Top Business Terms You Need to Know as a New Entrepreneur
As a new entrepreneur, it's important that you familiarize yourself with some basic business terminology. This will help you to communicate more effectively with your colleagues and clients, and to understand the language of business. Here are some of the most important terms the Kalispell Chamber of Commerce thinks you should know.
Accounts Payable (A/P)
Accounts payable is a term used in business to describe the money that a company owes to its suppliers. This may include the cost of goods or services that have been purchased as well as any taxes or other expenses that are owed. The accounts payable amount is usually shown on the company's balance sheet.
Accounts Receivable (A/R)
Accounts receivable is a term used in business to describe the money that a company is owed by its customers. This may include the cost of goods or services that have been sold as well as any interest or other fees that are owed. The accounts receivable amount is usually shown on the company's balance sheet.
A balance sheet is a financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time. The balance sheet is used to calculate a company's net worth. The assets are listed on the left side of the balance sheet, and the liabilities and shareholders' equity are listed on the right side.
Cash flow is a term used in business to describe the movement of money in and out of a company. The cash flow statement shows the sources and uses of cash for a specific time period. The sources of cash are listed on the top of the statement, and the uses of cash are listed on the bottom.
A sales funnel is a term used in business to describe the process of converting leads into customers. The sales funnel consists of four stages: awareness, interest, desire, and action. In the awareness stage, the lead is introduced to your product or service. In the interest stage, the lead learns more about your product or service. In the desire stage, the lead wants to buy your product or service. And in the action stage, the lead actually buys your product or service.
In order to reach potential customers, businesses use marketing channels to promote their products or services. The most common marketing channels include television, radio, print advertising, online advertising, and direct mail. Each marketing channel has its own strengths and weaknesses, so it's important to choose the channels that will work best for your business.
B2B vs. B2C
When it comes to business, there are two main types of customers: business-to-business (B2B) and business-to-consumer (B2C). B2B customers are companies that buy products or services from other companies to use in their own businesses. B2C customers are individuals or families that buy products or services for their own personal use.
The main difference between B2B and B2C customers is the way that they make decisions about what to buy. B2B customers typically make decisions based on price, quality, and availability. They also consider the needs of their businesses when making decisions. B2C customers, on the other hand, typically make decisions based on factors such as price, quality, style, and brand. They also consider the needs of their families when making decisions.
Limited Liability Companies (LLCs)
A Montana limited liability company (LLC) is a type of business entity that offers limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the company. The LLC can be a good option for businesses that want the benefits of a corporation but don't want to deal with the complex paperwork and regulations. The pros of an LLC designation include:
Limited liability protection for the owners
Ease of formation and operation
Flexibility in taxation
Employer Identification Number
An employer identification number (EIN) is a number assigned by the IRS to identify a business entity. The EIN is used for tax purposes, such as filing tax returns and paying taxes. It's also used to open bank accounts and file employee taxes. Most businesses need an EIN, including corporations, LLCs, partnerships, and sole proprietorships.
Learn, Apply, Repeat!
There is a lot to learn when it comes to starting a business. However, the most important thing to remember is that learning is a process. By taking the time to educate yourself on the basics of business, you will be well on your way to achieving your goals. When you start the process, you likely won’t know an LLC from an S-Corp or what an EIN is, but now you do and can make more informed decisions. With hard work and dedication, you can turn your dream into a reality. So don't be afraid to ask questions and seek out information. With a little effort, you will soon be an expert on all things business.