GLOSSARY
Provided by Ventures Community Futures Development Corp. "I am an Entrepreneur-Self Assessment Guide"
A few terms for you!
Account- A statement of business transactions that tracks a company's assets, liabilities and net worth
Accountant- A professional who manages and analyzes business records
Accounts Payable- A company liability that represents amounts due for goods or services purchased on credit
Accrual- A method of accounting that involves recording revenues and expenses when they occur, rather than they are actually received
Advertising- Paid promotion of a business, usually in the form of telemarketing, fliers and posters, newspaper, radio or TV advertisements
Angel- A private investor who often has non-monetary motives for investing as well as the usual financial ones
Assets-Tangible or intangible objects of value to its owner
Audit- a formal study of accounts conducted by the Canada Customs and Revenue Agency to determine whether the taxpayer being investigated is paying appropriate taxes
Balance¬- The value, negative or positive, of an account
Balance Sheets- Paints a picture of the business' financial strength in terms of assets, liabilities and equity over a set period
Bankrupt- The condition of a business that is unable to pay its bulls. A business declared legally bankrupt may have its property confiscated by the courts and divided up among its creditors
Bookkeeping- The procedure of keeping accounting records of a business' daily accounts
Break-even Point- The point at which expenses are equal to income. Beyond this point a company realizes profit
Broker- An insurance agent who represents many different insurance companies
Browser- Software used to 'surf' or browse the Internet
Budget- A statement of expected income and expenses over a given period of time
Business Opportunity- legal definitions vary; in its simplest terms, a business opportunity is a packaged business investment that allows the buyer to begin the business
Business Plan- A detailed list of goals set by the entrepreneur, describing the means and time frame by which to achieve them
Capital- Money and assets available for business activities
Cash Flow- The amount of cash earned by, or available to, a business for investment, expenses, pr expansion
Compound Interest- The money and investor earns on interest that was earned by the investment in a previous period, enabling the investment to grow potentially
Consumer- A person or business that buys goods and services for its own needs, not for resale or for use in producing goods and services for resale
Contract- A legal agreement between two or more parties specifying each party's responsibilities to meet determined business obligations
Corporation- A business structure organized under state law and generally treated as a separate tax entity
Copyright- An exclusive right granted by the federal government to the processor to publish and sell literary, musical, and other artistic materials. Honored for 50 years after the death of the author.
Cost- An expense; the amount of money, time or energy spent on something
Credit- The right side entry in a double-entry accounting system
Credit Card- An account that allows carrying a debt indefinitely, as long as interest is paid to the account later
Creditor- A person who extends credit or to whom money is owed
Customer Service- The maintenance and servicing of a product once it has been sold; the act of keeping customers happy and loyal to one's business
Database- Information (data) such as customer addresses, stored in a computer
Debit- the left side entries in a double-entry accounting system
Debt- Money owed to creditors
Debt Capital- Funds or assets acquired by borrowing
Debt Ratio- the ratio or debts to assets
Deficit- When expenses are greater than income: the opposite of surplus
Demand- The desire for commodity, together with the ability to pay for it: the amount consumers are ready and able to buy at all the prices in the market
Demographics- Aspects such as the age, sex, income and household composition of a particular target market
Depreciation- A loss of value due to the use or age of a company's material assets
Dilution- The reduction of a stockholder's percentage of ownership in an enterprise, usually done by selling more common stock to other parties. Sometimes called watering the stock
Diversification- A method of decreasing risk by spreading an investor's money among many different investments
Electronic Storefront- A Web site set up as a store where consumers can see and purchase merchandise
E-mail- short for electronic mail or messages sent between computers using the Internet
Employee- A person hired by a business to work for wages or salary
Employment Insurance- A government administered plan which can compensate for loss of income due to lack or loss of work
Encryption- Code used to scramble information sent over the Internet
Endorsement- Signature on the back of a cheque, rendering it payable
Entrepreneur- Derived from the French entreprendre, "to undertake." Someone who is willing and eager to create a new venture in order to present a concept to the marketplace
Equity- Total assets minus total liabilities equals equity or net worth
Expenses- Money spent for goods or services
