Business Key Terms

• Added value


  The difference between the cost of the materials to make a product and the price that is charged for the product.
• Aims 


  Long term goals of the business
• Objectives 


  Short term goals of the business to achieve aims
• Breakeven


  The number of units a business must sell so that total revenue equals total cost
• Business plan


  A plan for the development of a business: products to be made, resources needed, financial forecast
• Business success


  A measure which could be sales, market share or profit over a period of time
• Cash flow


  The flow of money into and out of business over a period of time
• Cash inflow


  Money coming into the business eg revenue, loans or other SoFs
• Cash outflow

  Money leaving the business eg wages, suppliers, loan repayments or advertising.
• Choice


  A range of products aimed t different needs and segments
• Closing balance


  The amount of money left at the end of the current time period (eg 1 month)
• Competition


  When companies produce comparable products in the same market
• Competitive advantage


  The advantage one company has over others
• Competitive environment


  A market with a lot of competitors
• Consumer


  The person who uses the product
• Consumer income


  The amount a person or household has to spend after paying tax
• Consumer rights


  What the consumer is entitled to by law
• Crowdfunding 


  Where a large number of individuals invest in a business project
• Customer


  The person that buys the product
• Customer needs

  What the customer wants: Price, Choice, Quality, Convenience
• Customer service


  Having a clear understanding of customer expectations and delivering
• Demographics


  Characteristics of the population in terms of: Age, Gender, Race, Income, Disability
• Digital communication


  Communicating electronically through things such as websites, social media and email.
• Discrimination


  Judging someone based on their demographic
• Dynamic business


  Business responding to what consumers want
• E-commerce


  The use of online systems to sell goods and services
• Economic climate


  The broad performance of the UK economy, measured in GDP growith
• Enterprise


  The skills shown by an entrepreneur
• Entrepreneur


  A person who organises resources, makes decisions and takes risks in business in order to benefit from the potential future rewards
• Exchange rate


  The price of one currency in terms of another
• Exports


  Goods or services that a firm produces in its own home market, but sells in foreign markets
• Financial aims


  Aims and objective related to money
• Fixed costs


  Costs that do not change with output
• Focus group


  A small group of customers are invited to discuss a product (market research)
• Forecast 


  A prediction of future finances
• Franchise


  The right given from one business to another to sell goods and services using its name.
• Franchisee


  A business that buys right into a franchise
• Franchisor


  The person who owns the rights to the franchise
• Gap in the market 


  An area in the market with no products being provided
• Goods


  Physical items a business sells