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1.01 Key Terms

Nature of Business Plans

Accounting The process of keeping and interpreting financial records
Appendix A segment added to the end of the document; includes supporting information
Balance Sheet A financial statement that captures the financial condition of the business at the particular moment
Barrier to (market) entry Anything that blocks the way or makes it more difficult to enter a particular market
Bottom Line Net outcome
Business Model The company's method or plan for making money
Business Plan A company's blueprint for success; shows how the business works now and how it is intended to work in the future; the written business model
Business Structure The company's configuration of employees for accomplishing specific business tasks; how the business is organized
Capital Investment The amount of money a business has invested in its goods and other property
Capital Structure The organization of the influx and outflow of the company's money, including where the money goes on a regular basis; how a business pays for its operations
Cash Flow The movement of funds into and out of a business; determines the amount of cash the business has to work with at any given time
Cost Estimate A ball-park figure (or guess) of how much will be spent on a given activity
Equity Assets minus liabilities; also known as stockholders' (or shareholders) equity, book value, and net worth
Executive Summary The most important part of a company's business plan because it gives an overview of the entire document; used to determine whether it is worthwhile to read any further
Finance The process of obtaining funds and using them to achieve the goals of the business
Financial Plan The part of a company's business plan that shows how the business has performed (or is likely to perform) financially; how a business intends to use its money
Financial Resources All the sources of money available to a business or project
Financial Costs Funding a business activity or project through debt, equity, or venture capital
Fixed Assets Items of value a business owns that are not expected to change, e.g., buildings
Funding Money available to a business from one or more sources
Human Resources People who work to produce goods and services
Income Statement A financial summary that shoes how much money the business has made or has lost over a period of time; also called the profit-and-loss statement
Letter of Intent A document communication what a person or business intends to do within (or during) a specific timeframe
Liabilities Responsibilities of the business, especially legal responsibilities
Life Cycle The stages through which goods and services move from the time they are introduced on the market until they are taken off the market
Management The process of coordinating resources in order to accomplish an organization's goals
Market Analysis A systematic study of the market
Market Position The rank of a particular business in a specific market
Marketing An organizational function and a set of processes for creating, communicating, and delivering value to costumers and for managing customer relations in ways that benefit the organization and its stakeholders
Marketing Plan A set of producers or strategies for attracting the target customer to a business
Niche The small segment of the total market interested in a subject
Operations The day-to-day activities required for continued business functioning
Physical Resources Material items used to accomplish another activity
Product The good, service, or idea a business offers its customers
Product Development The efforts involved in the creation of a new product
Product Promotion A type of promotion that aims to persuade consumers to buy a good or service
Profit Monetary reward a business owner receives for taking the risk involved in investing in a business; income left once all expenses are paid
Resources Any item that is used to accomplished another, such as producing/providing goods and services
Return on Equity Financial ratio calculated by dividing net income by book value
Return on Investment Financial ratio calculated by dividing net profit by investment
Risk Management Plan A business document that involves the planning, controlling, preventing, and procedures involved in limiting business losses; optimizes the relationship of potential loss to gain
Royalties A percentage of actual sales that a licensee pays to a licensor; usually anywhere from 5 to 15 percent
Sales Volume The amount of a firm's sales; usually expressed in dollars
Strategic Plan Lon-range plan for the company as a whole; usually three to five years out
Strategy Plan of action for achieving goals and objectives
Table of Contents The portion of a document in which the sections are listed with their page numbers for easy access
Target Market The particular group of customers a business seeks to attract
Third-Party Agreement Legal or financial arrangement in which two companies do business through (or using) a third company
Venture A business or business project, usually new
Created by: yazmin.f411
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