BUSS1 DEFINITIONS

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BUSS1 DEFINITIONS

Adding value

The process of increasing the worth of resources by modifying them

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BUSS1 DEFINITIONS

Adding value

The process of increasing the worth of resources by modifying them

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BUSS1 DEFINITIONS

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

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

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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

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

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

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Cash flow 

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

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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

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

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Demand 

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

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

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

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

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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)

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

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

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Franchise

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

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Franchisee

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

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

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

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

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

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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

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Unlimited liability

A situation in which the owners of a business are

liable for all the debts that the business may

incur

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

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

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

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

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

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

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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

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

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Opportunity cost
The benefits foregone of the next best alternative

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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

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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

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Primary market research

The collection of information first-hand for a specific purpose

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Profit
The difference between total sales and total costs

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Qualitative research

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

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Quantitative research

The collection of information about the market based on numbers

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

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

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Sole trader

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

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Supplier
A business that provides goods and services to other firms

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

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USP

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

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

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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  

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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)

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