Asset:
Anything of value that is owned by a business or an individual. Assets are either financial, such as cash; physical, such as real property; tangible, such as a patent; or intangible, such as goodwill. An asset embodies probable future benefit and the ability to contribute directly or indirectly to future income. In accounting, assets are listed on the left hand side of a balance sheet statement showing the things owned. Things owed are listed on the right side (liabilities and equity).
Budget:
A document that lists planned income and expense items along with the dollar value for each. A budget is most useful when, at a later date, actual transactions are compared to the budget for analysis and control of future decisions.
Business Development Co:
A financing agency or corporation composed of private and public members that pool their resources toward economic growth of a single geographic locality. The objective is to provide financing assistance for companies that cannot obtain financing through normal channels.
Business Plan:
A documented expression of the facts concerning a business with a forecast of the desired future direction. It is like a roadmap or guidebook concerning where the business wants to go. A business plan usually covers one to five years of historical facts and one to five years of projections into the future. The two main uses are for guidance in decision making by the owner-manager and for presentation to a financial institution when applying for a loan. A business plan is especially important for a start-up business because it sets the course of actions necessary for survival of the business. The main elements to include in a business plan are an executive summary with a description of the firm and its future; profiles of the owner and managers; product description; a description of the industry; marketing plans; and a financial plan. See Self-Help Guide B on "How to Write a Business Plan.".
Financial Plan:
A document that describes a business owner's expectations about money income and outgo for a period in the future and the expected future financial results.
Feasibility Study:
An analysis of a potential business opportunity with emphasis on attainable income, probable expenses and recommendations for the most advantageous marketing approach.
Gross Margin:
Gross margin is gross profit expressed as a percent of net sales;
Hidden Risk:
A risk associated with a business venture that is not apparent without considerable investigation and knowledge. In business, there are always unknown factors that can affect the profitability of the business. Therefore, the business entrepreneur should constantly evaluate all phases of business activity to minimize the amount of hidden (unknown or unforeseen) risk.
Inventory Control:
The process whereby the company knows where everything is located at all times and efficiently moves inventory (materials) from one station to another as needed. Accountability of goods on hand can prevent loss or theft.
Manufacturing Costs:
The labor and material expenses incurred during the production of goods.
Marketing:
Moving goods and services from the provider to the consumer. This involves advertising, publicity, promotion, pricing, sale and distribution of the goods and services.
Marketing Research:
Exploration of the size, characteristics and potential salability of a product or service; determining what people want and need. Often market research is accomplished before developing the new product or service to determine the viability of the investment needed for development.
Pension Plan:
The document of a company that describes the requirements, obligations and benefits of the pension program offered by the company.
Perfect Competition:
A market condition where no buyer or seller has the economic power to alter the market price of a good or service; characterized by a large number of buyers, a large number of sellers, all selling similar products or services, an equal awareness of prices and volume, an absence of discrimination in buying or selling, total mobility of productive resources and complete freedom of entry into the market.
Profit Pattern:
The trend in an ability to earn; the unique characteristics that produce earnings in a particular situation.
Price Elasticity:
In economics, the extent to which a change in price will cause a change in demand. When prices are inelastic, consumers will continue to buy the same amount regardless of an increase or decrease in prices. On the other hand, when prices are elastic, rising prices will cause a drop in demand; conversely, lowering prices will cause increased demand.
Purchase Order:
A written authorization prepared by a buyer for the acquisition of goods or services at a specified price. Once accepted by the seller, the purchase order becomes a legally binding purchase contract. A purchase order describes the features or characteristics of a product or service important to its purchase.
Quota:
Quantity restrictions placed on business transactions, usually by a government body, often on import of foreign goods. Also, the number of minorities that must be hired to secure a government contract.
Retail:
The sale of goods or services singly or in small quantities directly to the consumer, or relating thereto.
Roadmap:
A business plan; the guidelines that identify potential impediments so they can be overcome to achieve profitability.
Sales Forecast:
The expected revenues (sales) that can be achieved for a period in the future. The projection is developed by estimating the number of units that will be sold at an average sale price per unit.
Target Market:
That segment of the market that is identified as the primary customer. The specific individuals or firms, distinguished by socio-economic, demographic, and/or interest characteristics, that are the most likely potential customers for the goods or services of a business.
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