bids, and conversely, quality ads (i.e. high quality score) can pay less for a first position advertisement then lesser quality advertisers.
Everyone wins, especially Google.

Affiliate

af · fill · i · ate

verb \ə-ˈfi-lē-ˌāt\

definition

to closely connect (something or yourself) with or to something (such as a program or organization) as a member or partner

in layman’s terms

With respect to the internet, the term affiliate is most often used in conjunction with the process of Affiliate Marketing. This is a type of performance-based marketing in which one business, usually selling a product or service, rewards other businesses or individuals for directing visitors from their own websites to the pages containing the product or services for sale.

The industry has grown and expanded greatly since 1994 when the concept of affiliate marketing was first put into practice and patented by William J. Tobin, the founder of PC Flowers & Gifts. Today an affiliate marketing program can often contain multiple players; The Merchant (also known as the “retailer”) – this is the business selling the product or service. The Network – this is commonly an intermediary company that through associations with many merchants and by the creation of payment schemes, API’s and other formal processes, offers affiliate programs from various merchants to many publishers; The publisher (also known as the “affiliate”) – this is the individual or business whose website or blog will advertise the merchant’s products and services; and the Customer – the ultimate consumer or purchaser of the product.

A typical transaction would proceed as follows. A customer, visiting the publisher’s website, would be presented with an advertisement or other form of endorsement for a merchant’s product. If the customer selects the advertisement they will be re-directed to the appropriate page on the merchant’s website. Although this link appears to function much like all links on the internet, typically affiliate links either pass the customer through the Network’s website first or contain an affiliate identification code. These mechanisms are in place to allow the merchant or network to track where inbound traffic to the website originated in order to give credit to the publisher should the transfer of the traffic result in a purchase at the merchant’s website. The customer’s web browser will get a “cookie” as a result of this process with information to identify the publisher as the source of the traffic. Should the customer complete a purchase, the data in the cookie will be used by the merchant or network to reward the publisher for the transition with an affiliate fee. Affiliate marketing programs typically only pay when traffic results in a sale, not simply for the click, like other pay-per-click advertising schemes.

Amazon Seller Central

Am • a • zon sell • er cen • tral

noun \ăm′ə-zŏn′\ sĕl′ər\ sĕn′trəl\

definition

Amazon Seller Central is the web interface used by merchants to manage and view their orders. If you sell via Seller Central, you’re considered a marketplace or third-party seller. As a marketplace seller, you have different options for managing your virtual storefront. Amazon has a pay-as-you-go system for individual sellers as well as a pro merchant option for high-volume sellers. Pro merchant sellers can also choose Fulfillment by Amazon (FBA) whereby Amazon takes care of shipping, customer service, and returns.

in layman’s terms

Once registered as a seller on Amazon.com, one can chose an individual or professional selling plan. Both of these options consider the account to be a third party seller allowing the seller to be in control of their virtual storefront, customers, brand presence and content. As an Individual Seller, you pay per item sold, add items one at a time and manage your business from a single Amazon account. As a Professional Seller, you pay a flat monthly subscription fee, add items by bulk, have access to reporting tools and have the opportunity to choose fulfillment by Amazon.

Amazon Vendor Central

Am • a • zon ven • dor cen • tral

noun \ăm′ə-zŏn′\ˈven-dər\ sĕn′trəl\

definition

Amazon Vendor Central is the web interface used by manufacturers and distributors. If you sell via Vendor Central, you’re called a first-party seller. You’re acting as a supplier, selling in bulk to Amazon. Registration on Vendor Central is by invitation only. A tell-tale sign that a company is selling through Vendor Central is the phrase “ships from and sold by Amazon.com.”

in layman’s terms

Only a select few Amazon merchant or distributor accounts are invited by Amazon to register on their Vendor Central platform. Once invited, merchants or vendors sell their products wholesale direct to Amazon.com, Inc. who then posts and sells to customers on Amazon.com. In this scenario whether you are primarily a retailer, distributor or manufacturer, you act as the vendor and Amazon is the retailer. Selling your product to Amazon grants them ownership of the inventory purchased just as any retailer owns products it purchases via wholesale vendors. As far as shoppers are concerned, your product is being sold by Amazon. Considered an exclusive club, being invited to Vendor Central is not only an honor but offers a huge business advantage. With 96 million unique visits per month in the U.S. alone, Amazon dominates online marketing and those Marketplace Sellers glean the rewards and the brand awareness.

