Edexcel GCSE Business (9-1) Key Terms: 1.3 Putting a business idea into practice

Aims and objectives

The goals of a business. These may be financial or non-financial.

Breakeven

The number of products a business must sell so that its total revenue is the same as its total costs. At this point the business will make no profit or loss.

Cash flow

The flow of money into and out of a business over a period of time.

Cash inflow (Receipts)

Money coming into the business. E.g. Revenue, a loan or another source of finance.

Cash outflow (Payments)

Money leaving the business. E.g. Wages, suppliers, loan repayments or advertising.

Closing balance

The amount of money left at the end of the current time period.

Crowdfunding

Where a large number of individuals invest into a business project on internet sites such as Kickstarter.

Financial aim

Aims and objectives that relate to the money. E.g. Survival, profit, sales, market share.

Fixed cost

Costs which do not change with output. E.g. Rent or salaries.

Insolvency

When a business can no longer afford to pay its debts.

Margin of safety

The amount of products a firm sells over and above the breakeven point.

Net cash flow

The difference between cash inflows and cash outflows over a period of time.

Non-financial aim

Aims and objectives that relate to areas other than finance. E.g. Social objectives, personal satisfaction, challenge and control.

Opening balance

The amount of money the business has at the start of the current time period.

Overdraft

With agreement from your bank, taking more out of your account than you actually have, leaving a negative bank balance.

Profit

The amount left from revenue after costs have been paid.

Retained profit

Profit that is 'ploughed back' into the business.

Revenue

The money made from selling a product.

Selling assets

When a person or business sells assets it owns, such as equipment or vehicles it no longer uses, in order to raise finance.

Share capital

A way of raising finance through sale of shares.

Trade credit

A period of time given to a customer between receiving the goods and payment being due.

Variable cost

A cost which rises as output rises. E.g. Raw materials or packaging.

Venture capital

An experienced business person provides funds for small or medium sized companies that may be considered too risky for other investors, in return for equity.