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Sales revenue: income generated by the sales of goods or services over a set period.
Variable costs: costs that change with output e.g. wages, raw materials.
Fixed costs: costs that do not change in direct proportion to output e.g. electricity and heating.
Total costs: all costs plus production.
Profit: money gained after subtracting all expenses.
Opportunity costs: the cost of an activity expressed in terms of the next best alternative e.g. putting
money into your business or the bank.
Capital expenditure: money used to purchase items that will be used frequently over a period of time.
Depreciation: loss in value of items over time e.g. cars
Break even level of output: the level of output or the number of customers that earns enough revenue to
cover total costs of production.
Added value: an increase in the attractiveness to customers of a product or a service achieved by adding
something to it
Break even output = Fixed costs
Contribution per unit
Contribution = selling price variable costs
Total contribution = contribution per unit x no. of unit sold
Cash flow forecasts: are estimates of a firms future cash inflows and outflows
Margin of safety: is the amount by which the existing level of output is greater than the break even
point.
Loan: A loan is a sum of money lent for a fixed period of time, repaid over an agreed schedule.
Venture capitalists: (professional investors interested in high growth, high risk businesses, who will
invest an amount into a business in return for shares and an expectation for a high return.
Business angels: a wealthy entrepreneur individual willing to invest in a small, high risk business who
expects a high return.
Market research: a range of research functions that link retailers to consumers by supplying essential
information to identify customer need, solve marketing problems and help with marketing decisions.
Primary market research: data collected by the entrepreneur, or paid to be collected, which does not
already exist.
Secondary market research (desk research): data already in existence that has not been collected
specifically for the purposes of the entrepreneur.
E-commerce: using the internet and associated technologies for trading purposes.
Sole trader: is its owner and the business are one and the same.
Partnership is a company owned by two or more people (up to 20 people).
A limited company is a company whose owners only have to pay part of the
money they owe if the company falls financially.
Franchise: a franchise is only one of a number of types of business structure.
Patent: an exclusive right to use a process or produce a product, usually for a
fixed period of time, up to 20 years.
Trademark: a word, image, sound or smell that enables a business to differentiate
itself from its competitors.
Input: something that contributes to the production of a product or service.
Output: something that occurs as a result of the transformation of business inputs.
Primary industry: is the extraction of raw materials from natural resources e.g.
coal, farming and oil.