61 Essential Business Terms Every Entrepreneur Should Know

Mastering the important business terms can be confusing



And that is why we have listed the most important terminology every entrepreneur should know. 



In this article, we’ll break down 61 essential business terms.



Consider this your cheat sheet for deciphering the language of business and achieving success. 







Top 61 Business Terms Every Business Owner Should Know



Account Payable : The amount owed by a business to its suppliers or creditors for goods or services received but not yet paid for.



Account Receivable : The amount of money owed to a business by its customers or clients for goods or services provided but not yet paid for.



Acquisition : The process of one company purchasing another company, usually with the aim of expanding its market share, gaining access to new products or technologies, or achieving strategic goals.



Angel Investor : An individual who provides capital or funding to early-stage or startup companies in exchange for equity ownership or convertible debt. They typically offer financial support, mentorship, and industry connections to help the business grow.



Annuity: A financial product or investment contract that provides a series of regular payments to the investor over a specific period, often used for retirement planning or income generation.



Arbitrage: The practice of taking advantage of price differences or disparities in different markets to make a profit, usually by buying low in one market and selling high in another.



Asset Stripping : A strategy where a company sells off its assets, such as property, equipment, or subsidiaries, often for quick financial gain, without considering the long-term sustainability or future growth of the business.



Auditors : Professionals or firms responsible for examining and verifying the financial records, statements, and practices of a company to ensure accuracy, transparency, and compliance with applicable laws and regulations.



Automatic Gratuity: A predetermined and automatic service charge added to a customer’s bill in certain industries, such as restaurants or hospitality, typically for large groups or parties, as a gratuity or tip for the service staff.



B2B : Abbreviation for “Business-to-Business,” referring to commercial transactions, interactions, or relationships between two or more businesses rather than between a business and individual consumers.



B2C : Abbreviation for “Business-to-Consumer,” denoting commercial transactions, interactions, or relationships between a business and individual consumers.



B2G : Abbreviation for “Business-to-Government,” representing commercial transactions, interactions, or relationships between businesses and governmental entities or agencies.



Balance Sheet : A financial statement that provides a snapshot of a company’s financial position at a specific point in time, showing its assets, liabilities, and shareholders’ equity.



Branding : The process of creating and establishing a unique and recognizable identity, image, or reputation for a product, service, or company through various marketing and communication strategies.



Business Account: A business bank account specifically designed for business purposes, allowing the business owner to manage financial transactions, receive payments, and track expenses related to their business operations.



Business Cycle : The natural fluctuation of economic activity characterized by alternating periods of expansion (growth) and contraction (recession) in the overall economy.



Business Ethics: The principles, values, and moral guidelines that govern the behavior, decision-making, and conduct of individuals and organizations in the business environment, encompassing concepts such as honesty, integrity, fairness, and social responsibility.



Business Etiquette : The customary code of behavior and professional conduct expected in business interactions, encompassing polite and respectful manners, communication norms, and appropriate behavior in various business settings.



Business Failure: The cessation of business operations due to financial insolvency, poor management, lack of market demand, or other factors resulting in the inability to sustain profitability or meet obligations.



Business Goal: The desired outcome or achievement that a business aims to attain within a specific timeframe, typically based on strategic objectives and aligned with the company’s mission and vision.



Business Incubator : A supportive environment or program that provides resources, mentorship, and guidance to early-stage startups or entrepreneurs to help them develop their business ideas, launch their ventures, and accelerate growth.



Business Insurance : Insurance coverage specifically designed to protect businesses from various risks and potential losses, including property damage, liability claims.



Business Intelligence : The process of collecting, analyzing, and interpreting data to gain insights and make informed business decisions. It involves using tools and techniques to transform raw data into meaningful information for strategic planning and operational improvements.



Business Model : The framework or plan that outlines how a business creates, delivers, and captures value. It describes the organization’s revenue sources, target customers, value proposition, cost structure, and key activities necessary for its operation.



Business Name: The official and legal name under which a business operates and conducts its activities. It serves as the primary identifier of the company and is often associated with its brand and reputation.



Business Opportunity : A favorable circumstance or situation that presents the potential for a business to achieve success or generate profit. It may involve identifying gaps in the market, emerging trends, or untapped customer needs that can be leveraged for business growth.



Business Plan : A comprehensive document that outlines the goals, strategies, operations, and financial forecasts of a business. It serves as a roadmap for the organization, guiding decision-making and providing a blueprint for achieving objectives.



Business Policy : A set of guidelines, principles, or rules established by a business to govern internal operations, decision-making, and employee behavior. These policies define acceptable practices, standards, and procedures within the organization.



Business Process Management : The systematic approach to identify, design, implement, monitor, and optimize business processes to improve efficiency, effectiveness, and overall performance. It involves analyzing workflows, automating tasks, and continuously refining processes.



Business Process Outsourcing : The practice of contracting specific business functions or processes to external service providers. It allows businesses to delegate non-core activities such as customer support, payroll, or IT services to specialized companies, often resulting in cost savings and increased focus on core competencies.



Business Proposal : A formal document that outlines a proposed solution, project, or partnership to address a specific business need or opportunity. It typically includes detailed information about objectives, deliverables, timelines, budget, and expected benefits.



Business Strategy : The long-term plan of action designed to achieve the goals and objectives of a business. It involves analyzing the competitive landscape, identifying target markets, formulating competitive advantages, and determining the allocation of resources to maximize success.



C2C: Abbreviation for “Consumer-to-Consumer,” referring to transactions, interactions, or relationships between individual consumers through online platforms or marketplaces where they can buy, sell, or exchange goods or services.



