Here, you'll find terms and concepts used in the business and marketing world, with explanations and links to more information, tools, websites.
It is 'Work in progress": more words & explanations will be added, as we go along.
AIDA is an acronym that stands for Attention, Interest, Desire and Action.
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The AIDA model is widely used in marketing and advertising to describe the steps or stages that occur from the time when a consumer first becomes aware of a product or brand to when the consumer trials a product or makes a purchase decision:
- Attention: The consumer becomes aware of a category, product or brand (usually through advertising).
- Interest: The consumer becomes interested in a product or brand by learning about its benefits & how it fits his/her lifestyle.
- Desire: The consumer develops a favourable disposition towards the product or brand.
- Action: The consumer decides to buy.
In financial accounting, an asset is money and other valuables belonging to an individual or business.
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An asset is anything tangible or intangible that can be owned or controlled to produce value and that has positive economic value
Assets represent ownership that can be converted into cash. Cash itself is also considered an asset.
The balance sheet of a firm shows the monetary value of the assets owned by the firm.
There are two types of assets:
- Tangible assets:
Fixed assets such as buildings, equipment etc.
Current assets like inventory
- Intangible assets:
Goodwill, patents, trademarks, copyright, computer programs
B2B, B to B, or B-to-B is short for: Business-to-business.
It refers to commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
B2C is short for: Business-to-Consumer. It refers to businesses that sell products or provide services directly to end-user consumers.
Bartering is a form of trading or swapping: people or organisations exchange goods or services, instead of paying for them.
For instance, you can use someone's video studio, and in return you design of a new logo for the owner of the studio. Or: they can use your office, for a presentation.
Bartering enables persons or businesses who lack hard currency, to obtain goods and services.
When you start a business, your business will cost you money. There will be many expenses: you have to pay for the development of the product, your advertising, etc. etc. At the same time, there will be no, or very little income. Because you have nothing to sell yet, or because your potential customers haven't found you yet.
If all goes well, over time your expenses will go down and/or your income will increase. At some point in time, your expenses will match your income. This is the 'break-even point': no profit, no loss.
A business is an organization where people work together. In a business, people work to make and sell products or services. Other people buy the products and services. The business owner is the person who hires people for work.
A business can earn a profit for the products and services it offers.
The word business comes from the word busy, and means being occupied.
A business model is a description of how your business is going to operate and how you are going to make money. At the most basic level, it involves:
- a producer
- making something and
- selling it directly to customers
- at a profit.
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Some examples of less obvious business models:
The Add-On model
You sell your main product cheaply, but then you offer many 'add-ons', for a high price - to recover your losses on the main product. For instance: printers are sold quite cheaply; to operate the printer, you need toner. Companies may lose money on selling the printers, but they will make money by selling expensive toner. Of course, your printer should only be able to use your kind of expensive toner, or you will not generate sufficient income.
The Advertising model
You can sell your product cheaply or give it away for free, but generate money by selling space to advertisers. This is the business model used by many people on YouTube: we can watch their videos for free; advertisers pay for every viewer.
The Affiliate model
An affiliate is someone who helps sell a product in return for a commission (some payment, or percentage per sale). The affiliate may never actually take ownership of the product (or even handle it). The affiliate simply gets rewarded for referring customers to a retailer when they make a sale. The website www.booking.com uses the affiliate model. You can search the website to find a hotel for free, the hotel owner pays www.booking.com for every room that is booked through the site. www.amazon.com uses this model too: you can offer your products or services on www.amazon.com, and pay Amazon for every sale that you make.
The Auction model
This is the model used by Auction sites like eBay.
The Pay as You Go model
Customers pay only for the services or products that they actually use. An example is Pay per View: you only pay for the films that you actually watch. Another example: online sign language classes, where learners pay per lesson.
These are only some examples of Business Models. Google "Business Model" and you will find more; also: templates, and apps that will help you generate your Business Model.