Asset Sale

as • set s • ale

noun \ˈa-ˌset also -sət \ /’sāl/

definition

An asset sale is completed when only the assets (as opposed to the common shares) of a company are acquired by a buyer. The buyer may incorporate a new company or use an existing company to acquire selected assets along with management and contracts. This means the seller retains ownership of the company that sold the assets, and must pay all of the existing liabilities and debts before taking the net cash proceeds.

An asset sale carries much less risk for a buyer since any liabilities (disclosed or undisclosed) as well as any contingent expenses (e.g. pending litigation or tax reassessments) stay back with the selling company. The due diligence can then focus on vetting the fair market value of the assets being acquired, as well as the quality of the contracts and employees being transferred over.

in layman’s terms

In an asset sale, the seller retains possession of the legal entity and the buyer purchases individual assets of the company. With regard to the purchase of an online business, assets that are typically included in the sale are the site’s domain name, website coding, ecommerce platform, licenses, goodwill, trade secrets, trade names, telephone numbers and any inventory. There are some occasions where equipment, furniture and fixtures may also be included. The benefit of this type of transaction is that any liabilities remain with the selling business entity and thus carries less risk to the buyer.

An Asset Purchase Agreement

as • set pur • chase agree • ment

noun ˈa-ˌset also -sət\ \ˈpər-chəs\ \ə-ˈgrē-mənt\

definition

An agreement between a buyer and a seller that finalizes terms and conditions related to the purchase and sale of a company’s assets.

in layman’s terms

An Asset Purchase Agreement (APA) is a binding contract signed by both the buyer and seller in the acquisition of a business. The document defines the assets and liabilities to be included with the sale along with other terms of the deal. Since certain assets or liabilities can be excluded from the purchase, it is a common document used to complete a business sale transaction. In addition to outlining effective dates, closing dates, purchase price and payment schedules, the agreement includes seller and buyer representations and warranties, covenants, disclosure restrictions, non-compete clauses among other items.

Cash Flow

cash flow

noun \ˈkash\ \ˈflō\

definition

Is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, limited period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company’s value and situation. Cash flow can be used, for example for calculating parameters: it discloses cash movements over the period.

in layman’s terms

The total net cash flow of a company over a period (typically a quarter, half year or a full year) is equal to the change in cash balance over this period: positive if the cash balance increases, negative if the cash balance decreases. Cash Flow can be used to show a record of something which has occurred in a past time period (like the sale of a specific product) or be an indicator of what’s to come in the future (what a business expects to take in or spend). The business is considered solvent if the business has enough cash to pay employees and creditors timely. A business that does not have enough cash to meets its operating expenses is said to be insolvent.

This term is also frequently used when presenting the financial summary of an internet businesses for sale. In this case instead of as a reflection of the businesses’ cash flows, the term represents the Net Profit of a website business after the interest, taxes, depreciation, amortization (EBITDA) and owner’s compensation have been removed.

Cookie

cook • ie

noun \ˈku̇-kē\

definition

A file that may be added to your computer when you visit a Web site and that contains information about your (such as an identification code or a record of the Web pages you have visited).

in layman’s terms

The term “cookie” was derived from the term “magic cookie”, which is a packet of data a program receives and sends back unchanged. Magic cookies were already used in computing when computer programmer Lou Montulli had the idea of using them in web communications in June 1994. At the time, he was an employee of Netscape Communications, which was developing an e-commerce application for a client. The client did not want to retain partial transaction states on their servers when users left their website before completing a transaction, so a cookie was used to store the transaction state on each user’s computer. Cookies provided a solution to the problem of reliably implementing a virtual shopping cart as a user browsed an e-commerce site.

Essentially, a cookie is a small file containing data that is sent from a server to a web browser when it accesses a website. The cookie is stored in the user’s web browser and is send back to the server whenever the user accesses that website again. The data in the cookie can cover a wide range of information from the user’s name, to the shopping cart contents or even a record of the user’s browsing activity including clicking particular buttons, logging in, or recording which pages were visited by the user as far back as months or years ago. If you have ever wondered how advertiser seems to follow you from website to website or how other websites seem to remember you and even sign you back into your accounts (authentication cookies are used here), it all about the cookies.

Cost of Goods Sold

Cost of Goods Sold (COGS)

noun

definition

Cost of goods sold (COGS) refer to the direct costs attributable to the production of the goods sold by a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good. It excludes indirect expenses such as distribution costs and sales force costs. COGS appears on the income statement and can be deducted from revenue to calculate a company’s gross margin. Also referred to as “cost of sales”.

in layman’s terms

The Cost of Goods Sold is the cost of the merchandise or products that a website business, retailer, distributor, or manufacturer has sold. The figure includes the cost of all components needed to directly create the product including labor. This item is reported on the income statement and can be considered as an expense for the accounting period. At the time the product is sold and its sale is recognized as income, its cost is also expensed. Any profit or loss remaining will show under the gross profit line item. The sales revenues minus the cost of goods sold is gross profit.

