1.3 Keywords - Putting a business idea into practice

Frage	Antworten
Financial Objectives	Targets expressed in money terms such as making a profit, earning income or building wealth.
SMART	Specific, measurable, achievable, realistic and time-constrained.
Determination	The drive to succeed in business. To show commitment to an idea or setting up a business.
Initiative	To work independently and be able to make the first move in business.
Taking Risks	A skill shown by entrepreneurs. It can be risky to own your own business.
Making Decisions	To be in charge of making a good judgement. An entrepreneur will listen and take in information to ensure they make the right decision.
Planning	Planning is essential to any successful business. Clear objectives have to be set for the long term and how these objectives will be met in the short term.
Persuasion	A skill of an entrepreneur. To be able to convince a customer they should buy the product/ service. Or it could also mean negotiating with a supplier to lower their prices.
Showing Leadership	Entrepreneurs should have a vision of where the business is heading, be good at planning and have self-confidence. These are all leadership skills to succeed.
Revenues Sales Revenue Turnover Sales Turnover	The amount of income received from selling goods or services over a period of time
Total Revenue	TR = P x Q Total Revenue = Price x Quantity
Sales volume	The number of items or products or services sold by a business over a period of time.
Fixed costs	Costs which do not vary with the output produced such as rent, business rates, advertising costs, administration costs and salaries.
Total Costs	All the costs of a business; it is equal to fixed costs plus variable costs.
Total Costs	TC = FC + VC Total Costs = Fixed Costs + Variable Costs
Variable Costs	Costs which change directly with the number of products made by a business such as the cost of buying raw materials.
Profit	Occurs when the revenues of a business are greater than its costs over a period of time.
Loss	Occurs when the revenues of a business are less that the costs over a period of time.
Profit/ Loss	Profit/ Loss = Total Revenue – Total Cost
Cash	Notes, coins and money in the bank
Cash Flow	The flow of cash into and out of a business
Inflow	The cash flowing into a business, its receipts
Outflow	The cash flowing out of a business, its payments
Net Cash Flow	The receipts of a business minus its payments
Insolvency	When a business can no longer pay its debts
Cash Flow Forecast	A prediction of how cash will flow through a business in a period of time in future
Opening Balance	The amount of money in a business at the start of the month
Closing Balance	The amount of money in a business at the end of the month
Cumulative Cash Flow	The sum of cash that flows into a business over time
Trade Credit	Where a supplier gives a customer a period of time to pay a bill (or invoice) for goods or services once they have been delivered
Stocks	Materials that a business holds. Some could be materials waiting to be used in the production process and some could be finished stock waiting to be delivered to customers
Business Plan	A plan for the development of a business giving forecasts such as sales, costs and cash flow
Long term finance	Sources of money for businesses that are borrowed or invested typically for more than a year
Short term finance	Sources of money for businesses that may have to be repaid with immediately or fairly quickly, such as an overdraft, usually within a year.
Personal Savings	Money that has been set aside and not spent by individuals and households.
Share Capital	The monetary value of a company which belongs to its shareholders, for example, if five people each invest £10,000 into a business, the share capital will be £50,000
Shareholders	The owners of a company
Venture Capitalist	An individual or company which buys shares in what they hope will be a fast growing company with a long term view of selling the shares at a profit.
Loan	Borrowing a sum of money which has to be repaid with interest over a period of time, such as 1-5 years.
Security (or collateral)	Assets owned by a business which are used to guarantee repayments of a loan; if the business fails to pay off the loan, the lender can sell what has been offered as security.
Mortgage	A loan where property is used as security.
Dividend	A share of the profits of a company received by shareholders who own shares.
Retained Profit	Profit which is kept back in the business and used to pay for investment in the business.
Leasing	Renting equipment or premises.
Overdraft facility	Borrowing money from a bank by drawing more money than is actually in a current account. Interest is charged on the amount overdrawn.
Factoring	A source of finance where a business is able to receive cash immediately for the invoices it has issued from a factor, such as a bank, instead of waiting the typical 30 days to be paid.

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1.3 Keywords - Putting a business idea into practice

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