It's always a good idea to get a refresher on the terms floating around the business world. We have all been in a situation where someone throws out a professional term, and you have to ask them what they mean. This can do more than damage your ego, it can diminish your credibility. Some of the best entrepreneurs in the world never had formal business school education, but it is never too late to buff up your knowledge and understanding of some terms that you may be hearing often.
Finance Terms
Whether or not you went to business school before starting your own business, there are some terms you need to know. You may have heard some of them along the way and never invested in researching their actual meaning. At the very least, knowing a few key phrases and terms can help you more easily communicate within the industry.
Assets: Anything that is property of the business that has economic value. There are a few categories of assets including current, fixed, tangible, intangible, operating, and non-operating.
Balance Sheets: Illustrates your business’s net worth at any one time. Your financial position including assets, expenses, and liability.
Net Income: This is your total profit. Net profit means the money that is left when you subtract all your expenses from your revenue including tax. You can raise your net income by either increasing your revenue or decreasing your expenses.
Profit: Profit can be defined as the amount earned minus the amount spent.
Revenue: This is the total amount generated from your business. This is sometimes referred to as “sales revenue”. It is the income of your business before any expenses.
Expenses: The cost of operations to produce revenue. Some expenses may include, payment to employees, rent, and electricity. You will break down your expenses in your income statements.
Capital Expenses or Capital expenditures: also known as CapEx, these are the funds you use related to your physical assets. So when you need to upgrade or maintain equipment, this is added to your capital expenses.
Working Capital: This is all of your cash on hand, and the money required to fund day to day operations of your business.
Accounts Payable: Stands for the debts a business owes to lenders, suppliers and the like.
Accounts Receivable: The opposite of accounts payable. This is the amount that is owed to your business at any one time.
Advertisement and Marketing Terms
No amount of schooling can prepare you for the number of acronyms and terms that are thrown around on an advertising consultation call. Having a cheat sheet up during these phone calls can greatly help. You don't need to be a marketing expert to know a few basic terms and put them to use. Knowing your stuff in this department can also help small business owners not get taken advantage of. Even if you have a marketing and advertising expert on your staff, knowing a few key terms can help you communicate with them better and understand what they are doing for your business. Some of these terms also help you to really think about the state of your advertising and marketing and can keep you abreast of what is working.
Campaign: Simply put, this is the umbrella term for an organized effort to promote your product or service.
CPC: These are advertising campaigns that are charged calculated on a per-click basis, standing for cost per click. An example is a 3rd party site promoting your business and charging you on how many people click on the ad.
Blog: The regularly updated portion of your website where you can post articles, photos, and other media to keep your site active.
Ad Copy: Written or spoken words that contribute to your ad.
Brand Manager: Someone who is responsible for the cumulative persona of your brand.
Reach: How many people may see your content. This will vary from platform to platform and can include an estimated reach.
Case Study: An in-depth analysis done after services are rendered that may show how those services that show how it was completed and benefited the client.
Email Marketing: This one is getting huge, it is simply the process of emailing your clients with something that includes a call to action. This marketing is on the rise as it is a great way to connect with your audience in their inbox.
ROI: Return on investment. Keeping an eye on this metric is essential. You want to make sure that any advertising or marketing you are spending money on is giving you a return. If not, you are possibly just throwing out money.
Buyer Journey: The different paths that customers take to buying your product. Once you can get these down pat you can increase buyer flow. Say that you find out that every time someone both listens to a podcast that you advertise on and sees your ad on Facebook then makes a purchase. Knowing that journey, you can target your advertising to what works.
SEO: Stands for search engine optimization. This is the process of making sure that your clients and customers can find you online when they search for you.
Now that you know a few basics, you can grow this knowledge and become your own finance and marketing genius. But if you are too business running your small business to do that, you may also consider bringing on a specialist like an accountant or a marketer to do it for you. If your business is growing in advertising and finance and you need cash flow to keep up, reach out to First Union Lending for a consultation of how we can help grow your business. Click here or call 863-825-5626.