Putting a Business Idea into Practice.

All information taken from 'Edexcel Business For GCSE'.

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Definitions of key terms.

Billion: One thousand million (1,000,000,000).

Profit: Revenue minus costs. This is the surplus that can be used to reward shareholders or to invest in the expansion  of the business.

Revenue: The value of sales (i.e. the number of customers x the average amount they spend). This does not allow for costs.

Sales Forecasts: Estimates of the future level of sales to be achieved by a new or existing product.

Sales Revenue: The total value of sales made within a period of time, such as a month. To find this value, multiply the quantity sold by the price.

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Definitions of key terms.

Fixed Costs: Costs that do not change when sales/output changes.

Total Costs: All the costs of making a specific level of sales (i.e. fixed costs plus total variable costs).

Variable Costs: Costs that change in direct proportion to changes in sales/outputs.

Business Plan: A formal document setting out a new business idea and how it is planned to make it succeed.

Cash: The money the firm holds in notes and coins and in its bank accounts.

Cash Flow: The movement of money into and out of the firm's bank account.

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Definitions of key terms.

Cash Flow Forecasting: Predicting the future flows of cash into and out of the firm's bank account.

Cumulative Cash: The build-up of cash in a firm's bank account.

Insolvency: The inability to repay debts as they become due.

Negative Cash Flow: When cash out is greater than cash in.

Net Monthly Cash: The month's cash inflow minus the month's cash outflow.


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Definitions of key terms.

Liquidation: Selling off a firm's assets in order to raise cash to pay off the firm's debts.

Share Capital: Raising finance by selling part-ownership in the business. Shareholders have the right to question the directors and to receive part of the yearly profits.

Venture Capital: A combination of share capital and loan capital, provided by a bank that is willing to take a chance on the success of a small to medium-sized business.

Mission: Something that a person passionately wants to achieve.


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Definitions of key terms.

Patent: Legal protection for the originator of a technical breakthrough. 

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