Basic Every Small Business Owner Terms to Know?

Accrual Method: An accounting method wherein revenue is recorded when the order occurs or the service is provided and not when the payment is received, and expenses are accounted for when they are incurred and not when they are paid.

Affiliate Marketing: A type of performance-based marketing where affiliates are compensated for each visitors or customer delivered.

Angel investor: An individual who provides capital for a business in exchange for debt or equity ownership.

Asset: Anything of economic value that a company owns, including property and equipment.

Banner ad: A graphic or image used on a website to advertise a product or service.

Barriers to entry: Obstacles that prevent competitors from easily entering an industry or business.

Business Model: The method by which an organization generates revenue and makes a profit.

Business Plan: A set of documents that outline the goals of a business and the steps required to achieve them.

Capital: Money invested in a business with the purpose of generating income.

Cash Flow: Incomings and outgoings of cash that represent the operating activities of a business.

Cash Method: An accounting method wherein revenue is recorded when the payment is actually received, and expenses are accounted for when they are actually paid.

Consumer Segment: A group of consumers who possess specific similarities, such as gender, location, or spending habits.

Convertible Debt: A bond that can be converted into a predetermined amount of equity ownership.

Due Dilige nce: the process of researching and validating specific material facts related to a potential investment or sale.

Equity ownership: An ownership interest in an organization expressed in the form of stock.

Fixed Cost: Regular operating costs a business accrues on a weekly, monthly, or yearly basis not associated with the individual cost (variable cost) of producing the actual product or service. EXAMPLE: Rent and equipment.

Franchise: A business system wherein a party (the franchisor) allows another party (the franchisee) the right to produce and/or sell a product or service.

Franchisee: An individual who purchases a franchise business.

Franchisor: A company that allows an individual to open and run a location of their business.

Fringe Benefits: Nontaxable benefits provided by an employer that supplement an employee’s salary.

Gross Profit: A company’s total amount of revenue minus the cost to produce the product without deductions (or the variable costs). EXAMPLE: It costs $10 to make a product and you sell it for $25. Your gross profit is $15.

Hard Launch: A method of launching a new business to the general public.

Independent Contractor: A self-employed individual who provides specific services to a business or on behalf of one.

Intellectual Property: Knowledge, creative ideas, or expressions of the human mind that have commercial value and are protectable under law.

Letter of Intent: A nonbinding document that expresses the interest of an individual or business in purchasing another business.

Liability: Anything of economic value that a company owes to others, including debts and obligations.

Marketing: The activities of an organization related to buying or selling a product or service.

Market Share: A percentage of total sales volume in a market captured by a brand, product, or organization.

Mark Up: An amount added to the cost of a product or service by the seller to cover expenses and profit.

Metrics: The measurement used to determine a quantifiable element of a company’s performance.

Mission Statement: A written assertion of an organization’s core purpose and intention.

Net Profit: A company’s gross profit minus any deductions. EXAMPLE: The same company that sells a $10 product for $25 must also factor in their office space, equipment, and other fixed costs. Once that’s subtracted from their $15 gross profit, they will have their net profit.

Net Worth: The monetary value of a company, figured by subtracting the total dollar amount of liabilities from the total dollar amount of assets. Also know as net value or equity.

Profit Margin: A ratio of profit, often expressed as a percentage, earned from the sale of a product or service.

Proof of Concept: Evidence that establishes that an idea, invention, process, or business model is feasible.

Public Relations: The Practice of promoting and maintaining the positive image of an organization through outside media and other nonpaid forms of communication.

Revenue: Income generated from the sale of a product or service before costs or expenses are deducted.

Soft Launch: A method of launching a business to a limited audience, often used to test the viability of a product or service.

Supply Chain: A network of different organization or individuals that play a role in the production or delivery of a product or service to a consumer.

Target Market: A specific market segment as which a company aims its products or services.

Turnkey Operation: A business that can be started with no additional work from a buyer.

Value Proposition: A business statement that clearly explains why a consumer should buy a product or service.

Variable Costs: Costs that change frequently based on a company’s level of activity or a specific business variable. EXAPMLE: production, labor, and material.

Vendor: Any outside company or individual that provides goods or services to an organization.

Venture Capitalist: A private investor or group of investors who provides a very large sum of capital to promising ventures in exchange for equity ownership.

This Article is taken from Share Tank Jump Start Your Business

Written by Arshad. A

Arshad Ansari is a Youtuber. Blogger and Copywriter. He like to Read Book and acquire new skills. He is a Free basic Consultant . Insta @mr_arshad_ansari_