business over a period of time.

Budget A plan, usually expressed in monetary terms, which projects the operation of a
Web.
Browser: A computer program that enables users to access and navigate the World Wide
Bridge finance: Short-term finance that is expected to be repaid quickly.
company's costs, both fixed and variable.
Breakeven point: Dollar value of sales that will cover, but not exceed, all of the
total costs.
Break Even Break-even point represents the volume of sales at which total revenue equals
ideas to resolve the issues raised.
Brainstorming A technique of solving problems in which members of a group put forward
exceptional performance.
Best Practice Best performance of a function or process or methods that lead to
businesses. It is an effective way of identifying areas for business improvement.
Benchmarking A method used to compare the relative performance ranges of different
time, listing assets as well as liabilities.
Balance sheet: Summary statement of a company's financial position at a given point in
audited.
own accountant. Sole traders and partnerships do not need to have their accounts
to check that the financial records are correct. The auditor cannot be the companys
Audit A process carried out by an accountant (auditor) on all limited companies each year
supplies and all things of value that the business owns.
equipment, fixtures, property or buildings, merchandise for sale or being made,
in the bank, accounts receivable, securities held in the name of the business,
Asset Anything of worth that is owned by the business. The assets of a business are money
venture capital.
as a bridge from the self-funded stage to the point in which a business can attract
often successful entrepreneurs who invest in emerging entrepreneurial ventures, often
Angel investors: Individuals who have capital that they are willing to risk. Angels are
your proposition more attractive then theirs e.g. personal service.
Adding Value Providing something extra, over and above your competitors, which makes
a Balance Sheet, a Director's Report and Auditor's Statement.
required to file each year. Most companies filing will include a Profit & Loss account,
Accounts A generic term for the financial documents that companies in the UK are
customers to whom you give credit.
record of what you buy and what you pay. You should do the same thing with any
company you are dealing with will set up an "account". This means that they set up a
Account Record of a business transaction. When you buy something on credit, the
transactions, assets etc., those are associated with the everyday running of a business.
Above the line This term can be applied to many aspects of accounting. It means
Abatements usually apply to tax levies, special assessments, and service charges.
Abatement Complete or partial cancellation of a levy imposed by a governmental unit.

used.
accounting method, such as allocating the cost of an asset over the years in which it is
Depreciation: The decrease in the value of assets over their expected life by an accepted
Debtors A party who owes money to the business.
e.g. creditors, bank overdraft and short term loans.
Current Liability A temporary debt which is capable of being paid off within one year,
Current Asset A cash balance and other assets intended for conversion in cash.
Creditor A party to whom money is owed by the business.
Credit The period allowed, or taken, to pay for goods or services.
goods or services and pay for them later.
Credit Account An agreement made with a trusted customer so that he or she can buy
adding a fixed mark-up to the total costs of production and associated costs.
Cost Plus Pricing Selling a range of products/services by setting the price on the basis of
which, when taken from the sales figures, gives the gross profit.
Cost of Sales A term used in a trading account representing the cost of the materials used
life.
important features include limited liability, easy transfer of ownership, and unlimited
Corporation: A business form that is an entity legally separate from its owners. Its
grants exclusive rights to the work's creator for a specified period of time.
scientific, and artistic works that have been fixed in a tangible or material form. It
Copyright: Copyright is a form of legal protection for published and unpublished literary,
seek payment if it was due to him/her.
Conditions of Payment The written terms under which one must make payment or could
an independent legal entity, separate from the people who own, control and manage it.
What sets the company apart from all other types of businesses is that a company is
Companies A Company is a type of business structure created and regulated by state law.
Collateral: An asset pledged as security for a loan.
and pay current bills and obligations.
given period. It refers to the amount of money actually available to make purchases
Cash flow: The difference between the company's cash receipts and its cash payments in a
Cash flow statement: A summary of a company's cash flow over a period of time.
Cash Book A daily record of payments and receipts.
the funds and other assets invested in the business venture.
Capital: Cash or goods used to generate income. For entrepreneurs, capital often refers to
Capital Expenditure Money spent on the purchase of an asset.
sheet, and cash flow projections.
marketing strategy, the operating plan, and the management as well as profit, balance
analysis of the product or service being offered, the market and competition, the
expected needs, and projected results for the enterprise. It contains a thorough
Business plan: A written document detailing a proposed venture, covering current status,
reduced cost.
support services are provided to entrepreneurs and early-stage businesses at a free or
Business incubator: This is a form of mentoring in which workspace, coaching, and

Glossary

Business Angel An individual investing in businesses, especially start-up businesses.