The main thing to remember: most models try to 'bait' a customer by offering something for free, or very cheaply. As soon as the customer has taken the bait and is 'hooked', he or she has to pay, and pay, and pay. Because that is how the business owner generates his/her profit.
A business plan is a description of:
- the goals of a business,
- the motivation,
- and the plans for reaching these goal.
A business plan may also contain background information about the organization or persons attempting to reach these goals.
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When you go to a bank or other organization to ask them to help you finance your business, they will almost always ask for your business plan.
Some good advice:
The act of planning helps you to think things through thoroughly, study and research if you are not sure of the facts, and look at your ideas critically.
It takes time now, but avoids costly, perhaps disastrous, mistakes later.
It typically takes several weeks to complete a good plan. Most of that time is spent in research and re-thinking your ideas and assumptions.
But then, that’s the value of the process. So make time to do the job properly.
Those who do never regret the effort. And finally, be sure to keep detailed notes on your sources of information and on the assumptions underlying your financial data.
When you start a business, you have to choose a legal structure for your business. The legal structure determines:
- The requirements for setting up the business, including the financial requirements
- The amount of taxes that you will pay.
- The liability: are you personally responsible for all business transactions, including financial transactions?
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Business structures may differ between countries, so always check the information for your country. Some common business structures are:
Sole Proprietorship or Sole Trader
A sole proprietorship is the most basic type of business to establish. You alone own the company and are responsible for its assets and liabilities and debts. If you start working for yourself and are 'self employed', you will be classed as a sole trader.
If you start working for yourself, 'syou’re classed as a sole trader.
This means the company:
- is legally separate from the people who run it;
- has separate finances from your personal ones;
- can keep any profits it makes after paying tax.
To set up a limited company, you will need at least one director and one shareholder.
A partnership is the simplest way for 2 or more people to run a business together. The partners share responsibility for the business’s debts. They also have accounting responsibilities. Partners share the business’s profits, and each partner pays tax on their share.
Cold, warm or hot acquisition
Cold acquisition, or cold calling, means: contacting someone who you don't know, to try and sell your product or service. Often this is done by telephone: you call a number, or you have a call center call people, and you do your 'sales pitch': "Hi, would you be interested in .... " Cold calling is difficult, search the web and you will find many 'tips and tricks'.
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Cold emails are easy to send, and you can send them to a large number of people. But most of those people will think 'Spam!' and delete your message. Many email programmes delete SPAM automatically, with a SPAM filter. Here are some tips of what you can do, to make sure that your email is not recognized by SPAM filters.
"Warm" acquisition: contacting someone who you've met before, but don't know very well yet. Maybe you've met them at a networking event, or a friend or relative gave you the name of the person. This makes your introduction easier, and more personal "Hi, we met at ..." or "Hi, my cousin Mark told me to contact you ... "
"Hot" contacts: people you know well, former customers, etc. The most important thing about 'hot' contacts is to keep them hot, and not to let them cool down. This may mean: Christmas cards, regular e-mails or newsletters, asking about the wife/the husband/the kids, and/or special discounts for regular customers.
CRM software (CRM: Customer Relationship Management) can help you with this; click here for an example and introduction.
A cooperative (also known as co-operative, co-op, or coop) is a democratically controlled enterprise, that is jointly owned by an group of persons who work together to meet their common economic, social, or cultural needs and aspirations.
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Examples of cooperatives:
- non-profit community organizations;
- businesses owned and managed by the people who use their services (a consumer cooperative, for example a food co-op);
- organisations managed by the people who work there (worker cooperatives).
A cooperative is a legal entity that is owned and democratically controlled by its members. Members often have a close association with the enterprise as producers or consumers of its products or services, or as its employees.
There are specific forms of incorporation for cooperatives in some countries, e.g. Finland.
Cooperatives may take the form of companies limited by shares or by guarantee, partnerships or unincorporated associations.
