Edexcel GCSE Business - Theme 1: Investigating Small Business

1.1.1 Enterprise

a business or company, can also mean entrepreneurial activity

1.1.1 Entrepreneur

someone who creates a business, taking on financial risks with the aim of making a profit

1.1.1 Consumer

someone who buys and uses goods and services

1.1.1 Customer

someone who buys goods and services

1.1.1 Obsolete

out of date and not used anymore

1.1.1 M-commerce

using a mobile device to carry out business transactions

1.1.1 Social media

websites that allow users to interact with other users

1.1.2 Risk

The possibility that an enterprise will make lower than anticipated profits or experience a loss

1.1.2 Financial Reward

The money that an entrepreneur or investor receives when a business succeeds

1.1.2 Market Research

The process of gathering information about the market and customers' needs and wants

1.1.2 Revenue forecast

A prediction of future revenue based on expected sales; this is either a judgement or based on pervious sales patterns

1.1.2 Cash Flow

The amount of money coming and going out of a business

1.1.2 Sales Revenue

The amount of money that comes in from selling a product or a service

1.1.2 Investment

Putting money into a business with the intention of making a profit

1.1.2 Start-up

A new business, usually with only a small number of employees

1.1.2 Intuition

Knowing something instinctively or understanding something without conscious thought

1.1.3 Stakeholder

Anyone who has an interest in the activities of a business

1.1.3 Ethics

The moral principles or standards the guide the behaviour of the business of a person.

1.1.3 Values

Standards of behaviour or moral principles

1.1.3 Loyalty

Supporting something or someone

1.1.3 Unique Selling point (USP)

Something that makes a product stand out from its competitors

1.1.3 Economy

The system by which a countries money and goods are produced and used

1.2.1 Want

something a customer desires but isn't essential

1.2.1 Need

something a customer needs as it is essential

1.2.1 Quality

the level of effectiveness of a product or service / the standard of the materials / features

1.2.1 Choice

the number of available products or services for a consumer to choose from

1.2.1 Price

the amount of money a business charges for their product or service

1.2.1 Convenience

how easy something is for someone

1.2.2 Market Research

The process of gathering information about the market and customers' needs and wants

1.2.2 Primary Research

Brand new research being carried out for the first time

1.2.2 Secondary Research

Research that has already been carried out by someone else / a company

1.2.2 Qualitative data

In depth information, usually opinions, thoughts, or reasons

1.2.2 Quantitative data

Numeric / statistic data that is easy to quantify

1.2.2 Sample size

The number of people asked in a survey

1.2.2 Research bias

Where there is unlikely to be impartial answers given

1.2.3 Market segmentation

dividing customers within a market into smaller groups with common needs or wants

1.2.3 Market segment

One of these smaller groups of consumers

1.2.3 Target audience

The segment(s) that a company is attempting to sell their product / service to

1.2.3 Mass market

The largest part of a market where almost everyone is targeted. Products will be quite similar.

1.2.3 Niche market

The smallest part of the market where only a few segments (or one) is targeted

1.2.3 Demographics

The characteristics of a population

1.2.4 Competition

Other businesses or products and services in a market that are fighting to get market share and sales

1.2.4 Patent

A right granted by government to allow an inventor the exclusive right to create their product

1.2.4 Price competition

Where businesses compete primarily by changing their prices (usually lowering)

1.2.4 Non-price competition

Competition in other areas, rather than price, such as product quality, promotion or distribution

1.2.4 Monopoly

Where the market is dominated by one business, who has a very high market share (over 25%)

1.2.4 Oligopoly

Where the market is dominated by a couple of large companies, who may split the market share between

1.2.4 SWOT Analysis

a tool businesses use to assess their competitive environment based on: strengths, weaknesses, opportunities and threats.

1.3.1 Aim

the long term goal of an organisation

1.3.1 Objective

a medium to long term target that aids a business in reaching their aim

1.3.1 Strategy

the short to medium term plans a business uses to meet their objectives

1.3.1 Tactic

day to day actions a business carries out as part of their strategy

1.3.1 Social objective

an objective with the primary purpose of doing something that benefits society

1.3.2 Revenue

Income generated from sales

1.3.2 Costs

Expenditure on running our business

1.3.2 Variable cost

A cost that changes depending on output

1.3.2 Fixed cost

A cost that doesn't change depending on output

1.3.2 Profit

What is left over from the revenue after all costs have been deducted

1.3.2 Revenue calculation

Selling price x Quantity sold

1.3.2 Variable costs calculation

Variable cost per unit x Quantity sold

1.3.2 Total costs calculation

Fixed costs + Variable costs

1.3.2 Profit calculation

Revenue-Total costs

1.3.3 Cash inflow

Immediate money coming into a business

1.3.3 Cash outflow

Immediate money leaving a business

1.3.3 Cash flow forecast

A financial document showing a prediction of cash inflows and outflows over a period of time

1.3.3 Net cash flow

What is left from inflows after outflows are taken away

1.3.3 Net cash flow calculation

cash inflows - cash outflows

1.3.3 Break even point

When a business makes no profit or no loss

1.3.3 Break even output

How many units a business needs to sell to break even

1.3.3 Break even calculation

Fixed costs / Contribution per unit

1.3.3 Contribution per unit

The contribution each product sold makes towards paying off fixed costs

1.3.3 Contribution per unit calculation

Selling price - Variable cost per unit

1.3.3 Margin of safety

The number of sales a business is above its break even output

1.3.3 Margin of safety calculation

Actual output - Break even output

1.3.4 Business finance

Money available for businesses to use

1.3.4 Interest

An additional percentage repaid on top of borrowed money (the cost of borrowing) or an additional percentage earned on top of saved money (the reward of saving)

1.3.4 Source of finance

Where an organisation can access business finance

1.4.1 Liability

the extent to which an individual or business is financially responsible

1.4.1 Limited liability

where the liability is limited to the business only

1.4.1 Unlimited liability

where the liability is unlimited and an owner's personal assets could be at risk

1.4.1 Incorporated

a business that has a separate legal identity from the owners

1.4.1 Unincorporated

a business that has no separate legal identity from the owners

1.4.1 Companies House

the organisation that businesses are registered with and where company accounts are filed

1.4.2 Business location

Where the business sets up their retail, production or offices

1.4.2 Lease

A contract made with a landlord which gives a business the right to use the property for business activity for an agreed period of time

1.4.2 Business rates

A cost paid to the local council, similar to council tax for houses

1.4.2 eCommerce

Selling online through a website

1.4.2 mCommerce

Selling through a mobile device

1.4.2 Pure play

Where a business specialises in one particular thing, for example, ASOS selling only online

1.4.3 Marketing

Understanding and communicating with customers so that they will buy from you

1.4.3 Marketing mix

The product, price, promotion and place of the product and the key decisions the marketing team must make

1.4.3 Target audience

The segment(s) that a company is attempting to sell their product / service to

1.4.3 Competitive environment

The degree and closeness of competitive pressure placed on a business

1.4.4 Business plan

A formal document outlining the aims for the business and how it intends to operate

1.4.4 Unique selling point

What feature of the business makes the business or its products / services unique

1.4.4 Loan capital

Money received from a bank through a loan which must be repaid over an agreed schedule

1.5.1 Stakeholder

an individual or group who have an interest in a business' actions

1.5.1 Majority shareholder

someone who owns a large percentage of the share capital of a business and likely has a big say on decisions

1.5.1 Minority shareholder

someone who owns a small percentage of the share capital of a business and likely is not involved in the day to day running of the business

1.5.1 Internal stakeholder

a stakeholder involved in the day to day running of a business