G l o s s a r y

2 5 7

2 5 8

E n t r e p r e n e u r s h i p

D e v e l o p m e n t

organisation.
assurance arrangements for the assessment and recognition of staff within an
IIP The guardians of the Investors in People Standard are responsible for the quality
telecommunications, internet, etc.
Information and Communications

deducting all personal liabilities from personal assets.

liabilities from total assets. Similarly, the net worth of an individual is calculated by
Net Worth Indicates an owner's equity in a business, calculated by deducting total

computers,

sales revenue.
Net Profit The figure remaining after direct cost and overheads have been deducted from

owner's home.
Home-based business: A business, of any size or type, whose primary office is in the

(real estate) as security.

Mortgage A mortgage is a secured charge for which the lender has stipulated property

Companies typically hedge against exchange rate movements.

opposite ways as markets move, leaving investors unaffected by major movements.
market movements. Hedging involves buying two investments that will move in
Hedging An insurance policy designed to protect individuals or companies from major

promotion, pricing, and packaging.

service. Marketing covers a broad range of practices, including advertising, publicity,
Marketing: The process of researching, promoting, selling, and distributing a product or

ICT

Technology

that

includes

results from minimal resources.

Guerrilla Marketing Approach Highly aggressive marketing intended to get maximum
Gross Profit (also Gross Margin) Difference between sales and direct costs.
proportion of debt to equity, the higher the gearing.
Gearing Gearing is an indicator of a company's ability to service its debt. The higher the
set out in the franchisers agreement.
services in exchange for a royalty. The franchisee agrees to abide by the conditions
Franchise The right to use the name of another company, and to sell its products or
product's intended purchasers.
participants) of individuals whose opinions are thought to reflect those of the
Focus Groups A professionally moderated discussion among a group (four or more
intend to sell and which are intended for use within the business.
Fixed Assets Assets such as machinery, land and buildings which the company do not
hence fire fight rather then working to plan.
Fire Fighting Having so much work and so few resources we can only react to events and
Financial Year The accounting year of a business, the period covered by the accountant.
Facility Usually a loan or overdraft offered to the business by a bank.

market and dividing them into different segments based on these needs.
Market Segmentation The process of looking at the different customer needs within a
Market Proposition Your unique offering to a particular market or part of a market.
Long-term Liability A debt, such as a secured loan extending over 1 year.
without any price discount.
Liquidity: The ability of an asset to be converted to cash as quickly as possible and
Liquid Assets An asset which can be converted into cash very easily, for example debtors.
in time. (2) A limit set by a seller on the amount that a purchaser can buy on credit.
maximum amount of unsecured debt the customer can owe the bank at a given point
Line of credit: (1) An arrangement between a bank and a customer specifying the
who are legally responsible for losses based on the amount of their investment.
controlled by one or more general partners and funded by limited or silent partners
Limited partnership: A business arrangement in which the day-to-day operations are
liabilities are due in a period of time greater than a year.
other obligations. Short-term liabilities are due within a year, while long-term
Liabilities: Debts a business owes, including accounts payable, taxes, bank loans, and
transaction or contract.
Kickback An illegal, secret payment made in return for a referral which resulted in a

Expenditure Expenditure is money that is spent in the course of the business.

Exit Route How the company plans to leave the market and possibility, sell up.

conduct a specific business enterprise with both parties sharing profits and losses.
Joint venture: A legal entity created by two or more businesses joining together to

Equity: An ownership interest in a business.

organisations and services.
about using enterprise to create new business, new businesses and 'can-do'
organisation designed to pursue a unique, innovative opportunity. Fundamentally, it is
Entrepreneurship is an activity which leads to the creation and management of a new
venture.
Entrepreneur: A person who organizes, operates, and assumes the risk for a business
waste of activities.
individual resource so that each is cost effective; to ensure there is no competition or
Economics of Scale Rationalising a business operation to maximise the use of each
E-Commerce Conducting business over electronic networks, usually via the Internet.
& partnership only).
Drawings Money taken out of the business by the owner for personal purposes (sole trader
of goods produced or services offered.
Direct (variable) Costs Expenses, such as materials, which vary according to the number
Differentiation To make ones product/service different from others in the market place.
G l o s s a r y

strategy to sell them goods and services

Marketing plan: A document describing a firm's potential customers and a comprehensive

