Basic Business Terms- (agenda for success)
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| Agenda for success |
Basic business terminology
What are the most Essential Business Concepts/Terms
Every Entrepreneur or Business Person must understand?
You don’t need to have an (MBA) or attend any business school to succeed in business. Almost all the essential knowledge and information you need to begin and succeed with your tiny business is available for free in the real world.
In this article, I am going to share with you some basic but very essential concepts/terms you must understand if you want to succeed as an entrepreneur or a business person.
These basic but very essential concepts/terms will help you to simply digest business opportunities and allow you to start making smart, sensible, informed and practical business decisions.
The best half is, these concepts/terms can assist you to think, talk and act like a modern entrepreneur or a modern business person. All of the concepts you'll learn here are very important. I think, I would contemplate this a basic terms, mini-crash course in economics and business rolled into one.
If your aim is to start and run a business, it is crucial that you have a good understanding of basic business terms. Every Entrepreneur should be well versed in the following terms:
Accounting:
Accounting is an art of recording, classifying and summarising in terms of money transactions and events of a financial nature and interpreting the results thereof. In other words,
A systematic method of recording and reporting financial transactions.
Accounts Payable:
Money owed by a company to its creditors.
Accounts Receivable:
The amount a company is owed by its clients.
Assets:
The value of everything a company owns and uses to conduct its business.
Balance Sheet:
It is a statement of the financial position of an individual or enterprise at a given date, which exhibits its assets, liabilities, capital, reserves and other account balances at their respective book values.
In simple words, A snapshot of company's assets, liabilities and owner's equity at a given moment.
Bottom-Line:
The total amount a business has earned or lost at the end of a month.
Business:
An organisation that operates with the aim of making a profit.
Business to Business (B2B):
A business that sells goods or services to another business.
Business to Customer (B2C):
A business that sells goods or services directly to the end user.
Capital:
Capital is the amount invested by the owner in the business. Or, Capital is the excess of assets over external liabilities.
The money a business has in its accounts, Assets and Investments. The two main types of capital are debt and equity.
Cash Flow:
Cash Flows mean the inflows and outflows of cash and cash equivalents. The overall movement of funds through a business each month, including income and expenses. A cash flows arises when the net result of a transaction is either increase or decrease in cash or cash equivalents.
Cash Flow Statement:
A Cash Flow Statement is a statement showing inflows (receipts) and outflows (payment) of cash during a particular period. In other words, it is a summary of sources and applications of cash during a particular span of time. It analyses the reasons for changes in balance of cash between the two balance sheet dates. The term 'cash' here stands for cash and cash equivalents.
Contract:
A Formal agreement to do work for pay.
Depreciation:
Depreciation is a fall in the value of an asset because of usage or with afflux a of time or obsolescence or accident. It is an allocation of cost of fixed asset in each accounting year during its expected useful life.
Or, The degrading value of an asset over time.
Expenses:
Expenses is the cost incurred for generating revenue.
Or, The costs that a business incurs through its operations.
Finance:
The management and allocation of money and other assets.
Financial Report:
A comprehensive account of a business' transactions and expenses.
Fixed Cost:
A one-time expense.
Income Statement (Profit & Loss Statement):
Shows the financial performance (i.e., profit earned) of business operations during a period of time.
Liabilities:
Liability means amount owed (payable) by the business.
Or, The value of what a business owes to someone else.
Marketing:
The process of promoting, selling and distributing a product or service.
Net Income/Profit:
Revenues minus expenses.
Net Worth:
The total value of a business.
Payback Period:
The amount of time it takes to recover the initial investment of a business.
Profit Margin:
The ratio of profit, divided by revenue, displayed as a percentage.
Return on Investment (ROI):
The amount of money a business gets as return from an investment.
Revenue:
The total amount of income before expenses are subtracted.
Sales Prospectus:
A potential customer.
Supplier:
A provider of supplies to a business.
Target Market:
A specific group of customers at which a company's products and services are aimed.
Valuation:
An estimate of the overall worth of the business.
Variable Cost:
Expenses that change in proportion to the activity of a business.
Working Capital:
Calculated as current assets minus current liabilities.
These are very essential business concepts/terms every entrepreneur or business person must understand
This article is the first in a series that will increase your knowledge and information of the key concepts/terms and also how they work in the world of business.
We hope you found this article useful. You'll need to pick up and apply the knowledge and information you have acquired from this article in your business. We would appreciate you that you can share it with your friends and partners using the Gmail, Facebook and Twitter buttons below.
You never know by sharing this article, you could inspire somebody today.
To Your success!
Accounting:
Accounting is an art of recording, classifying and summarising in terms of money transactions and events of a financial nature and interpreting the results thereof. In other words,
A systematic method of recording and reporting financial transactions.
Accounts Payable:
Money owed by a company to its creditors.
Accounts Receivable:
The amount a company is owed by its clients.
Assets:
The value of everything a company owns and uses to conduct its business.
Balance Sheet:
It is a statement of the financial position of an individual or enterprise at a given date, which exhibits its assets, liabilities, capital, reserves and other account balances at their respective book values.
In simple words, A snapshot of company's assets, liabilities and owner's equity at a given moment.
Bottom-Line:
The total amount a business has earned or lost at the end of a month.
Business:
An organisation that operates with the aim of making a profit.
Business to Business (B2B):
A business that sells goods or services to another business.
Business to Customer (B2C):
A business that sells goods or services directly to the end user.
Capital:
Capital is the amount invested by the owner in the business. Or, Capital is the excess of assets over external liabilities.
The money a business has in its accounts, Assets and Investments. The two main types of capital are debt and equity.