A group of deaf professionals can set up a co-operative to share, for instance, interpreter services and other resources. They could work together in the same building to create a sign language friendly environment. Or they can work across the country, e.g. as independent sign language teachers, who share resources such as learning materials, maybe develop a joint website, or a joint identity and quality standards, etc.
A copyright is a law that gives the owner of a written document, video, composition, book, picture, or other creative work, the right to decide what other people can do with it.
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Copyright laws make it easier for authors to make money by selling their works. Because of copyright, a work can only be copied if the owner of the copyright gives permission.
When someone copies or edits a work that is protected under copyright without permission, the owner may sue for the value of the violation.
Read more: https://simple.wikipedia.org/wiki/Copyright
CRM: Customer Relationship management.
CRM software, or a CRM system, lets you store all your business relationships in one place: names, addresses, purchase history, previous contacts, and more. This information helps you interact with clients, anticipate their needs, recognize customer updates and track performance goals when it comes to sales.
CRM software's main purpose is to make interactions more efficient and productive. Automated procedures within a CRM module include sending marketing materials based on a customer's selection of a product or service.
Crowdfunding is asking a lot of people (usually strangers who you do'nt know: a crowd) to help finance your business plans.
Crowdfunding uses social media and crowdfunding websites to bring entrepreneurs and investors together.
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In most countries, there are many crowdfunding websites for different kinds of projects. There are crowdfunding website for art-projects, for start-ups, etc.
Usually, you can add your project to these websites,s for free. Usually, there is a time limit: you must try to raise your capital before a certain date. If you don't succeed, then you don't get any money. Usually, you pay a percentage of the money that you raise or a fixed sum of money to the crowdfunding platform.
Before you choose a platform: read the small print!
Kickstarter is a well-known international crowdfunding platform for creative projects.
Usually, people contribute to your project as an investment: as soon as you start making a profit, you will have to pay them back - often with interest.
Donation-based crowdfunding is different. People don't invest in your product or event, they give you a donation (a gift of money).
In return for their donation, they usually receive some reward: a free ticket to your event, a copy of your book, their photo on your website, a personal meeting with you, etc.
Usually, people who donate more, will get a more interesting (and more expensive) reward.
Corporate social responsibility (CSR) means that a business contributes to activities that benefit society as a whole. CSR can be about employing people with disabilities, about 'fair trade', and/or about sustainability.
Direct marketing is a form of advertising: marketing materials are provided directly to the (potential) customers. Direct marketing does not involve advertisements placed on the internet, on television or over the radio. Types of direct marketing materials include catalogs, mailers and fliers.
It is called direct marketing because it removes the "middle man" from the promotion process. Instead, the company's message is provided directly to the potential customer. This type of marketing is typically used by companies with smaller advertising budgets.
An "Elevator Pitch" is a concise, carefully planned, and well-practiced description about your company that your mother should be able to understand in the time that it takes to ride up an elevator.
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Six questions your "Elevator Pitch" must answer:
- What is your product or service?
Briefly describe what it is you sell. Do not go into excruciating detail.
- Who is your market?
Briefly discuss who you are selling the product or service to. What industry is it? How large of a market do they represent?
- What is your revenue model?
More simply, how do you expect to make money?
- Who is behind the company?
"Bet on the jockey, not the horse" is a familiar saying among Investors. Tell them a little about you and your team's background and achievements. If you have a strong advisory board, tell them who they are and what they have accomplished.
- Who is your competition?
Don't have any? Think again. Briefly discuss who they are and what they have accomplished. Successful competition is an advantage-they are proof your business model and/or concept work.
- What is your competitive advantage?
Simply being in an industry with successful competitors is not enough. You need to effectively communicate how your company is different and why you have an advantage over the competition. A better distribution channel? Key partners? Proprietary technology?
More info., see: http://www.businessknowhow.com/money/elevator.htm
- An undertaking, especially one of some scope, complication, and risk.
- A business organization.
