How to make money
Money owed by a company to supplier.
Account Payable
Equipment, inventory or other goods that are pledged to the bank in the case the company can not make a loan payment
Collateral
When an entrepreneur's actions and decisions are guided by a set of beliefs about how he/she wants the business to succeed
Mission Driven
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
When two or more individuals own a company. Partners are taxed on the profits of the company, and are personally liable for any debts or judgements against the company.
Partnership
Money owed by a customer to a company
Account Receivable
A person or a business with a strong credit score and the financial resources that make it likely they will be able to repay any loan
Credit-Worthiness
All people or companies associated with an enterprise. Stakeholders include internal stakeholders (employees and shareholders/owners) as well as external stakeholders(consumers, supplies, community members).
Stakeholders
The ability to interact in a friendly and effective way with unfamiliar people. The ability to seem welcoming and easy to talk to, even with people who are different in age, appearance or background
Comfort Engaging with Strangers
The money a person borrows to buy real estate. Example: When you buy a house you go to the bank to get money
Mortgage
The amount of money borrowed
Principal
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
The practice of operating openly and communicating fully, providing stakeholders with a clear understanding of how your enterprise operates.
Transparency
The ability to accurately convey information. Both verbal(or spoken) and written communication skills are important
Communications Skills
An investment security that includes many different stocks purchased and held together. Investors purchase mutual funds because they are less risky than holding any individual stock. Example: "One stock in the mutual fund went down 50%. But because the mutual fund holds 1000 other stocks, the value of the mutual fund went down less than 1%."
Mutual Fund
Property and the buildings on it. It can be a piece of land, or it can be a home on the piece of land, or it can be a building. Typically purchased using a mortgage. The down payment the buyer makes is called the buyer's "equity"
Real Estate
Cash or securities that can be immediately turned into cash, which can then repay any loan amount outstanding. A company or individual "has liquidity" if they have lots of liquid assets
Liquid Assets
A situation in which an individual might take an action to his/her advantage that would be to the disadvantage of a person or company that believes this individual is serving them
Conflict of Interest
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
"Net" means revenues after costs. Example: you get $1,000 a month for renting a house you own to a friend. The costs of maintaining the house every month equal $800. That means your "net income" from renting that house to your friend is: $1,000- $800 =$200 per month (before taxes)
Net Income
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
A Latin phrase ("for the sake of form") that in business means a projection of future financial performance
Pro Forma
Treating stakeholders as the entrepreneur would hope others would treat him/her
Fairness
The ability to find solutions to difficult or complex issues. The process of working through the details of a challenge or crisis- often under pressure- to reach a solution
Problem Solving
Owning an asset without any associated debt. Example: "I paid off my car loan last month, so now I own my car 'free and clear.'"
Own "Free and Clear"