You may have heard many common business terms thrown around without really understanding what they mean.
Check out this list of 33 business terms so that you can build a solid knowledge foundation to do business.
Stock is a type of securities certifying the ownership over a fraction of the issuing organization.
Return on Investment (ROI) is the metric used to measure what you gain or lose compared to what you invest in. ROI is very helpful for keeping track of your business goals because it’s specific and measurable.
To provide a motivation or incentive for using a product or a service (customers) or for doing certain work (employees).
Make money out of a product or a service.
Inflation is the continual increase in the overall price of goods and services over time and the devaluation of a currency.
When the overall price rises, a single currency can be exchanged for fewer goods and services than before, so inflation reflects a decrease in the purchasing power per unit of the currency.
Capital is everything your business owns and uses, from money to assets.
Fixed costs, also known as overhead costs or indirect costs, are costs that don’t change despite how much your business produces or serves.
Some common fixed costs include rent, interest, utilities, insurance, salaries, etc.
Variable costs are costs that change when the level of activity or the quantity of products/services of your business change.
Some common variable costs include shipping expenses, packaging, commissions, raw materials, hourly wages, etc.
Gross refers to the total amount or quantity before deduction.
Net refers to total amount or quantity after deduction.
Systems & Technology
SWOT stands for: Strengths, Weaknesses, Opportunities, and Threats—a famous business analysis model for business. It is used by businesses that want to improve their situation with the right direction and build solid development foundations.
Strengths and Weaknesses are internal factors you can work on them to change for the better. For example, reputation, characteristics, geographical location.
Opportunities and Risks are external factors because you can’t actively control them. For example, the supply source, the competitors, the market price, etc.
KPI stands for Key Performance Indicator. It’s a tool for measuring and evaluating work performance through data, rate, quantitative indicators. Each department in the company will have different KPIs to evaluate the performance and reflect efficiency objectively.
Any countable measurement to assess performance.
Stands for Research and Development.
B2B stands for Business to Business. It refers to the form of trading, doing business, and making transactions between one business with another.
B2C means Business to Customer, meaning making transactions with customers.
B2G means business-to-government. It describes transactions with government entities.
Sales & Marketing
Marketing is the process of attracting potential customers or customers who are interested in your products and services. It involves researching, promoting, selling, and delivering the value of your product or service to consumers.
Unique Selling Proposition
Unique Selling Proposition (USP) is a factor that distinguishes your product or service from a competitor. For example, the lowest cost, highest quality, market-first product and many more.
A very specific segment of a large market.
This is the process of research, analysis, and interpretation of the market. You study:
- the industry
- products or services offered in that market
- customers in that market: their characteristics, consumption habits, locations, and needs
Market penetration is a measure of how well a product or service is being consumed by customers compared to the estimated total market for that product or service.
Market penetration is often used when a company wants to increase the market share of a particular product or service.
Details about your ideal buyer, including their characteristics, age, location, income, difficulties, etc.
A/B testing (also known as split testing) is a process in which you compare version A and B to evaluate which version is better.
You can use this method to test different versions of web pages, ads, etc. to see which one performs better.
A name, symbol, trademark, term, product, service, feature, or design that separates a company from others.
CTR stands for Click Through Rate, a metric used to evaluate the effectiveness of your ads. It’s measured by the number of clicks on your ad per the number of times viewers see your ad.
CRM is Customer Relationship Management, including strategies and tools for managing all relationships and interactions of a business with its customers.
CMS refers to the Content Management System, a type of software that helps you create, store, manage, and modify digital content. A popular example of CMS is WordPress.
CPL stands for Cost Per Lead, the cost needed to acquire a new buyer (lead).
CPL can act as a pricing model for online advertising, in which advertisers pay for each action that a customer performs. Or it can be used as campaign KPIs for marketing teams.
They’re data in terms of age, gender, income, etc. of your customers and clients.
Marketing campaigns and activities that are conducted on the Internet only.
PPC stands for Pay Per Click. It means how much you pay every time a user on the Internet clicks on your ad.
SEO stands for Search Engine Optimization. It’s a set of methods that help to improve a website’s ranking on a search engine results page (usually Google).
We hope the above list has helped you understand business terms regarding Finance, System, Technology, and Marketing better.
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