2 5 9

company.
Inventory: Finished goods, work in process of manufacture, and raw materials owned by a
enhancing the business.
developing new ideas, procedures, or products, by innovating practice and thereby
Intrapreneurship is the art of working within an organisation to effect change, by
computers worldwide.
Internet: The vast network of networks connecting millions of individual and networked
mark right or copyright.
individual but doesnt exist in physical form) for e.g. a patent right, design right, trade
property, (property such as an idea, a design, etc, which has been created by an
Intellectual Property Rights (IPR) A state granted right to protect a form of intellectual
Intangible assets: Items of value that have no tangible physical properties, such as ideas.
Intangible Assets Assets which have no material existence, i.e. goodwill.
and expenses, and the resulting profit or loss over a specified period of time.
Income statement: Also known as a "profit and loss statement," it shows a firm's income
2 6 0

E n t r e p r e n e u r s h i p

D e v e l o p m e n t

VAT Value Added Tax.

Server: A computer system to provide access to information or Web sites.

Variable costs: Costs that vary as the amount produced or sold varies.

involve product development and market research.

Seed financing: A relatively small amount of money provided to prove a concept; it may
information over the Internet.
Search engine: A computer program that facilitates the location and the retrieval of
Revenue Expenditure Money spent in the running costs of the business.

pledge any assets as collateral.

Unsecured loan: Short-term source of borrowed capital for which the borrower does not
other product has. Or The thing about the product that makes consumers buy it.
Unique Selling Point (USP) An unusual or unique feature of a product or service that no
Turnover Total invoiced sales net of VAT.

of Companies. (Not necessarily the trading address).

Registered Office The address where a company is officially registered with the Register
distributed by a receiver to creditors.
in serious financial difficulties. In the case of bankruptcy, the assets may be sold and
Receiver A person appointed to collect and manage the assets of a company, or partnership
carried out to the highest standard and documented as such.
Quality Systems (ISOs) The process within an organisation which ensures that work is

cost of sales for the same period, showing the resulting gross profit.
Trading Account A summary of your sales for a period, usually a year, together with the
patents, can be renewed forever as long as they are being used in business.
symbols, sounds, or colors that distinguish goods and services. Trademarks, unlike
Trademark: A form of legal protection given to a business or individual for words, names,
Top Line Sales or turnover.
intermediaries such as wholesalers and distribution logistics.
information from a business's sources of supply to its customer. It includes
Supply Chain The name given to the overall system that covers the flow of material and

Purchases The materials or stock that a business buys over a given period.
Profit Margin The ratio by which a company's income exceeds its outgoings.
an accounting period, normally one year.
Profit and Loss Account Statement showing sales costs, expenses and profit (or loss) for
Profiling To increase the public image of an individual, or ones business.
Pre-Selling Campaigns Marketing activities prior to product launch.

Stock Goods-whether finished, in production or raw materials.

amount you owe or are owed.
you have been dealing, which shows all the relevant transactions and finishes with the
Statement of Account The record you receive, from your bank or a company with which

market.
Positioning Positioning is how a product appears in relation to other products in the same

commercially.
initial marketing. It is usually funding for firms that have not yet sold their product
Start-up financing: Funding provided to companies for use in product development and

Inland Revenue.
up and administer to pay income tax and National Insurance contributions to the
PAYE Pay As You Earn. A scheme that every small business employing people must set

business are incorporated within the individual's personal financial and tax affairs.
Sole Trader An individual running a business. All revenues and payments from the

Patent The exclusive legal rights to make and sell an invention or new product.

firm's liabilities.
Sole proprietorship: A business form with one owner who is responsible for all of the

exchange for public disclosure of the invention when the patent is granted.
from making, using, offering for sale, or selling an invention for a limited time in
profits and losses. . Patent: A property right granted to an inventor to exclude others
Partnership: Legal form of business in which two or more persons are co-owners, sharing

to target more of them.

