Defentions - Business Unit 1

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Revenue
The money a business makes from sales of a good/service.
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Costs FIXED
Costs do not change with the level ofoutput I.E. Rent
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Costs VARIABLE
Costs change with the level of output I.E. Raw Materials
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Profit/Loss
The money left after costs are deducted from revenue.
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Business Plan
Sets out the objectives of the business usually for a 1 financial year.
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Adding Value
When a business pays for raw materials, then transforms them into finished products and sells at an increased price.
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Entrepreneur
People who start a business and takes a finacial risk
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Primary Market Research
When a business gathers orginal data using focus groups etc.
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Secondary Market Research
When a business analysis data that is already avaliable I.E. trade magazines
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Sole Trader
An individual who is self employed and has unlimited liability.
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Break Even
When revenue covers the businesses costs.
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Opportunity Cost
Puts a value on a product or business decision in terms of what the business had to give up to have it.
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Contribution
The difference between the selling price and the variable costs, used to pay fixed costs.
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Break Even Output
How many units need to be sold to cover total costs.
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Cash Flow
All the money flowing in and out of the business over a period of time
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Budget
Forecasts the future earnings and spendings of the business (Income, Expenditure, Profit/Loss)
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Variance
The difference between actual figures and budget figures. (Adverse or Favourable)
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Gross Profit
The amount of cash left over when the variable costs is taken away from revenue.
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Net Profit
The amount of cash left over when TOTAL costs are taken away from revenue.
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Franchisor
The business which is willing to sell, or licience, the use of an idea, name and reputation.
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Franchisee
The business who wants to use the name etc.
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Limited Liability
Owners are not personally responsible for the debts of their business.
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Unlimited Liability
Owners are personally responsible for the debts of a business SOLE TREADERS AND PARTNERSHIPS.
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Partnership
Between 2 and 20 partners.
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Private Limited Company
2-50 Shareholders
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Random Sample
Selecting people randomly from the target population I.E. out of a hat
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Quota Sample
The sample is picked because of certain charaterstics I.E. Males between 20 - 50
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Stratified Sample
Random sample of specific people from a predetermined sub group of the population I.E Males aged 40 -60
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Qualititve Data
Not statistical Information, based opinions and facts.
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Quanitive Data
Statistical Information
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Market Segements
Parts of the wider market that contain customers who have similar characterstics or buying needs.
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Market Size VOLUME
Numer of units Sold
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Market Size VALUE
The amount spent by customers.
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Market Growth
How much bigger the market is getting.
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Market Share
The amount a business contributes to the market % or fraction.
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Market Leader
The business with the biggest market share.
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Market
Where buyers and sellers come together
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Physical Market
Where buyers and sellers come face to face I.E. Tescos
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Electronic (virtual) Market
Where buyers and sellers may not ever come face to face I.E. Amazon
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National Market
A large market containing many different customers.
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Local Market
A small market focusing on the needs of specific customers.
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Debt
Money the business has borrowed that must be repaid I.E. Bank Loan
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Equity
Money the business doesnt have to repay I.E. Sponserships
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Source of finance INTERNAL
Money from within the business I.E. Retained profit
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Source of finance EXTERNAL
Money from outside the business I.E. Loans
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Working Capital
Money required to run the day to day running of the business I.E Utility Bills
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Risk
Buying a company that is losing money.
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Reward
When the business is making money.
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Other cards in this set

Card 2

Front

Costs do not change with the level ofoutput I.E. Rent

Back

Costs FIXED

Card 3

Front

Costs change with the level of output I.E. Raw Materials

Back

Preview of the back of card 3

Card 4

Front

The money left after costs are deducted from revenue.

Back

Preview of the back of card 4

Card 5

Front

Sets out the objectives of the business usually for a 1 financial year.

Back

Preview of the back of card 5
View more cards

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