Glossary
(Last updated: May 26, 2011)

This page defines the business terms and special terms that I have used in various places on this website. I've tried to avoid using these terms as much as possible. However, if you are going to start a business or enhance your abilities, you should know what these terms mean.

The accompanying index page provides a quick method to review and access the terms defined in this glossary.

Index to Glossary

Some of the following definitions are more or less standard. Others have my personal slant on things. So if you disagree with some of my definitions, that's perfectly all right.

Definitions of business terms and special terms

1. Get your attention
2. Get you excited about the business or the product
3. (And in some cases) compel you to action

Belief system -- A person's belief system consists of assumptions, attitudes, beliefs, expectations, rules of thumb, and values. The belief system is hidden away in a person's subconscious mind and thus may remain unknown.

This belief system determines or influences how a person behaves. Empowering beliefs encourage people to achieve their goals and seek out suitable opportunities. Limiting beliefs have the opposite effect. People with limiting beliefs are often disappointd with life.

See also: Reprogramming your mind.

Bond -- This is a guarantee from a bonding company that the named person or company will perform in accordance with the bond agreement. If the person or company fails to perform, then the bonding company must pay damages, up to the amount of the bond, to the injured party.

There are various types of performances that can be guaranteed. In one type, the guarantee is simply that the person will conduct himself or herself in a lawful manner. This in effect is a guarantee against theft and vandalism committed by the named person.

To purchase a bond, you would normally see your local insurance agent.

Bootstrap methods -- Using bootstrap methods is a way of saving money.

In one type, you do the work yourself instead of paying someone. In the other type, you use low-cost or no-cost ways to acquire needed equipment or other resources.

See also: Bootstrap Methods on another page.

Break-even point -- The break-even point is the sales volume where sales equal total costs and expenses, resulting in a zero net profit. When sales rise above the break-even point then the business starts to make a profit.

Ideally, the break-even point should be as low as possible when the business first begins operations so a profit is possible with only a moderate sales volume.

See also: Calculation of break-even sales level subtopic on another page.

Business concept, Business idea -- These are my terms for the basis of a proposed business venture. This basis is the type of product (goods, services, or information) that will be sold to customers.

Most of the times these two terms mean the same thing. But sometimes these terms show a progression from a "simple" business idea to a "more detailed" business concept. In that case, the following definitions apply:

A business idea is a brief description of the proposed product. It may be only the essence of the idea, such as "painting home interiors."

A business concept is a detailed description of the proposed product. This description usually includes who will use or buy the product, and how it will be produced and delivered.

Business entity -- The type of entity (sole proprietorship, partnership, joint venture, limited liability company, or corporation) used to conduct business operations.

Business firm, Business venture -- These are my terms for profit-seeking entities that sell products to customers.

I consider a business firm to be a full-time activity. The business owner(s) probably operate it as a separate entity. Examples are corporations, limited liability companies, and partnerships.

I consider a business venture to be just a sideline activity of one or more individuals. The business owner(s) might operate it as a sole proprietorship or joint venture. I am assuming that anyone using this website would start out as a business venture. Some ventures eventually might become full-time business firms.

Business operations -- The main business goal is selling products (goods, services, or information) to customers for a profit. However, this activity requires many supporting tasks, such as:

• Managing the business venture
• Maintaining an office
• Buying or producing the products to be sold
• Soliciting customers for these products
• Selling the products to customers
• Delivering the products to customers
• Handling customer complaints
• Recording the accounting transactions
• Complying with all pertinent governmental rules and regulations
• Filing reports and paying taxes, when required by appropriate governmental bodies
• Performing various other administrative, recordkeeping, and housekeeping chores

Business overhead -- These expenses are not related to a particular sales transaction. Examples are advertising, insurance, office supplies, repairs, and telephone expenses.

These expenses are in addition to the costs and expenses incurred for a particular sales transaction. So when deciding what to charge for a transaction, include a share of these expenses in your calculations.

Business publications -- These books, magazines, and websites discuss various aspects of business planning, development, and operations. They can be very helpful when starting and running a small business.

You can find the books at a library, bookstore, or on the Internet. You can find business magazines at a library, store, or downtown magazine rack.

Business opportunity magazines provide examples of various business opportunities that may interest you.

Trade magazines discuss matters of concern to a particular trade or business activity. Any large business sector or activity is likely to have its own trade magazine or two.

Business startup -- This is the period just before and just after beginning business operations. During this time, the business owner:

• Forms the business entity
• Satisfies the various startup requirements
• Starts business operations
• Solicits customers
• Produces and delivers the product
• Pays operating expenses
• Records the accounting transactions, and so on

This stage is kind of a "shakedown cruise" for the business owner. (In some cases, the owner may have to make some changes to stay in business.)

Cash flow -- This is the net result of cash inflows (receipts) versus cash outflows (disbursements) over a certain calendar period. A positive cash flow means the total cash inflows exceed the total cash outflows. A negative cash flow means the total cash outflows exceed the total cash inflows.

