Company Terms
Proper business behavior beyond complying with legal requirements. A simple rule guides business ethics, the same basic rule that should guide all human behavior: act towards your stakeholders as you would hope they would act towards you.
Business Ethics
Total Revenues minus Total Cost minus one-time expenditures (called “capital expenditures”) on equipment that will be used for many years.
Cash Flow
Commitment to get something done. Individuals with determination exhibit willpower to accomplish what they set out to do. Also called “tenacity.” Spirit, courage, willpower and single-mindedness describe determined individuals.
Determination
Debt obtained from a number of online companies. Borrowers need to disclose much less information about themselves to obtain online credit, and online credit companies make credit decisions much more quickly than banks. For these reasons, online credit is much more expensive for borrowers than bank loans.
Online Credit
A legal agreement that an assets is part of a guarantee to a lender, when the lender can take possession of the assets and sell it to recover the funds owed by a borrower in the event the borrower is unable to make a required debt payment.
Pledged
A clear, concise and compelling way to describe a business or new business concept in 30 seconds; a differentiating vision to encourage potential investors or employees to learn more.
Elevator Speech
Cash, publicly traded stocks, government bonds or corporate bonds that can be quickly turned into cash. Cash Instruments can be turned into cash at values that are predictable and available to all holders of the cash instrument. Example: "Apple stock is a cash instrument because it can be sold and converted into cash immediately, and the amount anyone would get for that Apple stock is the same - the price of the stock at that moment in the stock market."
Cash Instruments
The 12 month period a company uses to report financial results. It can be the same as a calendar year (January through December), or any other 12 month period that makes sense. Example: a gift store chain sells most of
its items during the Holiday season and then in clearance sales during January. Therefore the gift store chain uses a fiscal year of February 1 - January 31 so that its year-end accounting doesn't interfere with its selling efforts.
Fiscal Year
The percentage of a loan a bank or online credit company charges when a small business receives a loan. Original fees add to the cost of the loan.
Origination Fee
A Latin phrase (“for the sake of form”) that in business means a projection of future financial performance. A pro forma usually takes the form of a projection of future revenues and costs.
Pro Forma
A computer portal offered by the Louisiana Secretary of State that enables entrepreneurs to go to a single source to learn which forms they need to file, to file the forms required by the Secretary of State, and to determine which other government agencies they may need to interact with.
geaux BIZ Portal
Money earned when something is sold. Example: the real estate agent who sells you a house is paid a 2% commission on the value of the house sold.
Commission
An individual’s self-commitment to overcome obstacles to achieve long-term goals. The ability to keep pursuing your dream despite challenges and defeats. Perseverance, resilience and backbone.
Grit
Services a company uses to maintain proper financial records, legal filings and employee documentation.
Outside Services
property and the building(s) on it. Real estate can be a piece of land, or it can be a home on that piece of land, or it can be a building. Real estate is typically purchased using a mortgage. The down payment the buyer makes is called the buyer’s “equity.”
Real Estate
A special type of corporation where individual owners (or “members”) are taxed on the profits of the company, but the corporation (not the member owners) is liable for debts or judgments against the company.
Limited Liability
Corporation (LLC)
Costs that make up one unit of what you sell. These can be labor costs as well as material costs. Example: when you sell a hat, the variable costs include: a) the hat’s material; and b) the labor cost required to make the hat.
Cost of Goods Sold
A credit-worthy individual or business with sufficient liquidity that promises to repay a loan in the event that the debtholder can't make a required payment.
Guarantor
When a company issues a check or makes a financial commitment for an amount greater than the amount the company has deposited in the bank. Also called "a bounced check."
Overdraft
Debt that includes a legal obligation by the borrower to repay the debt personally if the business is unable to make its scheduled debt payment. A secured debt can be guaranteed by the entrepreneur or by any credit-worthy guarantor.
Secured Debt
How a business communicates to large numbers of customers, motivating them to learn more about the business and its offerings. Example: advertising is a marketing tool. (TV, Radio, Signs, Flyers)
Marketing
The amount an insurance company makes a policyholder pay as part of any claim. Example: my fire insurance policy has a deductible of $500. I had a fire last year where there was $20,000 of damage to my store. I had to pay for the first $500 of damage, then my insurance company reimbursed me for the other $19,500 in damages." The higher a deductible the lower a premium, since the insurance company will not have to pay small claims and will pay a lower portion of large claims.
Deductible
A complete package that supports a "Go" decision by an entrepreneur to launch a new business. A launch plan would include an Elevator Speech, supporting Market Research conclusions, an Organizational Plan (including an organizational chart and a Human Capital plan for attracting talented team members), a Marketing and Sales Plan, and pro forma financial projections.
Launch Plan
Costs that a business incurs that are not part of producing the goods or services its sells, but which are required to operate legally and efficiently. Example: "The salary I pay my accountant is overhead - these funds don't help us sell more product, but I need my accountant to keep our financial records and submit all required filings."
Overhead
A company that provides a good or service to another company. Example: "The beauty products distributor is my supplier - I buy the hair care products I sell to my customers from my distributor."
Supplier