1.3 Business Aims & Objectives Flashcards
Aims
a general statement of where you’re
heading, for example ‘to get to university’.
Market Share
the percentage of a market held
by one company or brand.
Objectives
a clear, measurable goal, so
success or failure is clear to see.
SMART Objectives
targets that are specifi c,
measurable, achievable, realistic and time-bound.
Survival
keeping the business going, which
ultimately depends on determination and cash.
Fixed Costs
costs that don’t vary just because
output varies, for example rent.
Interest
the charges made by banks for the
cash they have lent to a business, for example six
per cent per year.
Profit
the difference between revenue and total
costs; if the fi gure is negative the business is
making a loss.
Revenue
the total value of the sales made within
a set period of time, such as a month.
Total Costs
all the costs for a set period of time,
such as a month.
Variable Costs
costs that vary as output varies,
such as raw materials.
Break Even
the level of sales at which total
costs are equal to total revenue. At this point
the business is making neither a profi t nor a
loss.
Break Even Chart
a graph showing a company’s
revenue and total costs at all possible levels of
output.
Margin of Safety
the amount by which demand
can fall before the business starts making losses.
Cash
the money the fi rm holds in notes and
coins, and in its bank accounts.
Cash Flow
the movement of money into and out
of the fi rm’s bank account.
Insolvency
when a business lacks the cash to
pay its debts.
Overdraft
the amount of the agreed overdraft
facility that the business uses.
Overdraft Facility
an agreed maximum level of
overdraft.
Cash Flow Forecast
estimating the likely fl ows
of cash over the coming months and, therefore,
the overall state of one’s bank balance.
Closing Balance
the amount of cash left in the
bank at the end of the month.
Negative Cash Flow
when cash outfl ows are
greater than cash infl ows.
Net Cash Flow
cash in minus cash out over the
course of a month.
Opening Balance
the amount of cash in the
bank at the start of the month.
Crowdfunding
raising capital online from
many small investors (but not through the stock
market).
Dividends
payments made to shareholders
from the company’s yearly profi ts. The
directors of the company decide how large a
dividend payment to make; in a bad year they
can decide on zero.
Retained Profit
profi t kept within the business
(not paid out in dividends); this is the best
source of fi nance for expansion.
Share Capital
raising fi nance by selling part-ownership in the business. Shareholders have the right to question the directors and to
receive part of the yearly profi ts.
Trade Credit
when a supplier provides
goods but is willing to wait to be paid – for
perhaps up to three months. This helps with
cash fl ow.
Venture Capital
a combination of share capital
and loan capital, provided by an investor willing
to take a chance on the success of a small to
medium-sized business.
