15 Terms Every Business Manager Should Know
Before you earn your business degree, learn the vocabulary of business.
If you want to get ahead in business, you need to speak the language of business. While you’ll want to earn a business administration degree or management degree to put yourself in the best position to be a business manager, you can start expanding your vocabulary even before you enroll in a business degree program. To get you started, here are 15 important business terms.
Accounts payable appears on your balance sheet and is a record of everything you owe to suppliers and vendors. You have to closely monitor your accounts payable to ensure you can meet payment deadlines and don’t overextend your business debts.
Like accounts payable, accounts receivable appears on your balance sheet. Rather than a record of who you owe, accounts receivable is a record of money owed to your company for providing your goods or services. Proper management of accounts receivable can determine whether you have the cash you need to pay your bills.
B2B, B2C, and B2G
These three abbreviations stand for the three types of markets businesses can sell to. B2B means business-to-business and describes a business transaction with another business. B2B businesses include factories, suppliers, shippers, and business service providers. B2C means business-to-consumer and describes business transactions between a business and individual consumers. B2C businesses include retail shops, restaurants, hotels, and home service providers. B2G means business-to-government and describes a business transaction with a governmental entity. B2G businesses are known as government contractors.
Benchmarking is the process by which you measure the efficiency of your systems. Benchmarking can measure how fast you complete tasks, how cheaply you complete tasks, or how much product you produce. The purpose is to know how you stack up against industry standards and past performance.
Capital is what your business owns and uses to function. It can include land, buildings, and equipment such as machinery and vehicles.
Fixed Costs and Variable Costs
Fixed costs include any costs your business must regularly pay regardless of how well or poorly the business is doing. These costs typically include overhead expenses such as rent, salaries, and some utilities. Variable costs are costs that fluctuate depending on the volume of business. These can include supply costs, hourly wage payroll, shipping costs, sales commissions, and some utilities.
Gross profit is any profit your business makes once you subtract the costs of making and selling your product. If your business brings in $40,000 but spends $30,000 on making and selling your product, your gross profit is $10,000.
Intellectual property includes anything that is the result of creativity, such as product design, computer coding, artwork, and writing. Where you might protect physical assets in a safe, your intellectual property can be protected through patents, copyrights, and trademarks.
Key Performance Indicators
Known as KPIs, key performance indicators are a means to gauge the effectiveness of the steps your business takes to achieve specific goals. If your goal is to improve customer service, your KPIs might include average time on hold and consumer satisfaction ratings. Improving the results of KPIs should improve your ability to reach specific business goals.
Metrics is the term used for any quantifiable measurement your business can use to track or assess performance. Metrics are used in both benchmarking and KPIs.
Net income is what your business earns after all expenses are subtracted from your earnings. Unlike gross profit, net income deducts more than just the cost of making and selling your product. It includes overhead, administration costs, and even investment loss.
A performance review is the specific process by which a manager evaluates whether an employee is meeting given standards. Typically, performance reviews provide employees with feedback about where they’re excelling and where they can improve.
Short for research and development, R&D is the division of your business focused on developing new products and services and making sure they work and are viable.
Short for return on investment, ROI refers to all benefits received from an investment. It’s most often used in reference to costs spent on marketing. If your business spends $1,000 on a mailer and that mailer generates $5,000 in business, your ROI is $4,000.
Pronounced “swat,” SWOT is a common form of business analysis that looks at your businesses strengths, weaknesses, opportunities, and threats. It’s considered a good method for identifying ways you can grow your business.
How can you learn more?
One of the best ways to learn about business is to earn an online business degree. In particular, a Bachelor of Science in Business Administration can give you the foundational knowledge you need to succeed in business.
By choosing an online university for your business administration degree, you won’t have to worry about moving to be near your school or quitting your job to have time to attend class. Instead, an online BS in Business Administration program gives you the flexibility to complete coursework from home while you continue at your current job.
At Walden University, you can choose to earn your BS in Business Administration in one of two learning formats. With the traditional course-based learning format you will complete courses in a set sequence. Walden offers the General Program of its BS in Business Administration in a competency-based format. Instead of completing courses in a set sequence, students demonstrate their competency in specific areas at a pace that works best for them. Credit is earned when they demonstrate mastery of a competency through an assessment that may come in the form of a short paper, a planning document, a work-based project, or something similar.
Knowing the terminology of business is only the first step to business success. By earning your BS in Business Administration, you can put yourself on the road to being a great business manager.
Walden University is an accredited institution offering an online BS in Business Administration degree. Expand your career options and earn your degree in a convenient, flexible format that fits your busy life.
Walden University is accredited by The Higher Learning Commission, www.hlcommission.org.