- Industrious, systematic activity, especially when directed toward profit: Private enterprise is basic to capitalism.
- Willingness to undertake new ventures; initiative.
An entrepreneur is a person who starts and runs a business or organization. An entrepreneur is also called a founder. He or she develops a business plan, obtains financing and hires employees necessary to run the business.
The entrepreneur starts with a good idea for a new business.
While the business grows, the entrepreneur is the central person in the business.
The European Union wants to promote and support entrepreneurship in its citizens.
In this context, 'entrepreneurship' means more than 'starting or running your own business':
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"Entrepreneurship as a competence applies to all spheres of life.
It enables citizens
- to nurture their personal development,
- to actively contribute to social development,
- to enter the job market as employee or as self-employed, and
- to start-up or scale-up ventures which may have a cultural, social or commercial motive."
For more information, see Entrecomp, the Entrepreneurship Competence Framework (2016, free pdf download).
Europass is the name for a set of standardized documents that were developed to make it easier for people to apply for jobs or traineeships in other EU countries:
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- The Europass Curriculum Vitae (CV, or resume) helps you present your skills and qualifications effectively and clearly. You can create your CV online using tutorials or download the template, examples and instructions.
- The Europass Language Passport is a self-assessment tool for language skills and qualifications. You can create your Language Passport online using tutorials or download the template, examples and instructions.
- The European Skills Passport is an electronic portfolio that you can use to give a comprehensive picture of your skills and qualifications. It can help you document your skills and qualifications
- to find a job or a training; and./or
- to validate your skills.
In addition, there are three standardized documents that education and training authorities can issue, to record the knowledge and skills a person has acquired:
the Europass Mobility records the knowledge and skills acquired in another European country;
the Certificate Supplement describes the knowledge and skills acquired by holders of vocational education and training certificates;
the Diploma Supplement describes the knowledge and skills acquired by holders of higher education degrees.
All Europass documents can be created online, for free. For more information, see the Europass website.
A Franchise is a business, that uses the name, products, and other services of a larger company. You are the owner of the business, but you pay the Franchiser for the use of its name etc.
Examples: MacDonalds, PizzaHut.
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Franchises are a very popular method for people to start a business.
One of the biggest advantages of purchasing a franchise is that you have access to an established company's brand name; meaning that you do not need to spend further resources to get your name and product out to customers.
Disadvantages include heavy start-up costs as well as ongoing royalty costs. For instance, the estimated total amount of money it costs to start a McDonald’s franchise ranges from $500,000 to $1.6 million.
Franchises, by definition, have ongoing costs to the franchiser company in the form of a percentage of sales or revenue. This percentage can range from 4 – 8%. Other disadvantages include lack of territory control or creativity with your own business, as well as limited financing options from the franchiser.
An umbrella organization or facility that is established to nurture young (start-up) businesses during their early months or years.
It usually provides affordable space, shared offices and services, hands-on management training, marketing support and, often, access to some form of financing.
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The original term: a safe environment for premature babies. Also: a machine to hatch eggs.
An intrapreneur applies the skills of an entrepreneur within a public, private or voluntary sector organisation. As an intrapreneur, you can - for instance - be a project or campaign manager, organize an event, do marketing research, develop a new product.
Intra = the Latin word for 'inside'.
A jobcoach is a professional who helps you find and keep a job. The job-coach can go with you to a job interview, they can help you get the training you need, they can stay with you during the first hours or days or even weeks on the job.
In some countries, jobcoaches are paid for by the government. Usually, jobcoaches are only available for specific groups, e.g. people with disabilities, people who have been unemployed for a long time, young people.
In most countries, 'jobcoach' is not a protected term, anyone can call him/herself a jobcoach. So always check: are you qualified, is the jobcoach qualified, what do you get, who pays? In some countries, there are special jobcoaches for deaf people; you may be able to find jobcoaches who know sign language.
Kickstarter is a crowdfunding platform. For more information, read 'Crowdfunding', on this page.