See also: Net profit.

Comfort zone -- This consists of those tasks and activities that you have performed successfully in the past. Thus, you feel "comfortable" performing these tasks and activities. The larger your comfort zone, the more powerful and versatile you become. You can expand your comfort zone by learning new skills and/or engaging in new activities.

Competition (Competitors) -- This refers to other businesses that sell comparable products in your marketplace. The risk of this competition is that you may lose some customers. (If just starting up, you may not be able to gain enough customers.) If you can't keep your customers satisfied, they may go to the competition.

Competitive advantage -- A competitive advantage helps a business to be successful. A business has a competitive advantage when it can identify, attract, or satisfy customers in a way that is difficult for others to copy. A competitive advantage usually derives from some combination of unique ideas, insights, knowledge, resources, skills, and talents.

Examples of other competitive advantages:

• Business can produce a product at a lower cost than competitors can.
• Business owner is able to "out hustle" competitors.
• Business has a copyright, patent, or trade secret that gives it a monopoly on producing a desirable product.
• Business has an exclusive source for materials or supplies needed to produce its product.

Costs and expenses -- Costs and expenses are expenditures that (sooner or later) reduce net profit. Examples of costs are startup costs, cost of products sold, and cost of equipment and other assets. Examples of expenses are advertising, auto expenses, depreciation, office supplies, and repairs.

See also: Planning Costs and Expenses on another page.

Customers -- These people or organizations buy products from a business in order to satisfy their needs and desires.

Demand -- The willingness of people or organizations to pay to get their needs and desires satisfied. Note that people usually are influenced more by their desires than by their needs. (Where people or organizations are unable or unwilling to pay, there is no demand.)

Empowering beliefs -- These beliefs encourage people to achieve their goals, believe in themselves, get the tough jobs done, and seek out new opportunities.

Gross profit -- This is the amount by which total sales exceed the total costs of producing and delivering the products sold, over a certain calendar period.

See also: Net profit.

Home office -- An office is the location where the business owner (or family members) orders materials and supplies, pays business bills, prepares documents, talks to people in person or over the telephone, and manages the business operations.

A home office normally is located in the home of the business owner. I recommend that most small business ventures start with a home office.

Hot buttons -- These pictures or words cause an immediate, favorable, and often highly emotional reaction in people. These hot buttons will vary for people with different cultural and educational backgrounds, financial attainment, and social status. It may be useful for a new business venture to determine the likely hot buttons for its prospective customers.

You should include these hot buttons in any sales proposition used to solicit customers. Examples of typical hot button words are "dependable," "exclusive," "free," "guaranteed," and "low-cost."

See also: Satisfiers.

Leads -- A lead is the name and address (or telephone number) of a prospective customer. Leads of good quality, which generate sales, are very valuable. Leads of poor quality, such a listing from a standard telephone book, are of little value.

Likely customers, Prospective customers -- These people or organizations might be interested in buying the existing or proposed product of a business venture.

For an existing business venture, they are similar to its existing customers. For a new business venture, they have needs and desires that might be satisfied by the proposed product.

Low-cost, low-risk business -- This is a simple business venture that doesn't take much money to start or operate, and doesn't engage in risky activities. This is the type of venture that I recommend for all beginning business developers.

See also: Low-cost, low-risk business ventures topic on another page.

Marketplace -- This is a physical or virtual location where people meet to buy and sell products. A physical location refers to a certain geographical area, such as a street corner, meeting place, neighborhood, city, state, country, or the entire world. A virtual location refers to the Internet.

Media -- This refers to all the different vehicles that a business can use to advertise and promote its products.

See also: Choosing the advertising media.

Money Magic -- This concept refers to combining suitable personal empowerment methods with a great idea for making money. You see, it may not be enough just to find a great idea. You also may need to gain personal empowerment to put the idea into action.

Needs and desires -- These are things that people want in order to sustain or improve their lives or satisfy their cravings. People are especially willing to pay for those needs or desires that have a high emotional benefit.

Financial needs and desires relate to wealth. Examples are employment, income, investments, security, and retirement.

Non-financial needs and desires relate to enjoyment and satisfaction in life. Examples are entertainment, family, friendships, love, sex, status, and other personal cravings.

Net profit -- This is when total sales exceed total costs and expenses over a certain calendar period.

(Please note that the term "net profit" is an accounting concept. Thus, it may involve various adjustments and assumptions that mainly affect large business firms using the accrual method.)

See also: Cash flow.

Operating results -- This term usually relates to both the net profit and the cash flow from business operations.

These two operating results are shown on the Income Statement and the Cash Flow Statement, respectively. The Income Statement shows income and expenses. The Cash Flow Statement shows cash receipts (inflow) and cash disbursements (outflow).

Personal empowerment -- This refers to gaining improved abilities to deal with life and take advantage of the opportunities it offers. This empowerment is accomplished by improving your belief system.

