Glossary of Useful Business Terms

Ability to repay. Evidence of the wherewithal to repay any loans you arrange in connection with your enterprise.

Accommodation facility. Arrangement with (say) your Local Development Business Centre for short-term rental of desk space, secretarial services, mail handling etc.

Annual accounts. Formal statements showing the financial position of a business, which are normally drawn up by an accountant and submitted to the Inland Revenue for tax assessment purposes. They usually comprise a trading account, a profit and loss account and a balance sheet.

Assets. The total value of things owned by a business.

Attachments. Computer files that accompany the message portion of an e-mail.

Autoresponder. An electronic Internet email device which collects enquiries and which has the capability of transmitting up to seven individual responses -- from immediate to follow ups.

Bizops. Universally accepted Internet jargon for business opportunities.

Book-keeping. The production of records of a business's financial transactions.

Booster grant. Local Authority Start up Grant (typically around £1,000).

Business administration refresher course. Local Authority crash course on business skills (normally free of charge to qualified applicants).

Business Development Executive. Your initial contact on matters relating to starting up.

Business plan. The masterplan you prepare to convince other people that you have what it takes to run a business.

Buying signals. The telltale signs that indicate you're talking to a willing buyer.

Cash book. The accounting book which records all payments into and out of the business's bank account.

Cash flow. Controlling the flow of cash you collect from customers and other sources before you pay your suppliers and any other creditors.

Collateral. Security put up against loan arrangements, for example a house or insurance policy.

Competitive activity. Activity by your competitors in such matters as pricing, promotions, sales territory, marketing.

Contact points. Your essential personal points of contact when conducting sales negotiation. They are not always the decision makers, though.

Conversion ratios. The relationship between the number of calls you have to make to achieve a given number of confirmed sales, for example 36 calls, 12 sales. Divide 12 into 36 and the conversion ratio is 3.

Creditors. The suppliers to the business to whom money is owed and the amount owed by the business to them (contrast debtors).

Current assets. These are assets which are either cash or can be turned into cash quite quickly. They include cash, bank balances (not overdrafts), debtors, stock and work in progress. (Contrast current liabilities and fixed assets.)

Current liabilities. These are amounts owed to suppliers (creditors) together with short term loans such as bank overdrafts. Short term loans are those less than one year and so part of hire purchase liabilities may also be included under this heading where they are repayable within the next twelve months. (Contrast current assets.)

Customer base. The total number of customers with whom you are currently doing business.

Customer service. The added extras which businesses provide to ensure continued customer satisfaction, thus achieving loyalty amongst the purchasers of products and services.

Debtors. The customers of the business who owe money to the business and the amount owed. (Contrast creditors.)

Depreciation. An allowance made (charged as an expense in the profit and loss account) for the reduction in value of fixed assets, (particularly machinery, furnishings and motor vehicles) during each accounting period. See page 99 for more details.

Direct mail. Advertising and promotional material delivered to a specific and carefully targeted audience.

Discretionary funds. That amount of money you have available for paying out as you please.

Distribution channels. The patterns of distribution you have determined for your product, for example, wholesale, retail, door-to-door, direct mail.

Downlines. Those participants operating in downward levels from the sponsor in multi level marketing.

E-mail. Electronic information addressed and transmitted over the Internet.

E-mail address. Consists of a user ID, followed by @ sign and a domain name. For example: jim@uddingston.com.

Entrepreneur. A business person who seeks to make a profit by risk and initiative.

Entrepreneurship training program. Courses largely underwritten by government agencies, conducted by entrepreneurs in their own right and dealing exclusively with essential entrepreneurial skills.

Equity stake. Capital invested in an enterprise on a long-term or permanent basis. All or part of the share capital.

Executive summary. The concise precise of what your enterprise is all about and which appears at the very beginning of your business plan.

External capital. The amount of money (loans, grants, overdraft) you need to raise from outside sources.

Fixed assets. Items of long term use to a business such as a freehold property, fixtures and fittings.

Fixed interest rates. Those rates which are set when funding is arranged and do not vary for a given period.

Flame. An Internet message which uses profanity or otherwise belittles the recipient.

Founders' equity. The respective amounts of money each of the founding members invest in an enterprise.

Franchise. A license for one party to set up and run a venture in a particular area for a specific period of time, using the trading name and business format of another party.

Franchisee. The party buying a franchise. (The party granting the franchise is known as a franchisor.)

Full repairing and insuring liability. A legal obligation whereby the tenant of a property is responsible for its internal and external maintenance and insurance.

Funds sourcing. Going out in the market looking for the external capital you need to get the business up and running.

Free initial training. Available in various categories (free of charge to recognized start ups) from public sector sources.

Going concern. A well established business which appears to be trading satisfactorily (although an examination of its books and accounts may convey a different and more accurate image).

Goodwill. Sum based on the annual net profit of a business and added to its value when sold.

Gross profit. The profit derived from buying and selling goods and services, before the deduction of overheads such as rent, wages and transport costs.

Hands-on experience. Practical knowledge gained through participation as opposed to academic study.

