Terminology

"I said do you speak my language?"

You need to understand the meaning, use and significance of the words below.

[the video only makes sense at 1:07]

Revenue

the money generated by a business from selling goods or services

Cost of Goods Sold

the costs a business must pay that are directly related to the production of their goods and services (eg: materials)

Gross Profit

money left over from revenue after paying costs directly associated with producing the good (COGS)

Operating Expenses

the ongoing expenses of running a business, separate to those associated with the direct production of goods and services (eg: rent)

Net Profit

money left over from revenue after a business has paid all of their costs and expenses

Return on Investment

the amount of money gained (in terms of profit) in return for the investment you made in establishing the business

Fixed Costs

costs of production that do not change as a firm's output level changes; costs that must be paid whether the firm produces or not

Variable Costs

costs of production that change as a firm's output level changes

Total Costs

costs associated with producing a good or service; the sum of total fixed costs plus total variable costs

Break Even Point

the quantity of sales you need to make so that you exactly cover all of your costs and expenses

Customer Acquisition

the process of gaining new customers, is typically referred to in terms of cost per customer - related to the cost of marketing activities compared to the number of customers gained

Business Case

explaining the reasons for going ahead with a business opportunity; making the arguments to support a decision to go ahead

Startup Costs

expenses that any business must pay before it can produce and distribute goods and services.

Bootstrapping

funding your new business with very limited resources; using your own money and any sales generated to fund the continued growth of the business

Seed Funding

initial funds (capital) received to launch a business or idea, usually given in return for equity in the business at it's earliest stages

Capital Raising

the process of seeking additional funding (capital) to further develop the business in exchange for business equity

Key Measures & Formulas

https://www.lightercapital.com/blog/how-to-chart-a-path-to-profitability/

Report abuse