The marketing mix is the combination of elements necessary to the marketing of your product or service.
Usually, the marketing mix is divided into 4 Ps:
- Product: what you are selling;
- Place: where you are going to sell this;
- Price and
- Promotion: what you are going to do to advertise your product or service.
An NGO is a Non-Governmental Organization. An NGO is a non-profit organization that is independent of governments and international governmental organizations.
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NGOs try to improve the lives of other people through humanitarian, educational, healthcare, public policy, social, human rights, environmental, and other activism and services. They bring citizen concerns to Governments, advocate and monitor policies and encourage political participation through the provision of information.
NGOs can be funded by governments or by donations; some are run primarily by volunteers. Some may be registered as charities, while others may be registered for tax exemption based on recognition of social purposes.
The term 'NGO' is not always used consistently. In some countries, the term NGO is applied to an organization that in another country would be called an NPO (nonprofit organization), and vice versa.
One characteristic that NGOs have in common is that they are non-profit organizations that are not hindered by short-term financial objectives.
NGOs can have employees (including directors) who receive a regular salary.
A 'niche' (pronounciation as in French: neash) is a small, specialised segment of the market.
Niche marketing means that you offer a product or service, not for the mainstream, but for a special 'sub-population'. As a strategy, niche marketing means that your goal is to be a big fish in a small pond, instead of a small fish in a big pond.
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Deaf people, hearing impaired people, sign language users: all of these are 'niche markets'.
Deaf entrepreneurs have to decide what their market is: deaf people? sign language users? people with disabilities? Or a 'hearing' niche market, for instance parents of young kids (baby sign?), art lovers (photography?), etc.
For Deaf entrepreneurs, the Deaf 'niche' market may be easier, because it is homeground: you know the target group, your Deafness is an advantage, and communication is not a problem. The downside: it is a very small market, in most countries.
Mainstream markets, even mainstream 'niche' markets are usually larger. The downside: communication may be a problem; your deafness may be a disadvantage; you may have to consult or hire hearing people to help you target and reach your market.
A non-competition clause or non-compete clause can be part of a contract with an employer. The clause says that, if in the future you resign or you are fired, you are not allowed to start your own business in the same field as your current employer: you are not allowed to compete with your current employer. Sometimes the clause also says that you cannot be employed by a competing business, after you resign or are fired.
Usually, there is a time limit: 6 months, or 12 months or maybe even 3 years. Sometimes, distance is specified: you cannot do this in the same city as your current employer, or within a distance of 100 or 250 kilometres.
The non-competition clause protects your current employer. When you leave, you cannot take business secrets or clients with you to a competitor.
When you really want the job, you probably have no problems with the non-competition clause in the contract. If you are dreaming of setting up your own business in the future - in the same field as your current employer - then the clause can be a real problem. You may end up having to wait for the specified number of months, or pay a sometimes hefty fine.
A patent gives an inventor the right to stop other people making or using his or her invention. If someone makes or uses that invention without being allowed to, the inventor can sue that person in court to make them stop. The inventor can sell the patent to another person or company.
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A patent lasts for up to 20 years, depending on the country. After that, anyone can copy the invention.
Each country has its own patents. China gives Chinese patents. India gives Indian patents. The United States gives United States patents. An inventor can get a patent in any country the inventor wants. An inventor can get patents in many different countries for the same invention. Each patent in each country costs money.
Read more: https://simple.wikipedia.org/wiki/Patent
In the UK, you are self-employed if:
- run your business for yourself and take responsibility for its success or failure;
- have several customers at the same time;
- can decide how, where and when you do your work;
- can hire other people at your own expense to help you or to do the work for you;
- provide the main items of equipment to do your work;
- are responsible for finishing any unsatisfactory work in your own time;
- charge an agreed fixed price for your work;
- sell goods or services to make a profit (including through websites or apps).
