brokeage
A company that provides individuals and companies with access to financial markets. Example: "I buy stocks and bonds from my broker."
Brokage
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
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. Example: a customer tells a supplier in confidence that they are buying a large quantity of a specific product to advertise a major sale in two weeks. It would be a conflict of interest for that supplier to go to competitor stores and use this information to get them to buy more of this product and put it on sale immediately
Conflict of Interest
A loss that an insurance company will reimburse a policyholder for in the event of a claim. Example: "The fire damage to my inventory was a covered loss -‐ the insurance company paid my claim after I paid for my deductible. I had to close my store for a week -‐ the business I lost because my store was closed cost me another $20,000, but that was not a covered lost because my fire insurance policy did not cover a business interruption claim."
Covered Loss
Failure to repay a loan.
Default
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
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
Unit price minus cost of goods sold.
Contribution Margin
Funds lent to a business with an agreement that the business will repay the lender with interest.
Credit (or Debt)
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
Funds contributed by investors to a business. Investors contribute capital to a business because they expect a significant return on their investment when the business succeeds.
Capital (or Equity)
The ability to accurately convey information. Both verbal (or spoken) and written communication skills are important
Communications Skills
Actions entrepreneurs and companies take that go beyond their financial self-‐ interest. These actions are voluntary but often reflect the personal beliefs of business leaders about what their companies can or should accomplish. Many companies tie the actions they take for corporate social responsibility to initiatives that benefit their business. Example: the local pet store promises to donate $1 to the local animal shelter for every pet owner who buys the pet food they have on sale over a weekend.
Corporate Social
Responsibility
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
Distinguishing a product or service "different than anything else," attracting customers, generating sales and serving as the foundation for a thriving business.
Differentiated Offering
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 ability to use computers for basic tasks, such as developing documents, sending emails and searching the internet for information.
Computer Literacy
A corporation is a person in the eyes of the law. The corporation is taxed for profits and is liable for any debts or judgments. Corporations are owned by shareholders (individuals or other corporations).
Corporation
An Internet phenomenon, where strangers learn about a business online and then decide whether or not to make an investment. Crowdfunding investors are typically “fans” of an owner, but they do expect a return on investment.
(The company pays a percentage of the capital raised to the online Crowdfunding website.
Crowdfunding
The act of making a business different (and presumably more attractive to target customers) than any competitor.
Differentiation
Equipment, inventory or other goods that are pledged to the bank in the case the company can not make a loan payment.
Collateral
Individuals and companies often promise to keep information they learn secret. This promise is often formalized by signing a Non-‐Disclosure Agreement (or NDA). Example: the bank signs an NDA when an entrepreneur submits lots of personal information on a bank loan application.
Confidentiality
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
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
Money paid by a company to a person who owns stock in that company. Dividends are optional – many companies do not pay dividends. Dividends are typically paid every three months (which is called a “quarter,” since three months is a quarter of a year) or annually.
Dividend