See also: Personal reality.

Personal reality -- This refers to your interpretation of the world around you and how you should deal with it. The interpretations are performed by your subconscious mind, using your current belief system. Thus, by changing some of your beliefs, you can change your personal reality.

Your personal reality, not the outside world, is what primarily determines your success in life.

See also: Subconscious mind.

Product -- I often use this term instead of "goods, services, or information."

Reprogramming your mind -- This means replacing some of your existing beliefs with ones that are more empowering. Beliefs are assumptions, attitudes, expectations, rules of thumb, and values. This change normally is a gradual process.

By empowering your beliefs, you can increase your chances of finding success in life.

Sales methods -- This refers to the various ways to seek out customers.

Examples are:

• Door-to-door sales
• Direct mail sales
• Advertising using newspapers, magazines, radio, television, and billboards
• Internet websites
• Notices placed on outside doorknobs or posted in public places
• Salespersons in a store or office building

Sales offer, Sales proposition -- This is the offer made to prospective customers. This offer should include any appropriate hot buttons. It should eliminate any risk to customers. (An example is a money-back guarantee.) It also should have incentives for the customer to act quickly.

Sales price -- This is what customers pay for products provided by the business venture. This amount may vary according to economic conditions and other circumstances.

See also: Setting the Sales Price on another page.

Satisfiers -- This is my term for those tangible and intangible things that make a product attractive to customers. Satisfiers appeal to strong needs and desires, such as security, love, and prestige.

Section -- This is my term for a group of web pages for a particular area of interest. This website currently has six sections.

The pages making up these sections can be viewed on the Site Map page.

Standard pages -- This is my term for pages that are commonly found on all websites. Examples are About the Author, FAQ, and Site Map.

Startup costs -- These are the costs and expenses that are paid or incurred before beginning business operations. Examples are fees and licenses, office supplies and equipment, and the initial advertising campaign.

See also: Types of startup costs on another page.

Startup requirements -- These requirements must be satisfied before beginning actual business operations. Examples are legal and insurance requirements.

See also: Listing the Startup Requirements on another page.

Subconscious mind -- Your subconscious mind determines your personal reality. It receives various sensations from the outside world. Then it interprets these sensations, using your belief system, and integrates the result into a coherent view of the world. Finally, it sends the outcome of this process to your conscious mind to become the impressions and feelings of day-to-day living.

However, your conscious mind is not aware of these vital activities of the subconscious mind.

The overriding purpose of the subconscious mind is self-preservation. For this reason, it tends to exaggerate potential risks. It is more concerned with keeping you alive than with using your abilities to the fullest.

When people change their belief system, their perceptions (their personal reality) will alter accordingly, with no change in the outside world.

(This, of course, is the secret to personal empowerment.)

See also: Reprogramming your mind.

Subtopic -- This is my term for a division of a topic (or page introduction). Some large topics may have both major subtopics and minor subtopics.

Major subtopic is used to divide a large topic into smaller parts. The topic introduction may have a list of links to these major subtopics.

Headings for major subtopics are left aligned, in bold type, the same size as normal text. This heading is preceded and followed by a blank line.

Minor subtopic is used to divide a topic or major subtopic into smaller parts. Minor subtopics also may be used as links to other pages.

Headings for minor subtopics are left aligned, in bold type, the same size as normal text. This heading is preceded by a blank line. It is followed on the same line by a dash and the first sentence of the text for the minor subtopic.

Suppliers -- These are other business firms that provide the equipment, materials, supplies, and reference information that a business venture needs to operate.

Testimonials -- These are supposed to be unsolicited words of praise from satisfied customers. As such, they can be used in your advertising to help solicit new customers.

To-do list -- This is a written reminder of various tasks you have to perform. This list describes the tasks, in greater or lesser detail. It also may include the deadline and relative importance of each task.

Topic -- This is my term for a major division of a large page. Normally the page introduction has a list of links to these topics.

Topic headings are centered on the page, in bold type, which is slightly larger than normal text. This heading is preceded and followed by a blank line.

Vehicle expenses -- These are such expenses as gasoline and oil, insurance, repairs and maintenance, and loss of market value (depreciation). An easy way to estimate vehicle expenses is to multiply the business mileage times the standard business mileage rate per the Internal Revenue Service. (This rate is 50 cents per mile for the year 2010, and 51 cents per mile for the year 2011.)

Viable -- This means that the proposed business venture is doable and practical. It also implies that, if everything goes according to plan, the business will be sustainable and profitable. (However, there are no guarantees in life.)

Visualization -- A visualization is a guided daydream. You decide what is to happen and then you see it played out inside your mind. As you repeat this visualization and impart strong feelings to it, you fool your subconscious mind into believing that this is reality. This is one of the best ways to reprogram your mind.

See also: Reprogramming your mind.

Work plan -- This is a written summary of the requirements, advance preparations, main task activities, and final activities for a task. It helps you to complete a project as quickly and efficiently as possible.

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