Definitions

Question 1

ENTREPENUER

Answer 1

A person who takes the risk in starting a new business

Question 2

ENTERPRISE

Answer 2

The creation of a business to meet the needs and wants of customers

Question 3

RISK

Answer 3

The probability that things might not go as well as planned

Question 4

OPPORTUNITY COST

Answer 4

The opportunity cost of a decision is the cost of missing out on an alternative, e.g. Loosing a well paid job to start own business

Question 5

PATENTS

Answer 5

• difficult to obtain
• protection for up to 20yrs
• expensive & time consuming to obtain

Question 6

TRADEMARKS

Answer 6

Something that identifies a product by symbol, name or logo. Protection lasts for up to 10yrs

Question 7

COPYRIGHT

Answer 7

Particularly used in startup creative or knowledge industries. Protection is automatic for any original work. Lasts for 70yrs after authors death.

Question 8

ADDED VALUE

Answer 8

The difference between the price of a finished product and the cost of inputs making it

Question 9

NICE MARKET SEGMENT

Answer 9

A smaller, specialist part of a larger market where customers have particular needs and wants

Question 10

FRANCHISEE

Answer 10

The business which is granted the right to operate a franchise on behalf of the franchisor

Question 11

FRANCHISOR

Answer 11

The ultimate owner of the franchise format

Question 12

MARKET RESEARCH

Answer 12

Information that helps explain the size, structure and nature of a market

Question 13

QUALITATIVE RESEARCH

Answer 13

Provides useful insight into opinions and attitudes of target new customers from relatively little research

Question 14

QUANTITATIVE RESEARCH

Answer 14

Based on proper samples and provides insight based on numerical data

Question 15

MARKET

Answer 15

Is any location where buyers and sellers come together to transact with each other

Question 16

SOLE TRADER

Answer 16

An individual owning the business on their own. They can employ people but those employees don’t have ownership of the business.

Question 17

PARTNERSHIP

Answer 17

Where a business is started and owned by more than one person.

Question 18

PROFIT

Answer 18

The difference between total revenues and total costs

Question 19

CONTRIBUTION

Answer 19

This is the difference between sales revenue & variable costs of production

Question 20

LOCATION

Answer 20

The physical place from which a business is operated and controlled

Question 21

CONTRIBUTION PER UNIT

Answer 21

This is the difference between the selling price of one unit and the variable cost of producing one unit

Question 22

BREAK EVEN POINT

Answer 22

The output at which total revenues equal total costs

Question 23

CASH FLOW

Answer 23

The total cash payments (inflows) into a business minus the total cash payments (outflows)

Question 24

LIQUIDATION

Answer 24

This is turning assets into cash and may be insisted on by courts of suppliers haven’t been paid.

Question 25

BUDGETS

Answer 25

Financial targets for the future covering revenue (income) and expenditure over a certain time period

Question 26

BANK LOAN

Answer 26

A fixed amount loan from a bank which is enter ally used to finance long term assets

Question 27

BUSINESS ANGEL

Answer 27

A particular type of investor, usually a successful entrepenuer, who is willing to invest in high-risk, high growth businesses at a very early age

Question 28

ELASTICITY OF DEMAND

Answer 28

The responsiveness of demand to a change in price

Question 29

FULL TIME EMPLOYEE

Answer 29

An employee who works more than 30 hours a week in a business

Question 30

LIMITED LIABILITY

Answer 30

Shareholders are only liable for the money they have invested - not for the overall debts and liabilities of their company

Question 31

MARGIN OF SAFETY

Answer 31

The difference between the actual level of output and the break even output

Question 32

MARKET SEGMENTATION

Answer 32

The process of dividing a market into smaller sections (segment) which contains customers with similar wants and needs

Question 33

MARKET SHARE

Answer 33

The share of a total market that is owned by a particular business, product or brand

Question 34

MARKET SIZE

Answer 34

The total value or quantity of demand in a specific market, over a specific period of time. Can be measured in terms of value or quantities

Question 35

QUALITITATIVE RESEARCH

Answer 35

Market research concerned with collecting data on attitudes, beliefs, opinion etc

Question 36

QUANTITATIVE RESEARCH

Answer 36

Market research concerned with collecting data that can be quantified, e.g. Sales, statistics

Question 37

REVENUE

Answer 37

The income or sales that a business achieves in a period

Question 38

RISK

Answer 38

The probability or chance that hoped-for outcomes will not occur

Question 39

SUPPLIER

Answer 39

A business that provides goods and services to another firm

Question 40

TRADE CREDIT

Answer 40

Amounts owed to suppliers of a business

Question 41

UNLIMITED LIABILITY

Answer 41

Describes the potential risks that sole traders and partnerships face. They are liable for the debts of the business

Question 42

WORKING CAPITAL

Answer 42

The amount of money that a business has available to conduct its day to day activities