Key terms

Entrepreneur

person who owns a business

enterprising characteristics

confidence, creativity, determination, risk-taking

business plan

a document that sets out details of the product or service being sold, finance and more

markets

where a business sells its good or services

finance

money or capital

aim and objectives

things a business is trying to achieve

operate

how a business works

limited liability

responsibility for debts of the business is limited to the amount invested by a shareholder, they are Ltds and Plcs

unlimited liability

the owner of the business is responsible for repaying all the debts of a business, they are sole traders and partnerships

sole trader

business owned by one person

partnership

business owned between 2-20 partners

private limited company (Ltd)

often a small business owned by at least 2 shareholders, cannot sell shares to general public.

public limited company (plc)

large business, owned by shareholders, shares sold to general public, large sum of money can be raised

deed of partnership

document setting out the operations of a partnership

sleeping/ silent partner

partner who invests in the business but has no part in running it.

shareholders

owners of limited companies

share

part ownership of a company, invested money in the business

dividend

money paid to shareholder from profits of the limited company

capital

money raised to start or develop a business

assets

items owned by the business, vehicles and buildings

business objectives

survival, profit, growth, and providing a service

survival

business just manages to keep going

profit

revenue - costs

growth

business expands, making more products

providing a service

business makes sure the needs of the customer are being met

market share

share of total market for particular product/service

stakeholder

groups or individuals who have an interest in a business

internal stakeholder

business owners and people who work for the business

external stakeholder

local community, suppliers, customers and government

organic growth

growth of a business internally, increasing sales

external growth

growth of a business by takeover or merger

takeover

where a business takes a controlling interest in another business, buying more than 50% shares in it

merger

where 2 or more businesses agree to join together

horizontal growth

merger or takeover where 2 business are involved in a similar operation

backwards vertical growth

when a business merges with or takes over a business that supplies it with goods/ services

forwards vertical growth

when a business merges with or takes over a business that it supplies goods/ services to

diversification

when a business merges with or takes over another business with which there is no connection