ones income, is used to identify the kinds of people who buy your product and hence
Socio-Economic Background Social class (grade A to E) which is of course related to

responsibility.
Partners More than one person owns and manages a business. All have equal

determination to bring them to fruition.

than for private profit, that is using imagination to identify new opportunities and
Social entrepreneurship involves using entrepreneurial skills for the public good rather

costs, e.g. lighting, rent, rates.

production or number of employees and which cannot be attributed to production
Overheads (indirect or fixed costs) Expenses which do not vary with the level of
Overdraft The amount which a bank is prepared to extend as credit on a current account.
advertising, etc.
employees, for standard services such as accounting, payroll, information technology,
Outsourcing: The practice of using subcontractors or other businesses, rather than paid
requirements.
giving smaller companies the opportunity to design their offering to fit its particular
Niche Markets A small or little explored market which mass market corporate may miss,

such as Bill Gates of Microsoft, have become social entrepreneurs.

may also work in the private or governmental sector. Many successful entrepreneurs,
entrepreneurs often work through non-profit organization and citizen groups, but they
principles to organize, create, and manage a venture to make social change. Social
Social entrepreneur: Someone who recognizes a social problem and uses entrepreneurial
application of the sound business practices described on this website.
Although generally run as not-for-profit enterprises, their success usually depends on
business need. Examples include charities, co-operatives and community businesses.
Social Enterprise An enterprise whose primary aim is to meet some social rather than
SME Small and Medium-sized Enterprise

Niche marketing: Identifying and targeting markets not adequately served by competitors.

Shareholder A person or entity that owns shares of stock in a company or mutual fund.

systems together.
knowledge, expand a business, or serve the community. (2) Linking computers
Networking: (1) Developing business contacts to form business relationships, increase

to provide consulting to small businesses.

entrepreneurs' education and the success of small business. It is sponsored by the SBA
Service Core of Retired Executives (SCORE): A non-profit organization dedicated to

G l o s s a r y

2 6 1

2 6 2

E n t r e p r e n e u r s h i p

D e v e l o p m e n t





one but the preceding one was higher than its predecessor.
Zero-Plus-Tick It refers to a trading transaction made at the same price as the preceding
one but the preceding one was lower than its predecessor.
Zero-Minus-Tick It refers to a trading transaction made at the same price as the preceding
enterprises in quality practices.
Zero Defect Product: A defect-free product used as a target by the manufacturing
examples could be: basic groceries, prescription drugs or certain medical devices.
Zero-rated sales: is when a sale is taxable at the rate of 0%, i.e. no sales tax. Some
basis for pricing other securities using iterative or interpolation techniques.
maturities and progressing to the longest maturities. This curve would provide the
time. Frequently, this arrangement is graphically portrayed starting with the shortest
Zero Curve Is a yield curve comprised of the yields of zero coupon bonds arranged over
discounted purchase price. Also called original issue discount (OID) bonds.
payments. Its yield is determined by the difference between its par value and its
Zero coupon bond A bond that pays its par value at maturity but no periodic interest
account and, say, a deposit account.
balance is kept as close to zero as possible by transferring money between that
Zero Based Account (ZBA) Usually applied to a personal account (checking) where the
be justified or re-justified as being necessary; thus zero-base.
expense category starts from zero. All expenses or cost levels within the budget must
consideration when establishing expense or budgetary levels looking forward. Each
Zero based: budget is where the expenses or costs of the prior year are not taken into
as yield to worst.
call dates and prices and select the lowest yield (the most conservative possible yield)
embedded call options, the practice is to calculate a yield to maturity for each of the
Yield to worst Given a bond with multiple potential maturity dates and prices due to
market segments at a given time relative to yields on treasury issues of equal maturity.
Yield spread The difference between the promised yields of alternative bond issues or
graphics, audio, and video.
World Wide Web: The part of the Internet that enables the use of multimedia text,
Working Capital The capital which is used for the day-to-day running of the business.
managerial and technical expertise.
substantial growth. The venture capitalist also may provide varying degrees of
term capital to enterprises with a limited track record but with the expectation of
Venture investors: An institution specializing in the provision of large amounts of longG l o s s a r y

2 6 3

2 6 4

E n t r e p r e n e u r s h i p

D e v e l o p m e n t