You can be both employed and self-employed at the same time, for example, if you work for an employer during the day and run your own business in the evenings.
In the UK, you’ll need to register as self-employed to make sure you pay the correct Income Tax and National Insurance.
Always check to see what the legal requirements are in your country!
Also see: Business Structure.
SMART is an abbreviation that stands for criteria for goals and targets:
- Results-focused (or: Realistic)
- Time-bound (or: Timely).
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To set a specific goal, you must answer the six “W” questions:
- Why: Specific reasons, purpose or benefits of accomplishing the goal.
- Who: Who is involved?
- What: What do I want to accomplish?
- Where: Identify a location.
- When: Establish a time frame.
- Which: Identify requirements and constraints.
EXAMPLE: A general goal would be, “Get in shape.” But a specific goal would be, “Join a health club and workout 3 days a week.”
A specific goal has a much greater chance of being accomplished than a general goal.
- You have concrete criteria, to measure your progress towards each goal that you set. When you measure your progress, you stay on track, reach your target dates. Plus: you will enjoy the positive feeling that you haved reached a target. This will spur you on, to continue to try and reach the next target, and your end-goal.
To see if your goal is measurable, ask questions such as……
- How much? How many?
- How will I know when it is accomplished?
When you identify goals that are most important to you, you will have to figure out ways to make them come true. In the process, you will develop the attitudes, abilities, skills, and financial capacity to reach your goals. You may see previously overlooked opportunities, to bring yourself closer to the achievement of your goals.
You can attain almost any goal you set, when you plan your steps wisely and establish a time frame that allows you to carry out those steps.
Goals that may have seemed far away and out of reach, eventually move closer and become attainable, not because your goals shrink, but because you grow and expand to match them.
When you list your goals, you build your self-image. You see yourself as worthy of these goals, and you start developing the traits and the personality, that allow you to possess them.
To be realistic, a goal must represent an objective, towards which you are willing and able to work. A goal can be both high and realistic; you are the only one who can decide just how high your goal should be. But be sure that every goal you set, represents substantial progress.
A high goal is frequently easier to reach than a low one, because a low goal has low motivational force.
Your goal is probably realistic, if you truly believe that you can accomplish it.
Additional ways to know if your goal is realistic, is to determine if you have accomplished anything similar in the past or to ask yourself what conditions would have to exist, to accomplish this goal.
A goal should be linked to a time frame. With no time frame tied to it, there’s no sense of urgency. If you want to lose 10 lbs, when do you want to lose it by? “Someday” won’t work. But if you anchor it to a timeframe, “by May 1st”, then you’ve set your unconscious mind into motion to begin working on the goal.
SWOT Analysis is a tool to find out the Strengths, Weaknesses, Opportunities, and Threats that are to be expected in a project or in a business or in something similar. It means that the marketing environment (internal and external to the organization or individual) is looked at.
When examining the potential for a new business or product, a SWOT analysis can help determine the likely risks and rewards.
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Opportunities and threats are external SWOT factors.
- A strength is a positive internal factor.
- A weakness is a negative internal factor.
- An opportunity is a positive external factor.
- A threat is a negative external factor.
Free templates to help you get started: http://www.businessballs.com/swotanalysisfreetemplate.htm
An example of a SWOT analysis:
Unique Selling Proposition (USP)
The unique selling proposition (USP) or unique selling point is a marketing term.
If you want people to buy your product or service, your USP says why your product or service is better than other products or services. It is your "Choose me!" statement.
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Much has been written about USP. Wikipedia quotes Rosser Reeves, who first introduced the term:
- Each advertisement must make a proposition to the consumer—not just words, product puffery, or show-window advertising. Each advertisement must say to each reader: "Buy this product, for this specific benefit."
- The proposition must be one the competition cannot or does not offer. It must be unique— either in the brand or in a claim the rest of that particular advertising area does not make.
- The proposition must be strong enough to move the masses, i.e., attract new customers as well as potential customers.