Starting your own business is a very exciting time. But if you don’t understand the basic lingo of running your own business, you can quickly fall behind. It is important to learn as much as you can about the common terms and phrases used in business. You can always learn as you go, but starting off with a solid foundation is crucial. Here are seven terms every business owner should know to help you get started.
When it comes to accounting terms for business, there are too many to count. However, net profit is one all business owners should know well. Your net profit is essentially the amount of money your business has after paying your bills. You bring in money through sales, but you must pay your employees, fund marketing costs, pay rent and utilities, and factor in additional expenses.
Some business owners refer to net profit as “the bottom line.” After all is said and done, how much money have you actually made? Business owners need a working knowledge of this term to accurately judge the success and financial health of their business. It has been reported that 30% of new businesses fail within their first two years. Understanding your net profit can help you be in the 70% that succeed.
Profit and Loss
You may have heard the phrase, “You have to spend money to make money.” While that is usually true in business, you cannot spend more than you make. Profit is the money your business brings in and loss is the money your business spends or loses.
Business owners need to be familiar with profit and loss statements so they can represent their business’ financial status. If you ever need a loan for your business or seek to gain investors, they will want to see your profit and loss statements.
Assets include the financial holdings for your business. Short-term assets are the current cash in your bank as well as any inventory you have on hand. Long-term assets, or fixed assets, involve investments such as machinery, land, buildings, or equipment.
Understanding your assets is crucial to knowing the cash value of your business. You can determine how much cash, stock holdings, and inventory you have available to convert into cash.
The term “online presence” is often thrown around when it comes to marketing. If your business has a functional website, you may think you have fulfilled the requirements for an online presence. However, in today’s technology-focused world, your online presence expands much further than your website.
Any and all content about your brand online is part of your online presence. This includes your website, all social media channels, any mobile apps, reviews about your business, and links or references to your business from other sites. Having a solid grasp on your business’ online presence can help you market your brand and ensure you have consistent messaging across all platforms.
Once you have an established online presence, you must seek to drive traffic to your website. More visitors to your site can increase your conversion rate, turning viewers into customers. In order to drive traffic, you can focus on a variety of marketing efforts.
Inbound marketing refers to the efforts to drive traffic inbound to your site. Are you posting blogs, running campaigns, posting on social media, or utilizing reviews? These are just some examples of common inbound marketing strategies.
Search Engine Optimization (SEO)
SEO is a term that is used often but rarely understood. In essence, search engine optimization means that your website can be found in search engines. When someone searches your business, product, or industry in Google, Bing, or another search engine, does your website show up in the results?
There are a variety of ways business owners can incorporate SEO into their marketing efforts. From keyword research and onsite SEO to backlinks and engagement, a lot of pieces come together for SEO. Research these different topics and surround yourself with knowledgeable professionals to optimize your search engine rankings.
B2B and B2C
Who do you sell your products or services to? Are your customers individual clients or are they other businesses? Do you provide products for both?
B2B refers to business-to-business sales. You provide your products to other businesses. B2C businesses, or business-to-customer, sale directly to an end user of the product. It is important for business owners to have a clear understanding of their customers in order to be successful.
There are countless other terms that business owners will learn along the way, but understanding these concepts is a great place to start. Remember to keep your mind and ears open, so you can pick up on new terms and phrases as you run your business. There are a variety of resources, including online and in-person courses, to provide the knowledge you need to successfully run your business.