Connect with us

MARKETING

13 Key Financial Terms Every Business Owner Should Know

Published

on

13 Key Financial Terms Every Business Owner Should Know


In the business world, there are lots of terms, acronyms and jargon that get thrown around on a daily basis. In particular, there are lots of financial phrases that you probably hear a lot.

But no matter how big or small your business and no matter your key role within the business, it is always important to have a good understanding of these basic financial terms.

Despite this, plenty of professionals hear and even use lots of financial terms without really knowing what they mean, and this can be detrimental to financial planning and the overall success of your business.

That’s where this guide comes in.

Below, we’ve pulled together a list of 13 key financial terms that every business owner should know. Although some of these might seem obvious at first, you’d be surprised how often these key terms are misused or misunderstood.

Read on to find out more.

1. Revenue

A very common term we hear used a lot in business is revenue. Revenue refers to any money coming into the business as a result of sales of your goods or services. This is typically used to describe the amount made without taking into account expenses. This should not be confused with income.

2. Income

Although income and revenue both speak to the financial position of your business, they should not be used interchangeably. The income of your business is the total revenue minus the cost of expenses such as materials, taxes, etc.

3. Turnover

A very popular word in the business lexicon is turnover. In a nutshell, this means the total value of sales you have made, typically in a year but it can be over a different period (say quarterly). It is essentially another way of saying revenue.

See also  11 Proven PPC strategies for your ecommerce site

4. Net profit  

The net profit of a business, sometimes used in place of the term income, refers to your turnover/revenue once you have deducted expenses.

5. Expenses/expenditures

Expenses, sometimes referred to as expenditures are the costs incurred by a business. When talking about expenses, this might include rent, payroll, insurance, supplies, technology, travel, subscriptions, maintenance fees, etc., any money that you are paying out for business purposes.

6. Return on investment

Return on investment, often abbreviated to ROI, is used across a number of business functions. However, in terms of finances, ROI means the financial rewards your business gains from the things it invests in.

For example, if you invest in advertising, your return on investment is the number of sales and therefore money that you generate as a result of these advertising campaigns.

7. Balance Sheet

In the introduction, we mentioned the importance of key terms for financial planning, and when it comes to preparing your business for the coming months, you’re going to need to understand the term balance sheet.

This is a financial statement that shows your business’s assets (more on this next), expenses, profits and losses. A balance sheet is often used to check the financial standing of a business and to make predictions and plans for the year ahead.

8. Assets

You might not be convinced that assets are strictly a financial thing, but in this case, it refers to any items of value that are owned by your business. These can be both tangible and intangible things such as premises, machinery, tools, vehicles, or intellectual property, branding, customer base etc.

See also  11 Tips For Running A Successful SEO Writing Business

All of these assets are considered important when valuing your business. Plus, some of these may contribute to your expenses throughout the year.

9. Payroll

Whether you need payroll or not in your business will depend on whether you have employees or you’re a one-man band. That being said, it always helps to understand terms like this as you might need them in the future.

Payroll is a list or database of your employees that are entitled to payments and benefits from your company, and it outlines what everyone is entitled to receive each month/year.

10. Cash flow

Cash flow is a term used to refer to cash entering and leaving a business (almost as if it were flowing like water, hence the name). Cash flow can be positive or negative depending on whether you’ve got more money coming in than going out, or vice versa.

11. Accounting period

You might have heard the term accounting period, and this refers to a pre-arranged period of time during which all important accounting functions take place. This is typically 12 months, but it doesn’t have to be; it can be any given period of time.

This should not be confused with a financial year, which we will look at next.

12. Financial year

When talking about a financial year, this term is typically used for tax and accounting purposes, and unlike an accounting period, this never changes. In the UK the financial year runs from 6th April each year.

13. Fixed costs/overheads

We’ve touched on expenses above, but your fixed costs sometimes referred to as your overheads, are slightly different. This term refers to the day-to-day running costs of your business, such as rent, electricity, etc.

