18 Key Financial Vocabulary Words for Small Businesses
It's important to know financial lingo when you're starting your own business.
Without further ado, here are some important financial terms for you to brush up on:
1. Assets: Items of value owed by the business
2. Contingency Fund: Cash that is set aside for unexpected needs of the business
3. Continuing Costs: The ongoing expenses resulting from the operation of the business
4. Expenses: The cost of doing business; all business expenses except the cost of goods sold
5. Equity sources: Capital sources that trade cash for some portion of ownership in the business; sometimes called risk capital because the investor puts his/her money at risk
6. Fixed Costs: Expenses that remain the same for a period of time; must be paid regardless of the quantity of a good or service produced/sold
7. Government agencies: Operated by the government to provide technical assistance, counseling, grants, or other means of financial assistance at low-interest rates
8. Liabilities: Debts owed by the business
9. Lines of Credit: Agreements made by a bank to lend money at a stated interest rate whenever the owner needs it. A fee is charged for the privilege whether the money is used or not, and interest is charged on any money that is used.
10. Long-term Loan: Borrowed money that is repayable over a period longer than a year.
11. Net Worth: The monetary value of the business; assets minus liabilities.
12. Private Investors (Angels): Wealthy individuals functioning as non-professional investors who are willing to invest in local businesses for financial or emotional reasons and who sometimes prefer to remain anonymous
13. Repayment plan: A plan indicating how and when debts of the business will be paid.
14. Secured Loan: A loan that is backed by collateral.
15. Short term Loan: Borrowed money that must be repaid within one year.
16. Start up Costs: One-time expenses an entrepreneur incurs when starting a business.
17. Variable Costs: Expenses that may change from month to month depending on the needs of the business; costs that increase and decrease with the quantity of the good or service produced/sold.
18. Venture Capitalists: Individuals or firms that invest money professionally to make money, expect a large capital gain, and look for high growth potential.
Stayed tuned for even more small biz vocab on the horizon! Which one of these definitions was new to you?