BUSS1 DEFINITIONS

Adding value

The process of increasing the worth of resources by modifying them

Adding value

The process of increasing the worth of resources by modifying them

Bank loan
A sum of money provided to a firm or an individual by a bank for a specific, agreed purpose

Bank overdraft
Borrowings from a bank on a current account which are payable on demand

Breakeven output (or point)

The point at which the total sales of a business equal total costs -i.e. the business is making neither a profit nor a loss

Budget
An agreed plan establishing, in numerical or financial terms, the policy to be pursued and the anticipated outcomes of that policy

Business plan
A report describing the marketing strategy, operational issues and financial implications of a business start-up

Cash flow 

The inflows and outflows of a business over a period of time

Cash flow forecast

The process of estimating the expected cash inflows and outflows over a period of time. Cash flow is often seasonal, so it is advisable to forecast for over a period of 1 year

Costs
Amounts incurred by a business as a result of its trading operations

Demand 

The amount of a product or service that customers are willing and able to pay at a given time

Elasticity of demand
The responsiveness of demand to a change in price or incomes

Enterprise
The process by which new businesses are formed in order to offer products and services in a market

Entrepreneur
An individual who sets up and runs a new business and takes on the risks associated with the business

Expenditure budget
The budget which sets out the expected costs to be incurred by the firm, usually split into various categories (e.g. production, marketing, administration)

Fixed costs
Costs that do not vary with the level of output – e.g. rent, salaries

Fixed costs
Costs that do not vary with the level of output – e.g. rent, salaries

Franchise

When a business (the franchisor) gives the right to supply its product or service to another business (the franchisee)

Franchisee

The person or company which operates a franchised business format - under licence from a franchisor

Franchisor
The owner of a business format (franchise) which is licensed out to other people or businesses (franchisees)

Full-time employee
An employee who works more than 30 hours a week in a business

Income budget
The budget which sets out estimates of the likely demand for and value of the firms sales

Income budget
The budget which sets out estimates of the likely demand for and value of the firms sales

Limited liability

A situation in which the liability of the owners of a business is limited to the fully paid-up value of the share capital

Unlimited liability

A situation in which the owners of a business are

liable for all the debts that the business may

incur

Margin of safety
The difference between the actual level of output and the break even output

Market
Any place (e.g. physical, electronic) where buyers and sellers come together with a view to exchanging transactions

Market growth
The percentage growth in the size of the market, measured over a specific period

Market research
The process of planning, collecting, and analysing data relevant to help make marketing decisions

Market segmentation
The process of dividing a market into smaller sections (segments) which contain customers with similar needs and wants

Market share
The share of the total market that is owned by a particular business, product or brand. Usually expressed in percentage terms. 

Market size
The total value or quantity of demand in a specific market over a specific period of time. Can be measured in value terms (e.g. sales) or in terms of quantities (e.g. units) bought or sold

Niche market
A smaller part of a larger market in which customers have more specific needs and wants

Opportunity cost
The benefits foregone of the next best alternative

Patent
An official document granting the holder the right to be the only user or producer of a newly invented product or process for a specified period

Permanent employee
An employee who is employed on a formal employment contract and remains with the firm for an open-ended period until the contract is ended

Primary market research

The collection of information first-hand for a specific purpose

Profit
The difference between total sales and total costs

Qualitative research

The collection of information about the market based on subjective factors such as opinions and reasons 

Quantitative research

The collection of information about the market based on numbers

Revenue
The income or sales that a business achieves in a period

Share capital
The finance invested in a business (limited company) by the shareholders – part of the equity capital of a firm

Sole trader

A business owned by one person. The owner may operate on his/her own or may emlpoy other people

Supplier
A business that provides goods and services to other firms

Trademark
A logo, symbol, or phrase used to identify a particular company’s product and differentiate it from other competitors products

USP

A feature of a product or service that allows it to be differentiated from other products 

Variable costs
Costs that vary directly in proportion to output (e.g. raw materials, wages)

Venture capital

Finance that is provided to small or medium-sized firms that seek growth but may be considered as risky by typical share buyers or other leaders  

Working capital

The day-to-day finance used in a business, consisting of assets (e.g. cash, stock and debtors) minus liabilities (e.g. creditors and overdrafts)