Financial Plan- An estimate of a company's future income and expenses, broken down weekly, monthly or yearly
Fiscal Period- An accounting period, usually consisting of 12 months, and most commonly used for tax purposes
Fixed Costs- Business expenses that must be paid whether or not any sales are being generated; utilities, salaries, advertising, insurance, interest and rent (USAIIR)
Flame- An angry e-mail sent in response to "Spam," which is unsolicited to e-mail hawking a product or service
Gross- Total or entire amount before deductions, as opposed to net
Incentive- Something that motivates a person to take action- to work, starts a business or study harder, for example
Income- Money received for goods or services produced or as a return on investment
Income Statement- A formal financial document that serves as a summary of income and expenses and indicates profit or loss during a specified period of time
Income Tax- A tax imposed by the government, usually calculated as a percentage of income
Infringe- to violate a copyright, trademark or patent
Insolvent- the condition of a business that is unable to pay its bills
Interest- Payment for using someone's money, expressed as a percentage per unit of time
Inventory- The assets produced by a manufacturing business or the assets bought ad sold for profit by a wholesaling or retailing business
Invoice- A legal, itemized statement of goods and services sold (sales invoice) and purchased (purchase invoice)
Keystone- To buy an item wholesale and sell it for twice the wholesale price; to double one's money
Liability- An obligation to another party
Lien- An interest of a creditor in any real assets or property as security for repayment of credit. A legal claim against property
Limited Liability Company (LLC)- A hybrid business structure that combines tax advantages of partnership with liability protection of a corporation
Line of Credit- Short-term financing usually granted by a bank up to a predetermined limit; debtor borrows as needed up to the limit or credit without need to renegotiate with loan
Liquidate- the conversion of assets of cash
Loan- Money that a lender gives to a person or company for the purpose of making income. Usually a loan carries a cost which is expressed as an interest rate
Loss- A financial deficit. The result of income minus expenses; if negative it is a loss
Market- a set of consumers. A group of people interested in buying a product or service; any situation or designated location where trades occur
Marketing- The activities involved in finding, accessing and informing a market of a business in order to sell a product or service
Merchandise- A Company's inventory of products
Minimum Wage- A legally specified minimum rate of pay for labor in specific occupations
Net- final result, in business, the profit or loss remaining after all costs have been subtracted
Networking- Interacting with other people and organizations for the purpose of making contacts and developing business opportunities
Net Worth- The value of a business after al expenses have been deducted
Newsgroup- an on-line discussion group focused on a specific subject
Niche- A small market segment, often isolated from competition by degree of specialization or size
Operating Costs- Costs created by the production of business products or services
Overhead- The fixed costs of operating a business. They often include rent and lease payments
Partnership- Business association of two or people. There are two types of partnerships: general and limited
Patent- Federal government grant to an inventor giving exclusive rights to an invention or process for 20 years from date of patent application filing
Profit- The financial gain realized by doing business. The result of income minus expenses; if positive, it is a profit
Profit Margin- The sale price minus the total costs
Retail- The selling of goods or services to the end user
Revenue- Money earned by a business from sales or products or services
Risk- The chance of loss
Sole Proprietorship- A business firm owned by only one person and operated for his or her profit
Start-up Capital- Money needed to launch a new venture during the pre-start up and initial period of operation
Supply- the amount of a product or service made available by sellers
Tax- A percentage of a business' gross profit or of an individuals income, taken by the government support public services
Tax Evasion- Deliberate avoidance of the obligation to pay taxes; may led to penalty or even jail
Tax-Exempt- the condition of an entity that is allowed to produce income sheltered from taxation
Test the Market- to offer a product or service to a very limited, yet representative, segment of consumers in order to receive customer feedback and improve the product or service necessary, before attempting to sell it in a larger market
Venture Capitalist- an investor who provides early financing to new ventures- often technology based with an innovative product and the prospect of rapid or profitable growth
Workers' Compensation Insurance- covers medical and rehabilitation costs and lost wages for employees injured at work; required by law
Working Capital- the amount of funds available to pay short term expenses. Seen as a cushion to meet unexpected or out-of-the-ordinary expenses. It is determined by subtracting current liabilities from current assets