Drop Ship

drop-ship

verb \ˈdräp-ˌship\

definition

An arrangement between a business and the manufacturer or distributor of a product the business wishes to sell in which the manufacturer or distributor – and not the business – ships the product to the business’s customers.

in layman’s terms

Unlike a retail ecommerce business that orders product from vendors in bulk, stores the inventory and ships to the customer when an order is received, an internet business that operates a drop ship model partners with vendors who will ship the product directly to the customer for each order received. When an order is received by the online retailer, it is forwarded to the supplier for fulfillment. The supplier will ship the product directly from their warehouse to the customer. While this saves the retailer the time and expense associated with stocking inventory, there are usually dropship or fulfillment fees which result in lower profit margins for the business. The choice to stock or dropship product involves weighing out the pros and cons of each arrangement within each niche.

Due Diligence

due dil·i·gence

noun \ˈdü, ˈdyü\ \ˈdi-lə-jən(t)s\

definition

Research and analysis of a company or organization done in preparation for a business transaction.

in layman’s terms

Generally, offers to purchase a website business are usually contingent on the results of the analysis of the company’s records, also referred to as the Due Diligence Process. During due diligence, the buyer reviews all financial records and other materials to authenticate the initial data presented in the listing and prospectus. The buyer will usually provide a list of the due diligence items requested for review such as income statements, tax returns, bank statements, merchant statements, sales data, product lists, inventory, customer lists, suppliers/vendors agreements, and website analytics. The process takes place for an agreed upon period of time after an offer is accepted by the Seller. Once complete, if the buyer was able to substantiate the data presented to be true and correct, the parties would move to the next step of the transaction which is to create and sign a Purchase Agreement.

Earn Out

Earn Out

noun ərn/ \ˈau̇t\

definition

Refers to a pricing structure in mergers and acquisitions where the sellers must “earn” part of the purchase price based on the performance of the business following the acquisition. In an earnout, part of the purchase price is paid after closing based on the target company achieving certain financial goals.

in layman’s terms

Earnouts in website business purchases usually take on one of two forms; Earnout as part of seller financing or an earnout as an incentive for ongoing support and goodwill.

In the case of financing, an Earnout is a type of contingent payment as a term in the Purchase Agreement where a seller finances a portion of the sale of a business and the payment to the seller then gets based on the earnings of the business over a period of time. The overall idea is that the buyer will run the business and the better the performance, the faster the seller financed loan will be paid off. Although the seller can net more dollars from the sale, some of the risk of the future performance of the business falls back on the seller. As such, this is not typically considered a great deal for the seller and typical financing with interest payments are favored in general.

In the case of an incentive, an Earnout is often offered as a way to extend the option of a higher than expected purchase price to the seller in exchange for continued support of the business and the new owners. This arrangement usually includes a payment based on a percentage of the gross revenue attained by the new owner and is triggered by higher than expected business results. As an example, a buyer may offer 90% of the purchase price at close and an earnout incentive that pays the additional 10% of asking price if the business does 100% of the sales revenue in the first year of operations by the new owner as it did in the previous year. If it exceeds 125% of revenues the payout may be 15% and 20% if it surpasses 150% of sales. These types of arrangements are usually crafted to place some financial risk on the seller to help the business maintain its performance in the first year the business transfer hands with an opportunity to make additional revenue above the original purchase price if the business excels.

EBITDA

EBITDA

abbreviation

definition

Abbreviation for earnings before interest, tax, depreciation, and amortization

in layman’s terms

This term is an acronym for “Earnings Before Interest, Taxes, Depreciation and Amortization”. It is an approximate measure of a company’s net earnings from its Income Statement before the deduction of interest expenses, taxes, depreciation and amortization. The inclusion of these items can make it difficult to assess a business’s true operating profitability since each business entity can have a unique set of circumstances for the financing it uses resulting in interest income and/or expenses, its political jurisdictions establishing its tax structures, its assets determining its depreciation and its historical goodwill resulting in amortization. While not a financial measurement recognized in Generally Accepted Accounting Principles (GAAP), it is widely used in business acquisitions as a way for a buyer to determine a company’s true profitability based on its operations without the effect of these accounting measures and entries.
Revenues – Expenses (Without Interest, Taxes, Depreciation and Amortization) = EBITDA

Escrow

Es·crow

noun \ˈes-ˌkrō, es-ˈ\

definition

a deed, a bond, money, or a piece of property held in trust by a third party to be turned over to the grantee only upon fulfillment of a condition

in layman’s terms

Escrow is a financial agreement between two parties, in which the Escrow agent is a third party that acts as a trustee by overseeing the fulfillment of the specific agreement. Typically, the buyer will deposit money or other funds into the third party account, the Escrow account, where it is held until both parties involved meet the predefined conditions. Once the certain conditions are met, the funds are then transferred to the seller. The purpose of Escrow is to protect all parties in the transaction.

