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Commonly Used Business Terms Everyone Should Know

Here is a list of 50 essential business terms and their definitions:

Profit – the difference between a company’s revenue and expenses.

Loss – a negative financial result, when expenses exceed revenue.

Revenue – the total amount of income generated by the sale of goods or services.

Sales – the act of selling goods or services to customers.

Marketing – the process of promoting and selling products or services.

Branding – the practice of creating and promoting a name, symbol or design that identifies a product or company.

Market research – the process of gathering and analyzing information about consumers and markets.

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Competitive advantage – the factors or attributes that allow a company to produce goods or services better or more cheaply than its rivals.

SWOT analysis – a strategic planning tool used to evaluate a company’s strengths, weaknesses, opportunities and threats.

Business plan – a document that outlines a company’s goals, strategies and financial projections.

Entrepreneur – an individual who starts and manages a new business.

Investment – the act of putting money into a business or project with the expectation of making a profit.

Angel investor – a wealthy individual who provides capital to startups in exchange for ownership equity.

Venture capital – funds provided to startup companies and small businesses with high growth potential.

IPO (Initial Public Offering) – the first sale of stock by a company to the public.

Stock – a unit of ownership in a company.

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Bond – a debt security that pays periodic interest and returns the principal when it matures.

Cash flow – the amount of cash that a company generates or uses in a given period of time.

Balance sheet – a financial statement that shows a company’s assets, liabilities and equity at a given point in time.

Income statement – a financial statement that shows a company’s revenues, expenses and profit over a given period of time.

Tax – a government levy on income, goods or services.

Diversification – the practice of investing in a variety of financial products or industries to spread risk.

Merger – the combination of two or more companies into a single entity.

Acquisition – the purchase of one company by another.

Leverage – the use of borrowed money to increase the potential return on an investment.

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Interest – the cost of borrowing money.

Inflation – a sustained increase in the general price level of goods and services in an economy.

Gross domestic product (GDP) – the total value of goods and services produced by a country in a given period of time.

Globalization – the integration of economies, societies and cultures through the exchange of goods, ideas and information.

Supply chain – the network of organizations involved in the production and delivery of a product or service.

Logistics – the process of planning, implementing and controlling the flow of goods, services and information from the point of origin to the point of consumption.

Outsourcing – the practice of contracting with a third-party provider for goods or services that are traditionally provided in-house.

Offshoring – the practice of moving manufacturing or service jobs to another country to take advantage of lower labor costs.

Human resources – the department within a company that is responsible for managing personnel and labor relations.

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Employee benefits – non-wage compensation provided to employees, such as health insurance, retirement plans and paid time off.

Labour Union – an organization that represents the interests of workers in a particular industry.

Productivity – a measure of how efficiently a company’s resources are being used to produce goods or services.

Innovation – the development of new ideas, products or processes that create value.

Intellectual property – a legal category that includes patents, trademarks, copyrights and trade secrets.

Partnership – a business relationship in which two or more people or companies work together to achieve a common goal.

Franchise – a business model in which a company (the franchisor) licenses its brand and business model to another company (the franchisee) for a fee.

Economies of scale – the cost advantage that a business experiences as it increases in size.

Operations management – the process of planning, organizing, and controlling the resources needed to produce a company’s goods and services.

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Quality management – the practice of ensuring that a company’s products or services meet or exceed customer expectations.

Risk management – the process of identifying, assessing and prioritizing potential risks to a company’s operations, and implementing strategies to mitigate those risks.

Strategic management – the process of setting long-term goals and objectives, and then developing and implementing plans to achieve them.

Cost-benefit analysis – a method used to evaluate the potential costs and benefits of a proposed project or investment.

Strategic planning – the process of creating a plan that outlines how an organization will achieve its goals and objectives over a specific period of time.

Performance appraisal – the process of evaluating an employee’s job performance, typically on an annual or semi-annual basis.

Continuous improvement – a business approach that aims to identify and eliminate waste and inefficiencies in processes and operations.

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