TOPIC 1.1.3 PUTTING A BUSINESS IDEA INTO PRACTICE Flashcards
aims
a general statement of where you’re
heading, for example ‘to get to universi
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-boun
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 profit nor a loss
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.
opening balance
he amount of cash in the
bank at the start 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.
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 partownership 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.
bankrupt
when an individual is unable to pay
their debts, even after all personal assets have
been sold for cash.
limited liability
restricting the losses suffered
by owners/shareholders to the sum they invested
in the business.
private limited company
a small family business
in which shareholders enjoy limited liability.
soletrader
a business run by one person; that
person has unlimited liability for any business
debts.
unlimited liability
treating the business and
the individual owner as inseparable, therefore
making the individual responsible for all the
debts of a failed business.
franchising
paying a franchise owner for the
right to use an established business name,
branding and business methods.
royalities
percentage of the sales revenue to be
paid to the overall franchise owner.
Business plan
a detailed document setting out
the marketing and fi nancial thinking behind a
proposed new business.
place
how and where the supplier is going to get
the product or service to the consumer; it includes
selling products to retailers and getting the
products displayed in prominent positions.
price
setting the price that retailers must pay,
which in turn affects the consumer price.
product
targeting customers with a product that
has the right blend of functional and aesthetic
benefi ts without being too expensive to produce.
promotion
within the 4Ps promotion means
all the methods that a business uses to
persuade customers to buy, for example branding,
packaging, advertising to boost the long-term
image of the product and short-term offers.
fixed premises
buildings that have to
be where they are (for example, the high
street); e-commerce buildings can be located
anywhere.
proximity
nearness; whether or not a
business wants to be close to a factor such as
‘materials’.
