Capital
• Buildings, equipment, tools,
and other goods needed to
produce a product, or the
money used to purchase
these items.
R.O.I.
• Return On Investment. A
comparison of the money
earned or lost on an
investment to the amount
of money invested.
Monopoly
• A market that only has one
producer, and has no
competition. A company that has
a monopoly is able to charge
higher prices because consumers
have nowhere else to go.
Importing
•Buying goods from
other countries to
sell in your own
country
Feasibility Analysis
•The process used
to test a business
concept
Profit
• The money leftover after
all the expenses of a
business have been
deducted from the
income.
Investment
•What it costs to
make and market
a product
Equilibrium
•Point at which supply
equals demand,
neither leaving a
surplus or a shortage.
Scarcity
•When demand is higher
than supply. Scarcity
allows businesses to
increase prices
Demand
•The quantity of goods
or services that
consumers are willing
and able to buy
Franchise
•Legal agreement to
market a company’s
products or services
in a particular area.
Entrepreneurship
The process of
getting into and
operating
one’s own
business.
Exporting
•Making goods in
your own country
and sending them to
other countries
Competition
•When several
businesses strive for
the same customer
or market.
Consumer Product Safety
Commission
•Watchdog for
consumers over
products that may be
hazardous.
Equal Employment
Opportunity Commission
• Protects the rights of
employees age, race, color
or national origin, religion,
gender or physical
challenge.
Fair Labors Standard Act
• Minimum wage and maximum
working hours are identified.
Children under 16 cannot work fulltime except if employed by parents.
Occupational Safety & Health
Act
•Ensures safe and
healthy working
conditions for
employees.
Fair Packaging and Labeling
Act
• Requires manufacturers
truthfully label products,
showing all raw materials used
in the production process.
Target Market
•The specific market
segment toward all of
a business’s activities
are directed.
Demographics
•Statistical data that
describes a given
market by criteria such
as age, gender, and
income.
Psychographics
• Statistical data that
describes a given market
by criteria such as
personality, opinions, and
lifestyle.
Geographics
•Study of the market
based on where
customers live by
region, state, city,
and/or area.
Buying Characteristics
• Customers will purchase
products or services from
companies they know or have
experience with.
Market Segmentation
• Group of people whose
opinions are studied to
determine the
opinions/buying preferences
of a larger population
Competitive Analysis
•Process of grouping a
market into smaller
groups defined by
specific characteristics.
Market Research
•Business that offers
similar products as
your business
Mission Statement
•Expresses specific
goals for the
company.
Channels of Distribution
• The path a product takes
from producer to final user
(consumer.) Includes
transportation, storage &
product handling
Organizational Chart
•A graphic representation
of the company’s
organizational structure.
Marketing Mix
•The 4 P’s. Product,
Price, Place, Promotion
Partnership
• A business with two or more
owners who share ideas, abilities,
or financial obligations. Partners
do not have to share equally.
Credit
•Allows customers to
obtain products or
services with the
promise to
pay later.
Corporation
• This legal form of ownership
operates apart from its owners, and
lives-on after the owner dies.
Registered by the state and operated
apart from its owners. Ownership
represented by shares of stock –
public or private.
Promotional Mix
•Includes advertising,
publicity, personal
selling, and sales
promotions.
Price Lining
•Pricing strategy that is
used to offer products in
the same line at several
different prices; low,
medium & high.
Promotional Pricing
•Pricing method that
lowers prices for a
limited time to stimulate
demand.
Perpetual Inventory
•Inventory system
that us updated
on a daily basis.
Quantity Discounts
• Pricing method that is
often used when ordering
t-shirts for the school – the
larger the order, the
cheaper the per-unit price.
Income Statement
• Summary of a company’s
profit or loss during any
one given period of time
Also known as a Profit &
Loss Statement.
Start-up Costs
•The one-time
expenses paid to
establish a
business.
COGS
•Cost of Goods Sold –
the cost of inventory
to be sold in a
business
Net Income
•Gross income
minus operating
expenses.
Break-Even Point
•The volume of sales
that must be made to
cover all expenses of
the business
Equity Capital
•Cash invested in a
business in exchange
for an ownership
stake in the business.
Collateral
•Security in the form of
assets you pledge to a
lender.
Fixed Expenses
•Lease payment, salaries,
insurance, advertising.
Expenses that do not
change with the
number of units sold.
Variable Expenses
•Expenses that do
change with the
number of units sold
or produced.
Gross Income
•Total income
minus COGS sold.
Focus Group
• A group of people whose
opinions are studied to
determine the
opinions/buying preferences
of a larger population.
Capacity
•Your ability to repay
a loan based on
incoming and
outgoing cash flow.
Code of Ethics
•Behavior guidelines that
describes appropriate
conduct for a business
or organization.
Global Company
• A business that sells
products in more than one
country
Domestic Company
•A business that sells
product in its own
country
Web-based business
• A business that generates
their revenue directly from
their website.
Primary Data
• Research collected for the
first time and relates
directly to the collector’s
study.
Secondary Data
• Information collected by someone else for
their own purpose.
Five Steps of Market Research
•
•
•
•
•
Identify Your Information Needs
Obtain Secondary Resources
Collect Primary Data
Organize the Data
Analyze the Data
Niche
•A small, specialized
segment of the market
based on customer’s
needs.
Direct Competitors
•Offer similar
products
Indirect Competitors
• Offer close substitutes that
meet the same basic need.
Industrial Markets
•Group of customers who
buy products or services
for business to use; (not
consumer-based)
Location
•Critical factor in the
success of a
business, especially
for retail stores.
Sole Proprietorship
• Owned and operated by one
person. Easy to create. Owner
receives all profits, incurs any
losses, and is liable for the
debts of the business
Advertising
• Paid non-personal
presentation of ideas
directed toward a mass
audience.
Publicity
•Free placement of
newsworthy items
about company, etc.
in the media.
Personal Selling
•Giving an oral
presentation to one
or more potential
buyers.
Promotions
•Use of incentives or
interest-building
activities to create
demand.
Competition-Based
Pricing
•Lower or raise of
products/services based
on what the
competition is doing.
Odd/Even Pricing
•Odd numbers suggest
bargains ($19.99). Even
numbers suggest higher
quality ($20.00)
Assets
• Represent things of value that
person or company owns and has
in its possession.
Liabilities
• What a person or company owes
to others—creditors, suppliers,
tax authorities, employees, etc..
They are obligations that must be
paid under certain conditions and
time frames.
Equity
•Ownership in a
business.
The 5 C’s of Credit to Qualify
for a Loan
• Character
• Capacity
• Capital
• Collateral
• Conditions