Cash Flow:
Cash Flows mean the inflows and outflows of cash and cash equivalents. The overall movement of funds through a business each month, including income and expenses. A cash flows arises when the net result of a transaction is either increase or decrease in cash or cash equivalents.
Cash Flow Statement:
A Cash Flow Statement is a statement showing inflows (receipts) and outflows (payment) of cash during a particular period. In other words, it is a summary of sources and applications of cash during a particular span of time. It analyses the reasons for changes in balance of cash between the two balance sheet dates. The term 'cash' here stands for cash and cash equivalents.
Contract:
A Formal agreement to do work for pay.
Depreciation:
Depreciation is a fall in the value of an asset because of usage or with afflux a of time or obsolescence or accident. It is an allocation of cost of fixed asset in each accounting year during its expected useful life.
Or, The degrading value of an asset over time.
Expenses:
Expenses is the cost incurred for generating revenue.
Or, The costs that a business incurs through its operations.
Finance:
The management and allocation of money and other assets.
Financial Report:
A comprehensive account of a business' transactions and expenses.
Fixed Cost:
A one-time expense.
Income Statement (Profit & Loss Statement):
Shows the financial performance (i.e., profit earned) of business operations during a period of time.
Liabilities:
Liability means amount owed (payable) by the business.
Or, The value of what a business owes to someone else.
Marketing:
The process of promoting, selling and distributing a product or service.
Net Income/Profit:
Revenues minus expenses.
Net Worth:
The total value of a business.
Payback Period:
The amount of time it takes to recover the initial investment of a business.
Profit Margin:
The ratio of profit, divided by revenue, displayed as a percentage.
Return on Investment (ROI):
The amount of money a business gets as return from an investment.
Revenue:
The total amount of income before expenses are subtracted.
Sales Prospectus:
A potential customer.
Supplier:
A provider of supplies to a business.
Target Market:
A specific group of customers at which a company's products and services are aimed.
Valuation:
An estimate of the overall worth of the business.
Variable Cost:
Expenses that change in proportion to the activity of a business.
Working Capital:
Calculated as current assets minus current liabilities.
Accounting is an art of recording, classifying and summarising in terms of money transactions and events of a financial nature and interpreting the results thereof. In other words,
A systematic method of recording and reporting financial transactions.
Accounts Payable:
Money owed by a company to its creditors.
Accounts Receivable:
The amount a company is owed by its clients.
Assets:
The value of everything a company owns and uses to conduct its business.
Balance Sheet:
It is a statement of the financial position of an individual or enterprise at a given date, which exhibits its assets, liabilities, capital, reserves and other account balances at their respective book values.
In simple words, A snapshot of company's assets, liabilities and owner's equity at a given moment.
Bottom-Line:
The total amount a business has earned or lost at the end of a month.
Business:
An organisation that operates with the aim of making a profit.
Business to Business (B2B):
A business that sells goods or services to another business.
Business to Customer (B2C):
A business that sells goods or services directly to the end user.
Capital:
Capital is the amount invested by the owner in the business. Or, Capital is the excess of assets over external liabilities.
The money a business has in its accounts, Assets and Investments. The two main types of capital are debt and equity.
Cash Flow:
Cash Flows mean the inflows and outflows of cash and cash equivalents. The overall movement of funds through a business each month, including income and expenses. A cash flows arises when the net result of a transaction is either increase or decrease in cash or cash equivalents.
Cash Flow Statement:
A Cash Flow Statement is a statement showing inflows (receipts) and outflows (payment) of cash during a particular period. In other words, it is a summary of sources and applications of cash during a particular span of time. It analyses the reasons for changes in balance of cash between the two balance sheet dates. The term 'cash' here stands for cash and cash equivalents.
Contract:
A Formal agreement to do work for pay.
Depreciation:
Depreciation is a fall in the value of an asset because of usage or with afflux a of time or obsolescence or accident. It is an allocation of cost of fixed asset in each accounting year during its expected useful life.
Or, The degrading value of an asset over time.
Expenses:
Expenses is the cost incurred for generating revenue.
Or, The costs that a business incurs through its operations.
Finance:
The management and allocation of money and other assets.
Financial Report:
A comprehensive account of a business' transactions and expenses.
Fixed Cost:
A one-time expense.
Income Statement (Profit & Loss Statement):
Shows the financial performance (i.e., profit earned) of business operations during a period of time.
Liabilities:
Liability means amount owed (payable) by the business.
Or, The value of what a business owes to someone else.
Marketing:
The process of promoting, selling and distributing a product or service.
Net Income/Profit:
Revenues minus expenses.
Net Worth:
The total value of a business.
Payback Period:
The amount of time it takes to recover the initial investment of a business.
Profit Margin:
The ratio of profit, divided by revenue, displayed as a percentage.
Return on Investment (ROI):
The amount of money a business gets as return from an investment.
Revenue:
The total amount of income before expenses are subtracted.
Sales Prospectus:
A potential customer.
Supplier:
A provider of supplies to a business.
Target Market:
A specific group of customers at which a company's products and services are aimed.
Valuation:
An estimate of the overall worth of the business.
Variable Cost:
Expenses that change in proportion to the activity of a business.
Working Capital:
Calculated as current assets minus current liabilities.
These are very essential business concepts/terms every entrepreneur or business person must understand
This article is the first in a series that will increase your knowledge and information of the key concepts/terms and also how they work in the world of business.
We hope you found this article useful. You'll need to pick up and apply the knowledge and information you have acquired from this article in your business. We would appreciate you that you can share it with your friends and partners using the Gmail, Facebook and Twitter buttons below.
You never know by sharing this article, you could inspire somebody today.
To Your success!
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