| Key Term | Definition |
| Added Value | The increased worth a business creates for a product. |
| Repeat Purchase | Where customers stay loyal to a business’s product/service. |
| Choice | Giving customers options and increasing the chance that the product will satisfy more than one customer. |
| Convenience | Making life easier for customers. |
| Customer needs | The product/service must have to suit the needs of a customer. |
| Customer wants | What a customer desires to have in a product/service |
| Primary research | Research conducted first-hand e.g. surveys, questionnaires |
| Secondary research | When a company uses research already carried out for general purposes e.g. census |
| Qualitative Data | In-depth research into the opinions and views of a small group of potential or actual customers to provide an insight into why customers buy what they buy |
| Quantitative Data | Factual research among a large enough sample of people toprovide statistically reliable results. |
| Business Enterprise | The ability to identify opportunities and take advantage of them |
| Market Segmentation | Involves dividing an entire market into smaller customer groups. A business can segment its market based on its distinguishable characteristics or demographics including: Location, Income, Lifestyle, Age |
| Competitors | Businesses that sell the same type of products in the same market. |
| Business Aims | The goals a business wants to achieve (S.M.A.R.T) |
| SWOT | Strengths, Weaknesses, Opportunities and Threats. |
| Revenue | Total income earned within a set period. Revenue = Quantity x Price |
| Fixed Costs | Costs that do not vary with output. Stays the same. E.g. rent, salaries, insurance, loans. |
| Variable Costs | Costs that depend on the output e.g. raw materials, wages, packaging.Total Variable Costs = Cost per unit x Quantity |
| Total Costs | Total costs = Fixed Costs + Variable Costs |
| Profit | The difference between revenue and costs.Profit = Revenue – Total Costs |
| Interest | When a business borrows money and is charged extra by the lender.Interest = Amount borrowed x Interest rate/ 100 |
| Break-even charts | These help businesses identify how many products they need to sell to reach a point when total revenue equals total costs |
| Margin of safety | The extent to which actual or projected sales exceed the break-even point. |
| Cash | The money immediately available to a business at any time. |
| Cash flow | The inflow and outflow of money into and out of a business in a given period.Net Cash Flow = Cash Inflow – Cash Outflow |
| Sources of finance | The money the business needs to set up. Can come from: personal savings, selling assets, reinvesting profits, overdrafts, venture capital, trade credit, hire purchase, loan capital, share capital, crowdfunding, leasing. |
| Overdraft | A credit limit is available when a bank account falls below zero. (short term) |
| Venture capital | Capital is provided by private investors. (long term) |
| Trade credit | A period of credit is provided by investors (short term) |
| Hire purchases | Purchases are paid for in installments (long term) |
| Loan Capital | A lump sum is borrowed and repaid in installments (long term) |
| Share Capital | A limited company can sell shared in the business (long term) |
| Crowdfunding | A venture is funded by a large group of people donating money (long term) |
| Leasing | A business pays to borrow equipment (long term) |
| Location | Where a business decides to set up. Many factors influence this including: raw materials, labour, market location and competition. |
| E-commerce | An online business |
| Sole Traders | Owned and controlled by one person who is responsible for making all the business decisions. |
| Limited Liability | Owners are not personally responsible for business debts. |
| Unlimited Liability | Your personal assets are at risk. |
| Partnerships | Owned and controlled by two or more people. Responsibility is shared between them. |
| Limited Companies | Owned by two or more shareholders. Two main types: Private Limited Companies(Ltd) and Public Limited Companies (PLC) |
| Private Limited Companies | Shares are sold privately (not to the public) but only if all shareholders agree. Shareholders have limited liability so they can’t come after assets. Can be expensive. |
| Public Limited Companies | Shares are sold on the stock market to the general public. Shareholders have limited liability. A minimum of £50,000 is needed. |
| Marketing Mix | The combination of key elements in a marketing strategy including the 4Ps: Product, Price, Promotion and Place. |
| Business Plan | It shows what a business aims to achieve and how it will achieve it. |
| Stakeholders | Groups of people who are affected by the actions of a business. |
| Consumer Rights Act 2015 | Gives consumers the right to a refund, repair or replacement if goods fail to meet certain standards. |
| Health and Safety Act | Protect employees and customers from injury or illness in the workplace. |
| Equality Act 2010 | It is illegal to discriminate against anyone based on age, sex, religion, sexual orientation or disability. |
| Wages | Businesses have to pay at least the national minimum wage to employees. If less, they can face prosecution and fines. |
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