Glossary of Business Terminology That You Need To Know
What is ‘bankruptcy’?
This is when a company can no longer continue trading because it has serious financial problems. Another common phrase is to say that a company has ‘gone under’, or that it has ‘gone bust’.
Note: A more technical term is to say that a company has gone into ‘administration’. This is when the banks etc have to sell off the company’s assets in order to get some of their money back.
What is a ‘bid’?
When you want to employ an outside company to do some work for you, you often invite various companies to ‘bid’ on the work. They usually write a ‘bid’ explaining why they would be the best company to do the work.
Note 1: When a company ‘bids’ on something they often include the price they are willing to do the job for. This is called a ‘quote’.
Note 2: Another common use of the word ‘bid’ is in auctions. If for example, you want to buy something at an eBay auction, you will compete with other buyers to purchase the item. Every time you offer a higher price you are ‘bidding’ on the item.
In use: When local government needs outside contractors to do work for them they usually put it out to tender. This is when various companies write proposals (or ‘bids’) and then submit them to be considered. When all the bids are in, the local government workers choose the best bid.
What is a ‘brick and mortar business’?
This is a business that has a real shop or office. It has a physical location. It is not an ‘online business’.
What is ‘capacity’?
This is the most one can do, produce, hold, etc. For example, if your company can produce 100 items a day, then you have the ‘capacity’ to produce 100 a day. That is the maximum you can produce. Or if a room can hold a maximum of 20 people, then it has the ‘capacity’ to hold 20 people.
What is a ‘consumer’?
A ‘consumer’ is someone who buys things. This is the person who buys and uses the end product.
In use: If you don’t build up a network of contacts you are really missing out. These people may not become direct customers, but it’s always beneficial to know lots of people from different fields. You never know what is going to happen in business. So having lots of different contacts can be extremely useful in the future.
What is a ‘contract’?
This is a written agreement between two parties. It is often ‘legally binding’ which means that by law you have to do what is agreed on in the contract.
Note: If you win a contract, that means that you have gotten a piece of work. You (or your company) have been employed to do a certain piece of work.
In use: An important principle in business is to always have a written contract. That way both parties know exactly what is expected of them. So if you hire someone to do something, then it is clear what they are contracted to do. They have to fulfill what is expected of them.
This is something that is the most advanced in its field as possible.
What is a ‘dealer’?
This is a company (or an individual) that buys and sells a certain item. So a ‘used car dealer’ is someone who buys and then sells used cars. They ‘deal’ in used cars.
What is ‘to delegate’?
This is when instead of doing everything by yourself you assign certain jobs to other people (usually your employees).
In use: A lot of managers or business owners are failing to delegate. They are just trying to do everything by themselves because they think that no one can do the job as well as them. Of course, this is not true, and often if you delegate the work out, the other person will actually do the job better. This is because they can focus on that one thing rather than trying to do everything else as well.
What is ‘a delegate’?
A delegate is a person who represents their company or group at a meeting or event.
What is an ‘enterprise’?
An ‘enterprise’ is a project of some kind. It can sometimes refer to a (new) company.
In use: When starting a new enterprise it is essential to think about the potential market. Are there enough people who want to buy what you are selling? Why are you starting this enterprise, is it for fun, or do you actually want to make money? You need to be clear about what you are getting into because starting a new project is often a lot of work.
What is ‘expansion’?
This is when a company tries to get bigger.
In use: For new businesses, expansion can be a real problem. If they don’t expand they will not be able to compete with the larger companies. But if they do expand then that is a big risk. The best thing to do is to expand as slowly as possible and try to not get into debt. That way you will have less chance of running into problems.
What is a ‘firm’?
This is another word for ‘company’.
What is a ‘freelancer’?
This is someone who is self-employed but does jobs for other people. So for example a ‘freelance’ camera operator, does not work for a particular television channel, they are just employed occasionally to film certain shows.
What is ‘innovation’?
This is when you improve on something that already exists. It is not ‘invention’ which is when you think of something completely new.
What is a ‘joint venture’?
This is when two companies do a project or release a product together.
What is ‘manufacturing’?
This means ‘to make’ something. It usually refers to making a lot of something, not just single items.
What is a ‘marketing strategy’?
‘Marketing’ is how a company advertises its products and services to the customers. So a ‘marketing strategy’ is a plan (or a certain technique) of how they will advertise to the public.
What is a ‘market share’?
This is how much of a certain market your company controls. So if in a certain market 100 units are sold a year, and of that 100 you sell 12 and other companies sell the remaining 88. That means that you have a 12% market share.
What is a ‘mentor’?
This is someone with more experience than you who guides you through a certain process. For example a ‘business mentor’ would offer you advice and guidance on how to run a business. It is usually a relationship that lasts quite a long time.
What is a ‘mission statement’?
This is a written statement that companies sometimes write to be clear about what their objectives are. They often get their employees to read this statement so that they know what the company’s objectives and work ethos is.
What are ‘overheads’?
These are the ongoing costs of running a business. For example the cost of rent, electricity, and staff, etc.
What is a ‘patent’?
This is a document that proves legally that you own the rights to an invention/innovation or product. Other people cannot use your ideas without permission. They usually will have to pay you for using your ideas as well.
Note: When you apply for a patent you ‘file for a patent’ at the ‘patent office’.
What is ‘petty cash’?
This is a small amount of money that is kept in the office to pay for everyday expenses. For example, if you need to buy stamps or tea and coffee you could use the petty cash.
What is a ‘recession’?
This is when the economy gets smaller for at least 6 months. The economy doesn’t grow.
Note: A ‘recovery’ is when the economy comes out of recession and starts to grow again.
What is ‘retail’?
This means ‘to sell’ something. So if you are ‘in retail’ that means that you work in a shop of some kind. ‘Retail price’ is how much something sells for to the public.
What is a ‘ROI’?
This stands for ‘return on investment’. For if example if you invest £100 on advertising and then make £1000 in sales then that is a good return on your investment.
What is a ‘shareholder’?
This is someone who owns part of a business. They may not work there but they own stocks in the company.
What is a ‘sole trader’ or ‘sole proprietor’?
A sole trader (UK) or sole proprietor (US) is someone who is self-employed. They do not have a direct boss or continuous employer. This is a formal word used to describe what type of business you run.
What is a ‘transaction’?
This is when you exchange money for goods. You pay for something, or someone pays you for something.
What is ‘turn-over’?
This is the total amount of money that comes into a company through selling products and services etc. It is not just the profit, but the whole amount that comes in.
What is an ‘upturn or downturn’?
This refers to when the economy (or the finances of a company) gets better (an upturn) or worse (a downturn).
What is ‘wholesale’?
This is when you (a company) buy a large amount of a product from the manufacturer or supplier for a discount. You then sell the products to your customers for a profit. A ‘wholesaler’ is the company that sells you the wholesale products.