Hidden agenda. An important and real agenda which isn't written down on any official piece of paper.

Image. The impression you give to others of yourself and your business.

Immediate catchment area. The geographical area in which you initially intend to do business.

Indigenous growth. Creating growth in the economy through encouraging locally based enterprise.

Information technology. Using computers to store and process information as opposed to entrusting it all to pen and paper.

Initial budgeting requirements. Estimating precisely how much money you will need by way of investment and sales to keep you afloat during the initial trading period.

Input tax. Value added tax charged on products and services purchased by a VAT registered trader for resale or business use.

Intelligence gathering. The continuous gathering of information about your industry so that you always know what's happening.

Internet. A worldwide network of millions of computers and servers that uses telephone system technology to transmit information from one place to another.

Internet Service Provider (ISP). A company which provides users with access to the Internet.

Jointly and severally responsible. Expression used in relation to partnerships, indicating that partners are responsible for each others' activities.

Liabilities. The money which a business owes in the forms of loans, hire purchase agreements, trade suppliers, tax etc.

Limited company. A separate legal entity which can trade in its own right. Forming limited companies can have tax advantages, and can protect the owners from paying debts if the firm runs into trouble.

Mainstream finance. Just another way of describing external finance: mainstream because it normally accounts for the bulk of the required investment.

Marketplace. Where you'll be doing business.

Marketing grants. Available only from the public sector and only to qualified start ups for assistance with brochures, exhibition participation etc.

Marketing program. The program of activity that gets your business rolling.

MLM (multi level marketing). Marketing of a product or service at various levels in upward and downward directions.

Net assets. The total of net current assets added to fixed assets.

Net current assets. The sum remaining after current liabilities have been deducted from current assets.

Net profit. The profit of a business after taking account of all expenses.

Networking. Broadcasting your message to groups of people and achieving a knock-on effect in the performance of your sales program.

New business grant. Available only from the public sector to qualified unemployed applicants with approved start up status. Output tax. Value added tax charged by a VAT registered trader on goods and services sold to customers.

Overheads. Costs incurred by a business regardless of its sales turnover.

Participating equity partner. A partner in the enterprise who has contributed to the share capital.

Partnership. A legally binding business association of two or more people. Each partner is usually equally liable for all of the partnership's debts.

Personal drawings. Monies taken out of a business for personal use, as noted on the balance sheet.

Personal integrity. Your personal honesty and trustworthiness. It is your most vital asset in business.

Pricing policy. The means you use to set your selling prices.

Profit and loss account. An account summarizing the income and expenditure of a business for a given period and showing the surplus income (profit) or deficit (loss).

Planning permission. The legal permission which is granted by local authorities for individuals or businesses to build or change the use of premises. Planning permission may be necessary for some home-based businesses.

Professional indemnity. An insurance scheme which protects businesses against claims for problems involved in the running of the business, such as administrative errors.

Proven ideas. Business ideas that are tried, tested and seen to work in practice.

Public sector funding. Working capital obtained from the public sector by way of grants and soft loans.

Sale or return. A trading condition whereby unsold stock is returned to the supplier for a cash refund or credit against future purchases.

Scenario planning. Planning for various `what if€' situations that could occur in the future.

Schematic. A simple diagram that illustrates an idea.

Secured borrowings. Loans, overdrafts, mortgages and other financial advantages against which assets have been set by a borrower.

Security. Assets pledged by a borrower against monies borrowed, to protect the lender against defaults by the borrower.

Seed capital. The initial cash invested in a business to get it up and running.

Selling off-the-page. Getting distribution of a product or service solely by means of press advertising.

Server. Any computer or device on a network that manages network resources.

Soft loans. So called because they are arranged on very generous terms. They are available only from the public sector.

Sole trader. A self-employed individual.

Start up. A brand new enterprise.

Stock. Finished items which are ready to be sold to customers.

Telemarketing techniques. Using the telephone (and fax) to sell direct to customers.

Template. A pattern for success, your business plan.

Trade directories. Every trade has at least one reference directory, classifying businesses according to their trading profiles.

Trading name. The name under which your enterprise will trade.

Trading out of your debts. Trying to pay off old debts by creating new business. It is normally a road to ruin.

Turnover. The total amount of money which comes into a business from all sources.

Uniform Resource Locator (URL). The standard address used to locate a Web page, Web server, or other device on the Web or on the Internet.

Unsecured loans. Loans made without any collateral.

VAT. Value Added Tax. A tax applied to a wide range of products and services, currently 17.5 per cent.

VAT threshold. The trading level at which you are obliged to register for Value Added Tax.

Venture capital houses. Financial institutions you would go to first for funding if your enterprise is on a major scale.

Web site. A collection of World Wide Web documents, normally consisting of a home page and several related pages i.e. an interactive electronic book.

Working capital. The amount of money required to keep the business running effectively and solvent.

World Wide Web (WWW). The graphical segment of the Internet, which consists of millions of Web pages on servers all over the world. Each page carries an address called an URL and contains links which you click to go to other Web pages.

Youth incentive schemes. Government sponsored projects to help young unemployed persons find a job or set up in business for themselves.