See also  Top 5 benefits to make cloud storage a business priority

These are called fixed costs as they don’t vary based on the number of sales made (or not made as the case may be). In contrast, expenses may change if you require more or fewer materials or other resources to meet demand.

Are you clued up on these key financial phrases?

Although 13 may be unlucky for some, understanding these 13 key financial phrases is going to mean good things for your business. Whether they are all relevant to you right now or not doesn’t matter.

The more you know about your finances, and the better you understand these terms, the better prepared you are to assess your own financial standing, make plans for the future and generally feel more confident in your own abilities.

This is the key to success, especially if you run a small business.

So go on, get reading and make sure you are familiar with all of the above!



Source link

MARKETING

3 Principles of “Post Digital” Marketing with Ryan Deiss [VIDEO]

Published

on

3 Principles of "Post Digital" Marketing with Ryan Deiss [VIDEO]


When it comes to digital marketing what do you need to OWN to make sure your business thrives in this post-digital world?

WHAT IS DIGITALMARKETER:

DigitalMarketer is the premier online community for digital marketing professionals. It’s a place where you can learn how to market like a pro, connect with industry experts, and get the strategies and tools you need to grow and scale your business to new heights.

https://www.digitalmarketer.com/



Source link

See also  Salesforce launches an hybrid CMS after investing in WordPress.com
Continue Reading

MARKETING

The Quick & Easy Guide To Freezing Rows in Excel

Published

on

The Quick & Easy Guide To Freezing Rows in Excel


Without freezing rows or columns in your Excel spreadsheet, everything moves when you scroll through the page, as shown in the gif below.

(more…)

See also  7 Stages to Accelerate Your Small Business Growth
Continue Reading

MARKETING

Good morning: Go for gold

Published

on

Good morning: Go for gold


Good morning, Marketers, and go for the gold.

When it comes to customer journeys, the gold we’re talking about is golden milestones. This was one of the many key concepts expanded on at our last MarTech conference. They’re the most important parts of the journey that marketers build around to make experience valuable and relevant.

As these journeys continue to transform – just look at how events have shifted to hybrid and virtual experiences in the last two years – it’s worth reevaluating what those milestones are. If you’re a retailer, the milestone might have been to get a customer into the store to ask about a new product or sale item. In a transition to e-commerce, the journey has changed and free delivery could be the golden ticket.

Looking at the data and feedback from customers along their journeys is the best way to measure these changing values.

Chris Wood,

Editor

Shorts (Optional)

“B2B doesn’t mean boring-to-boring. Learn how to bring a little spice to your marketing in 2022. After all, you’re selling to people – not robots.” Ali Schwanke, CEO and Founder, Simple Strat


About The Author

Chris Wood draws on over 15 years of reporting experience as a B2B editor and journalist. At DMN, he served as associate editor, offering original analysis on the evolving marketing tech landscape. He has interviewed leaders in tech and policy, from Canva CEO Melanie Perkins, to former Cisco CEO John Chambers, and Vivek Kundra, appointed by Barack Obama as the country’s first federal CIO. He is especially interested in how new technologies, including voice and blockchain, are disrupting the marketing world as we know it. In 2019, he moderated a panel on “innovation theater” at Fintech Inn, in Vilnius. In addition to his marketing-focused reporting in industry trades like Robotics Trends, Modern Brewery Age and AdNation News, Wood has also written for KIRKUS, and contributes fiction, criticism and poetry to several leading book blogs. He studied English at Fairfield University, and was born in Springfield, Massachusetts. He lives in New York.

See also  Pay-per-click (PPC) Advertising Market By Product, Formulation, End-User And Geography ...



Source link

Continue Reading

DON'T MISS ANY IMPORTANT NEWS!
Subscribe To our Newsletter
We promise not to spam you. Unsubscribe at any time.
Invalid email address

Trending