In a transaction for the sale of a website business often the escrow service is setup by the seller’s broker or lawyer. The broker will initiate the account, identify the seller and buyer and all the conditions required to complete the transaction. These conditions must be accepted by both the seller and buyer to complete the transaction setup.

Once the transaction is underway typically the buyer would start by transferring sale proceeds to the escrow account. The Seller would then be required to complete their conditions and have the completed items confirmed by the buyer before funds are released. Conditions such as the transfer of the domain name, signing over vendor agreements, transferring of the hosting accounts are all common seller conditions. Once the Escrow agent confirms any and all conditions have been met by both parties, funds are transferred based on the funds release settings to the Seller and often to the broker to cover seller commissions.

Gross Revenue

gross rev · e · nue

noun \ˈgrōs\ \ˈre-və-ˌnü, -ˌnyü\

definition

Money generated by all of a company’s operations, before deductions for expenses.

in layman’s terms

Gross Revenue is the money a website business collects for providing a product or service before any of its expenses are deducted. For a business that provides a service, income is generally described as Revenues; while a business that provides a product will generally describe its income as Sales on the Income Statement. Revenue is calculated by multiplying the price at which services are sold by the number of units or amount sold.

Letter of Intent

let · ter of in · tent

noun \ˈle-tər\ \əv, before consonants also ə; ˈəv, ˈäv\ \in-ˈtent\

definition

A written statement of the intention to enter into a formal agreement

in layman’s terms

Also known as an LOI, Intent Letter, Plan to Purchase Letter, Purchasing Letter, Letter of Intent to Purchase Business. A Letter of Intent is a non-binding agreement between two parties for business, professional or personal purposes. When purchasing a website business, a buyer will submit an offer to the seller in the form of a Letter of Intent. While this document is not binding, its purpose is to outline the deal terms that identify in writing the intentions of the buyer as well as to make any requests and for the seller to accept and acknowledge said terms by his/her signature. Once an LOI is signed by both parties, the due diligence process usually begins and excludes the seller from negotiating with other parties.

Net Profit

net prof•it

noun \ˈnet\ \ˈprä-fət\

definition

Company’s total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses.

in layman’s terms

Net Profit, also called net income, is the amount of money a business has earned after subtracting all of the expenses of both producing its goods or services and of operating the business from the income it has realized through sales of those goods or services. This is the most frequently viewed figure in a company’s financial statements as it is used in calculating profitability among others.

Income – Expenses (COGS + Operating Expenses) = Net Profit

Non-Compete

non com · pete

verb \(ˈ)nän\ \kəm-ˈpēt\

definition

A contract limiting a party from competing with a business after termination of employment or completion of a business sale.

in layman’s terms

Also known as: Non-Compete Agreement, Non-Compete Clause (NCC), Covenant Not to Compete (CNC). In the purchase of an online business, the buyer will typically request a non-compete clause in the closing Purchase Agreement document. A standard non-compete clause includes verbiage that restricts the seller from performing similar work for a specific period of time within a certain geographical area and is thus designed to protect a new owner’s investment by limiting potential competition. As internet businesses operate globally, the clause would restrict the seller performing similar work online for a specific period of time as opposed to a specific geographical area.

Non-Disclosure Agreement

non dis • clo • sure agree • ment

noun \(ˈ)nän\ \dis-ˈklō-zhər\ \ə-ˈgrē-mənt\

definition

Also known as a Confidentiality Agreement (CA), Confidential Disclosure Agreement (CDA), Proprietary Information Agreement (PIA), or Secrecy Agreement (SA), is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties. It is a contract through which the parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects nonpublic business information.

in layman’s terms

The Non-Disclosure Agreement (NDA)/Confidentiality Agreement is a legally binding contract in which the parties promise to protect the confidentiality of any non-public information that is disclosed during employment or another type of business transaction. In the case of the sale of a website business, the seller will usually request that a Non-Disclosure Agreement (NDA) be signed by all prospective buyers before releasing its company details in order to maintain the confidentiality of its information during the sale process.