Capital: The financial resources, including cash, investments, and assets, available to a business for funding its operations, investments, and growth. It can be categorized as equity capital (contributed by owners or shareholders) or debt capital (borrowed from creditors or lenders).



Cash Flow : The movement of money into and out of a business over a specific period. Positive cash flow indicates that more money is coming in than going out, while negative cash flow means more money is going out than coming in.



Counter Service : A type of customer service where customers order and pay for goods or services at a designated counter or service point. It is commonly seen in fast-food restaurants, cafeterias, or retail establishments where customers take their purchases directly from the counter.



Equity : The ownership interest or stake in a business that belongs to the shareholders or owners. It represents the residual value of the company after deducting liabilities and is often associated with ownership rights and claims to future profits.



Expenses : The costs incurred by a business in its day-to-day operations, such as salaries, rent, utilities, raw materials, or marketing expenses. Expenses are deducted from revenue to calculate profitability.



Fixed Cost: The expenses that remain constant regardless of the level of production or sales, such as rent, salaries, or insurance premiums. Fixed costs do not vary with changes in activity or output.



Franchise : A business model in which a franchisor grants a franchisee the right to operate a business using its established brand, products, and systems in exchange for fees or royalties.



Gross Revenue : The total revenue generated by a business before deducting any expenses or costs. It represents the total sales or income earned by the company.



KPI : Abbreviation for “Key Performance Indicator,” which is a measurable value that indicates the performance and progress of a business towards its objectives. KPIs are used to evaluate and track critical aspects of the business’s performance.



Ledger : A record-keeping book or electronic system that tracks financial transactions, including income, expenses, assets, and liabilities. Ledgers are used to maintain accurate and organized financial records for the business.



Limited Liability Company (LLC) : A legal business structure that provides limited liability protection to its owners (members) while allowing flexibility in terms of taxation and management. LLCs blend elements of partnerships and corporations.



Liability : The legal obligation or responsibility of a business or individual to settle debts, pay obligations, or compensate for damages. It can include financial obligations, legal claims, or any other debts or responsibilities.



Margin Cost : The additional cost incurred by producing one additional unit of a product or service. It helps determine the profitability of each unit sold by calculating the difference between the selling price and the variable costs.



Minimum Viable Product (MVP) : The basic version of a product or service that has enough features to satisfy early customers and provide feedback for future development. MVPs are used to test the market, validate assumptions, and minimize development costs.



Net Income : The profit earned by a business after deducting all expenses, taxes, and other costs from the gross revenue. It represents the final amount of money the business retains after all obligations have been met.



Owner Equity : The ownership interest or value of a business that belongs to the owner or shareholders. It is calculated by subtracting the business’s liabilities from its assets and represents the owner’s residual claim on the company’s assets.



Principal of a Company : The individual or group with primary authority and responsibility for managing the affairs and operations of a company. The principal is typically an owner, executive, or key decision-maker within the organization.



Profit Margin : The percentage of revenue that remains as profit after deducting all costs and expenses. It is a measure of profitability and indicates how efficiently a business manages its expenses in relation to its revenue.



Risk in Business : The possibility of financial or operational loss or uncertainty associated with business activities. Risk can arise from various factors, including market conditions, competition, regulatory changes, and financial instability.



Return on Investment (ROI) : A financial metric used to evaluate the profitability and efficiency of an investment. It is calculated by dividing the net profit from the investment by the initial cost of the investment and expressing it as a percentage.



Stock Taking : The process of physically counting and recording the inventory or stock of goods held by a business. It helps ensure accurate inventory records and facilitates proper stock management and control.



SWOT : Abbreviation for “Strengths, Weaknesses, Opportunities, and Threats,” which is a strategic analysis framework used to assess and evaluate the internal and external factors that can impact a business. SWOT analysis helps identify areas of competitive advantage, areas for improvement, potential opportunities, and potential risks or challenges.



Turnover in Business : Turnover refers to the total sales or revenue generated by a business during a specific period, typically calculated before deducting any expenses. It represents the value of goods or services sold by the company.



Unlimited Liability : Unlimited liability is a legal concept where business owners are personally liable for all debts and obligations of the business. In the event of financial difficulties or legal claims, owners can be held personally responsible, risking their personal assets.



Value Proposition : A value proposition is the unique combination of products, services, features, or benefits that a business offers to its customers. It articulates the value or benefits customers can expect from choosing the company’s products or services over competitors.



Variable Cost : Variable costs are expenses that change in direct proportion to the level of production or sales. They fluctuate based on the volume of goods or services produced, such as raw materials, direct labor, or commissions.



Vendor Company: A vendor company refers to a business or supplier that provides goods or services to other businesses. It is the entity from which another company purchases products or engages in business transactions.



Globalization : Globalization is the process of increasing interconnectedness and integration of economies, markets, cultures, and societies worldwide. It involves the exchange of goods, services, information, and ideas across national borders, facilitated by advancements in technology, transportation, and communication.



Working Capital : Working capital represents the funds available to a business for its day-to-day operations. It is calculated by subtracting current liabilities (short-term debts and obligations) from current assets (cash, accounts receivable, inventory) and indicates the company’s liquidity and ability to meet short-term financial obligations.



Final Thoughts: Whether you are a new business owner or an experienced one, keeping yourself updated with these business terms is great for your vocabulary and of course your business. 



At Moniepoint, we will do our best to keep this list updated so you can be sure to learn something new when next you check out this page. 



So bookmark it today and don’t forget, Moniepoint is powering business dreams with our range of banking solutions: from business account , POS terminal , Expense cards and to working capital loans . 
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