Running a Small Business
partnership
a business owned and operated by 2-20 people
sole trader
a business owned and operated by one person
niche market
a very small segment of the total market
net profit/loss
amount remaining when operating expenses are deducted from gross profit
gross profit/loss
amount remaining when the cost of goods sold is deducted from revenue
market research
collecting and analysing information about customers and the business opportunities available
limited liability
if the business cannot pay its debts, a shareholder generally loses only the money he or she invested in the business
assets
items of value owned by a business
promotion
methods used by a business to inform, persuade and remind customers about its products
demographic factors
population characteristics that affect customer spending and include: age, ethnicity, gender, marital status, family size and income
entrepreneur
someone who starts, operates and assumes the risk of a business venture in the hope of making a profit
business opportunity
something an entrepreneur can see as an avenue to success
competitive advantage
the ability of a business to develop strategies that ensure it has an 'edge' over its competitors
liquidity
the ability of a business to pay its debts on time
management
the coordination of the human, physical, financial and information resources to achieve the goals of the business
expenses
the costs incurred in running a business
liabilities
the debts owed by a business to others
target market
the group of customers to whom the business intends to sell its products
revenue
the income earned by a business
goodwill
the monetary value of a business's reputation
break-even point
the point at which a business makes neither a profit or loss; where the number of sales covers a business' costs
risk management
the process of identifying and minimising the risks faced by a business
franchise
the rights from a manufacturer to distribute its products under its name
owner's equity
the value of the business to the owner(s)
unlimited liability
when a business owner is personally responsible for all the debts of his or her business
incorporation
when the company has become a separate legal entity from its owners (shareholders)