Profit and Loss Statement

prof • it and loss state • ment

noun \ˈprä-fət\ \ən(d)\ \ˈlȯs\ \ˈstāt-mənt\

definition

(accounting) an account compiled at the end of a financial year showing that year’s revenue and expense items and indicating gross and net profit or loss.

in layman’s terms

The Profit and Loss Statement, also referred to as a P&L Statement, provides a look at a company’s financial profitability for a period of time. While this report can be created to show figures for any period of time, it is typical to present a company’s financial data by Quarter or Year. In a traditional and simple format the top section includes the company’s Revenues or Sales, the next section includes Cost of Goods Sold items, Expenses are listed next and the bottom line then provides the Net Income (Profit or Loss).

Revenues – COGS – Expenses = Profit/Loss

Proof of Funds

proof of funds

verb \ˈprüf\ äv\ \ˈfənds\

definition

A document that demonstrates that a person has the ability and funds available to use for a transaction. It usually comes in the form of a bank, security or custody statement. The purpose of the document is to ensure that the funds required for the transaction are obtainable and legitimate.

in layman’s terms

When acquiring a website business, the buyer is usually requested to show he/she is qualified by demonstrating sufficient funds are available to complete the purchase transaction. This can be accomplished by providing the seller with a Proof of Funds Letter.

A Proof of Funds letter is a paper document from the buyer’s bank or financial institution stating the buyer maintains account balances and has availability of funds equal to or greater than the anticipated purchase price. This document often include the following requirements: Printed on official bank letterhead, Signed and dated by at least two bank officers, Contains the bank or financial institution’s name, address and contact information and Indicates the funds are “good, clean, cleared, unencumbered, legitimately earned funds freely available for investment”. If the bank is providing financing for the buyer to acquire the business, the Proof of Funds letter must state the loan is guaranteed and will be funded in a time frame to accommodate the purchase.

At times when a letter from the bank may not be available in a timely manner, a copy of current, dated, paper bank statements showing funds equal to or greater than the anticipate purchase price can be deemed Proof of Funds until a letter from the bank can be attained.

Seller Financing

Seller Financing

definition

Seller Financing is a loan provided by the seller of a property or business to the purchaser.

in layman’s terms

Seller Financing is an arrangement whereby the seller agrees to loan the buyer all or a portion of the sale proceeds for the purchase of his/her online business. Terms of the loan such as interest rate, term length, repayment schedule, consequences of default, a time frame and any balloon payment due at the end are specified in a binding agreement that both parties sign. Often these terms are included in the Purchase Agreement.

Social Media Marketing

so • cial me • dia mar • ket • ing

verb \ˈsō-shəl\ \ˈmē-dē-ə\ \ˈmär-kə-tiŋ\

definition

The process of gaining website traffic or attention through social media sites.

in layman’s terms

Companies who engage in social media strategies to grow traffic and increase sales for their internet business, start by setting up business member accounts on various social media websites such as Facebook, Twitter, Google+, Pinterest, etc… By providing updated posts which should include information valuable to the companies’ perceived target customer, the business can build a fan or follower base on its social media accounts. These are people who pay attention to and/or “like” the company or the information it posts. By actively continuing to engage its fans and followers, a business can grow its audience in the social media world with the goal of ultimately attracting those fans to its website business to become customers. Many consider social media marketing to be one of the best ways to market an internet business and build brand recognition in today’s marketplace.

URL

url

noun \ˌyü-(ˌ)är-ˈel, ˈər(-ə)l\

definition

URL (Uniform Resource Locator) is Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. The address contains three elements: the type of protocol used to access the file (e.g., HTTP for a Web page, ftp for an FTP site); the domain name or IP address of the server where the file resides; and, optionally, the pathname to the file (i.e., description of the file’s location). For example, the URL https://websiteproperties.com/index.php/premium-domain-names-for-sale.html instructs the browser to use the HTTP protocol, go to the www.websiteproperties.com Web server, and access the file named domain names for sale.

in layman’s terms

The URL or global address is the path to documents and other resources on the World Wide Web. Essentially it’s an encoded character string that points an application (like a web browser) to a resource (file or graphic) located somewhere on the Internet. The first part of the URL is called a protocol identifier and it indicates what protocol to use, and the second part is called the resource name and it specifies the IP address or the domain name where the resource is located. The protocol identifier and the resource name are separated by a colon and two forward slashes. In the example, https://www.websiteproperties.com, the protocol identifier is https, while the resource name is websiteproperties. Typing this URL into a website browser directs visitors to the website for Website Properties.