USEFUL BUSINESS WORDS

On the following pages are explanations of some common business words as they are used in this book.

Words printed in bold in the explanations have their own entry.

WORDS	THE WORD MEANS
Advertising	Giving information to people to make them more interested in buying your goods and services.
Analyse	To study something carefully to find out if there was a change. For example, by analysing your records you can find out if your sales are falling.
Cash	Payment immediately, not on credit.
Cash flow	The movement of money into and out of a business during a period of time.
Cash Flow Plan	A business plan which shows how much money is likely to come in and go out of a business during a period of time in the future, for example, the next three months.
Cheque	A form in which you ask your bank to pay a certain amount of money to the person or business named on the cheque. You need a current account or a savings account to be able to use cheques.
Costing	The way you calculate the costs of making and selling a product, or providing a service.
Costs	All the money your business spends to make and sell your products or services. Costs can be divided into direct costs and indirect costs.
Credit	The seller’s agreement to be paid later. You are given goods, materials or services by the seller but you do not have to pay immediately. For example, if you have 30 days’ credit, you must pay within 30 days.
Customers’ Accounts Record	A book where you write down, for each customer, all items or services your business sells to them on credit.
Delivery note	A document that the supplier sends with a delivery. It lists the type and quantity of goods delivered. The supplier wants you to sign the delivery note as proof that you have received the goods.
Depreciation	The loss in value of machinery, tools or other equipment which have a high value and last for a long time. Depreciation is a cost to your business.
Direct costs	All costs that can be directly related to the products or services you make or sell, or the production of those products or services. There are two different types of direct costs: direct material costs and direct labour costs.
Direct distribution	Selling your products directly to the customers who use them.
Direct labour costs	All the money your business spends on wages, salaries and benefits for the employees who work in the production of your products or services. Retailers and wholesalers do not have direct labour costs.
Direct material costs	All the money your business spends on the materials that become part of, or are directly related to, the products or services you make or sell. For a retailer or wholesaler, direct material costs are the costs of buying goods to resell.
Distribution	Part of Place. Distribution means different ways of getting your products or services to your customers: direct distribution, retail distribution, or wholesale distribution.
Enquiry	Questions to a supplier to find out the type of goods, prices, payment, delivery and other conditions they offer. The answer to an enquiry is a quotation.
Equipment	All the machinery, tools, workshop fittings, office furniture, etc., that a business needs. Equipment is normally expensive and expected to last for a long time.
Forecast	When you make a forecast for your business, you work out what you think is likely to happen in the future: how much you can expect to sell, how much materials are likely to cost you, how much cash you can plan on having.
Indirect costs	All other costs, except direct costs, that you have for running your business. Indirect costs are normally not directly related to one particular product or service your business makes or sells.
Indirect costs charge	A percentage (%) that retailers and wholesalers need to add to the direct material costs of each item to cover the total indirect costs. You use your indirect costs charge to calculate the indirect costs per item.
Indirect labour costs	The money that your business spends on wages, salaries and benefits for owners and employees who do not work directly in the production of goods or services. For retailers and wholesalers, all salaries and wages are indirect labour costs.
Invoice	A document that tells you to pay for the goods or materials you have received. An invoice lists details of what you have bought and tells you how much you must pay, when you must pay, who you must pay and how you must pay.
Labour Costs Form	A form manufacturers and service operators can use to calculate the working hours and pay per month for everyone working in the business. The Labour Costs Form gives you information to calculate the direct labour costs per item and indirect labour costs per item for any product or service in your business.
Loss	The amount of money a business loses. You make a loss when the amount of money that went out of the business for costs is higher than the amount of money that came into the business from income.
Market research	Getting information about your customers and competitors.
Marketing	Everything you do to satisfy the needs of your customers and make a profit by: · providing the product or service your customers need · setting the price your customers are willing to pay · locating your business at a place your customers can reach or getting your products or services to your customers · using promotion to inform your customers about your products or services and to attract your customers to buy from you. These are the four Ps of marketing: Product, Price, Place and Promotion.
Net profit	The amount of money left after you have subtracted all other costs from the value added.
Order	A request to a seller to supply certain goods. You can make your order by visiting, phoning, faxing or writing to the suppliers.
Place	The third P of marketing. In marketing, place means: · location - where your business is located, and · distribution - how to get your products to your customers.
Planning	Thinking about your business and working out what to do about something before it happens.
Price	The second P of marketing. In marketing, price means: · setting a price that customers are willing to pay · making sure the price gives a high enough profit.
Product	The first P of marketing. In marketing, product means providing the products or services customers want.
Product Costing Form	A form which you can use to calculate the total costs of any product or service in your business. There is one Product Costing Form for manufacturers and service operators and a different Product Costing Form for retailers and wholesalers.
Profit	The amount of money a business earns. You make a profit when the amount of money that comes into the business from sales is higher than the amount of money that goes out of the business for costs. Profit is often divided into value added and net profit.
Profit and Loss Statement	A calculation of how much profit or loss your business made during a period, for example, a month, six months or a year.
Promotion	The fourth P of marketing. In marketing, promotion means informing and attracting customers to buy your products or services.
Publicity	What newspapers and others say about your business. You do not pay for publicity. It is free promotion.
Quotation	An answer to an enquiry, in which a supplier makes an offer to sell certain goods. In a quotation, a supplier gives detailed information about the type of goods, prices, payment, delivery, and any other conditions.
Receipt	Written proof that you have paid for the goods or services you bought. The seller signs the receipt he or she gives you.
Record	Written information about business transactions. Examples are the Record Book and the Customers’ Accounts Record.
Record Book	A book where you write down all the money that comes in and goes out of the business.
Re-order level	The number of items that you estimate you need until you get new stock. When the quantity of stock falls to the re-order level, it is time to order more.
Retail distribution	Selling your products to shops and stores who then sell to customers who use the products.
Sales and Costs Plan	A business plan which shows what sales, costs and profit a business is likely to have in a future period, for example, a year.
Sales promotion	Everything you do to make customers buy more when they have come to your business.
Stock	All products your business has for sale, and all raw materials or parts your business keeps and uses to make into products.
Stock card	A stock record where you use a separate card or page for each product or material that your business keeps in stock.
Stock record	Records where you write down all stock that comes into or goes out of your business. Make your own stock records, for example by using stock cards, a hard cover book or an exercise book.
Stock-taking	A system to count, measure or weigh all your stock, and write down the quantities on a stock-taking list.
Stock-taking list	Sheets, an exercise book or something else you use during stock-taking to write down the quantity of each product or material your business has.
Terms of delivery	Agreement between buyer and seller about paying for delivery. Either the buyer or the seller pays for transport costs.
Terms of payment	Agreement between buyer and seller about when and how goods must be paid for. For example, the seller may give credit or ask for cash on delivery.
Total costs	All the money that your business spends on direct costs and indirect costs in order to make and/or sell a product, or provide a service.
Transaction	An exchange of money for goods, services or other money
Value added	The amount of money left after you have subtracted your direct material costs from the money earned from sales.
Voucher	Receipt or other written proof of a transaction to be written down in the Record Book.
Wholesale distribution	Selling your products in very large quantities to a business which then sells them in smaller quantities to retailers.
Work-hours	The total amount of time needed to make a product or provide a service. The time taken by each person working on the product or service is added up to give the total time.