businesss

Business (Verb)

Any activity that takes inputs and adds value to them to produce goods and/or services

Business (Noun)

Any organisation that provides goods and/or services

Entrepreneur

A person who risks their own savings to set up and manage a business

Capital

The money invested into a business to set it up (or expand it)

Entrepreneurship skills

Skills entrepreneurs demonstrate to a greater extent than employees

Creativity

Entrepreneurs come up with new and different ways to satisfy customer needs

Risk-taking

Entrepreneurs are more willing than others to take action when chances of success are low

Determination

Entrepreneurs continue despite setbacks

Confidence

Entrepreneurs believe in themselves and their ideas

Risk

The outcome is not 100% certain​. One outcome is the entrepreneur losing the capital they have invested in their business

Reward

A successful business will earn the entrepreneur a profit

Private Sector

Businesses owned individually by private persons

Public Sector

Businesses owned collectively by all citizens and managed by government

Third Sector

Businesses set up to benefit society

Primary Sector

Extracting raw materials from nature​

Secondary sector

Processing raw materials (and components) into finished goods​

Tertiary Sector

Providing a service​

Business Planning

The process of setting objectives, collecting information and making decisions to achieve the objectives

Business Plan

A document that sets out how the business will achieve its objectives

Incorporation

The process of separating a business from its owners (forming a limited company)

Unlimited Liability

A sole trader or Partner is personally liable for every penny the business owes

Limited Liability

A shareholder is only personally liable for business debt up to the value of their initial investment

Sole Trader

An unincorporated business owned by one person

Partnership

An unincorporated business owned by 2-20 people

Deed of Partnership

An agreement between partners stating share of capital and profit as well as responsibilities of each partner

Private Limited Company (ltd)

An incorporated business whose shares cannot be traded on a stock market

Shares

A share of ownership of a limited company (entitling you to a dividend and a vote)

Shareholders

The owners of a limited company

Dividend

The share of profit paid to shareholders (per share)

Retained profit

Profit reinvested into the business after the dividend is paid

Stock Market

Where PLCs can issue new shares to raise capital

Charity

A company 'limited by guarantee' set up to benefit society

Annual General Meeting (AGM)

Where shareholders vote on the dividend and the directors

Public Limited Company (PLC)

An incorporated business whose shares can be traded on a stock market

Articles of Association

Written rules about running the company agreed by the shareholders and directors

Memorandum of Association

A legal statement signed by all initial shareholders agreeing to form the company

Directors

Appointed by the shareholders to manage the company

Audit

PLCs and large ltds must get their accounts checked by independent auditors

Co-operative

A limited company where all shareholders get one vote regardless of how many shares they own

Business Aims / Objectives

What the business wishes to achieve

Break-Even

The business neither makes a profit or a loss

Survival

The business is able to continue trading

Profit

Where Total Revenue \> Total Cost over a year

Growth

Where the capital invested in the business increases (from the entrepreneur(s) or retained profits

Market Share

The percentage of all sales in a market by made one brand

SMART Objectives

Specific, Measurable, Achievable , Realistic and Time-constrained targets for individual functions of the business

Short Term Objectives

Objectives to be achieved within one year

Long Term Objectives

Objectives to be achieved beyond one year

Stakeholders

Any person who has an interest in the business.​

Employees

People who work for the business (who want fair wages, fair conditions and meaningful work)

Unions

Where employees act as one group when negotiating wages and conditions

Suppliers

Sell the business its inputs (who want revenue and to be paid on time)

Lenders

Any business or individual owed money (who want to be repaid in full and on time)

Government

Elected to manage the economy and society (who want you to pay tax and uphold the law)

HMRC (Her Majesty's Revenue and Customs)

Collects all taxes

Local Community

The business' neighbours (who want to avoid pollution and for you to support the community)

Customers

Anyone who buys a business' goods and services (who wand good value for money)

Organic Growth

A business grows by doing more of what it does

External Growth

A business grows by joining with another business

Merger

Creating a new business that owns all the shares in two existing businesses

Takeover

Buying enough shares in another business to control it

Horizontal Merger

Where a business joins with a competitor

Vertical Merger

Where a business joins with a supplier (backward) or customer (forward)

Diversification

Where a business joins with another that has nothing in common

Marketing

The creative process of anticipating and satisfying customer needs

Marketing Mix

The combination of Product, Promotion, Place and Price (The 4Ps) that meets customer needs

Customer Needs

The motivation to buy goods and services

Market Research

Any activity that helps a business anticipate its customers'' needs

Quantitative Data

Data in the form of numbers that can be used for charts and calculations

Qualitative Data

Data in the form of in-depth opinions in words​

Secondary research

Where a business uses information that has already been collected and organised for another purpose

Internal Secondary sources

Information already collected by the business

External Secondary sources

Information collected by other businesses

Primary Research

Where a business finds new information for its own purpose

Questionnaire

A large representative group of potential customers are asked questions

Sampling

Instead of asking the whole target market, a proportion are selected to answer the questionnaire

Representative

The answers given by the sample should be the same as if the entire target market were asked

Focus Group

A small group of potential customers are brough together to discuss their response to existing or new products Used to collect qualitative data

Interviews

A small number of potential customers are individually asked in-depth questions

Trialling

Launching the product in a number of small areas (e.g. Surrey, Northern Ireland) and measuring customer response to different marketing mixes

Market Segmentation

Splitting the market into groups of customers ​

Basis of segmentation

The characteristic in which one segment is different to another

Demographic basis

Easy-to-measure characteristics e.g. age, location, income etc

Psychographic basis

The customer's self-identification, typically only revealed by behaviour e.g. interests, lifestyle etc.

Product

Any good or service offered to the customer to satisfy their needs

Product Design

How the product is made to meet customer needs

Invention

Any new scientific or artistic idea

Innovation

Business use of invention to meet customer needs better

Product Life Cycle

The stages a product moves through over its lifetime

Introduction phase

The product is developed and launched - High cost, low sales

Growth Phase

Sales grow rapidly and competitors enter the market - High costs and rapidly rising sales

Maturity phase

Market share and sales are stable - Low cost, high sales

Decline Phase

Consumers move on to new products - Low Cost, falling sales

Extension strategies

The business makes efforts to prevent the product going into decline

Replacement Strategies

The business anticipates decline and develops a replacement product

Place

The means by which the product is provided to the customer

Physical distribution channels

Traditional 'bricks and mortar' shops that customers must visit

Digital distribution channels

Online distribution of goods and services (especially digital services)

Direct Channel

The producer sells directly to the final consumer

Wholesaler

Buys in bulk from producers and breaks bulk to sell to small retailers​