Using the Right Words
Business Plan Lingo for “Dummies” – Business Plan Vocabulary Part 1
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If you’re writing a business plan, you’re probably not a dummie, but that doesn’t mean that you already know what all that business plan lingo means. Here is a list of words that you’ll want to understand before you start writing your business plan.
Angel Investor – A person who provides early-stage businesses with start-up capital.
Balance Sheet – A financial statement that shows a company’s assets, liabilities, and net worth for a given period of time.
Competitive Advantage – Any advantage gained over competitors as a result of offering better value, either with a lower price or providing more benefits to justify a higher price.
Competitive Analysis – The process of identifying key competitors and evaluating their objectives, strategies, strengths, and weaknesses. This assists with determining which competitors you will pursue and which ones you will avoid.
Cost of Goods Sold – The net cost to the company of the products or services that it sells.
Gross Margin – The difference between net sales and the cost of goods sold.
Gross Sales – The total revenues from what a company charges in a given period of time.
Income Statement – A financial statement with a summary of a company’s revenue and expenses from a specific period of time.
Macroenvironment– Demographic, economic, natural, technological, cultural, and political forces that affect the business environment.
Market – All potential buyers and sellers of a product or service
Market Segmentation – Diving a market into groups that might require separate products or marketing efforts based needs, characteristics, or behaviors
Financial Ratios – Ratios of selected financial items that are used to compare a company’s performance from one year to the next.
Target Market – A set of buyers with common needs that the company would like to serve
Pro Forma – A hypothetical financial statement used in a business plan to project performance. These are based on assumptions.
SWOT Analysis – SWOT stands for strengths, weaknesses, opportunities, and threats. It is a method for quickly analyzing the status of a business.
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