Business Basics: Terms for New Entrepreneurs in Denton, MD
Launching a new business is an exciting time, but it's also a time when there's a lot to learn. One of the first things you'll need to do is wrap your head around some basic business terminology. But don't worry, we're here to help with that. In this blog post, we've outlined common business terms that every new business owner should know.
Marketing channels are the different ways that companies can reach their target markets. Some common marketing channels include online advertising, social media, email marketing, and search engine optimization (SEO).
Data analytics is the process of analyzing data in order to gain insights and drive business decisions. Data analytics can be used for things like understanding which marketing channels are most effective, determining which products are selling well, and spotting trends in customer behavior.
Benchmarking is the process of comparing your company's performance against other companies in your industry. Benchmarking can be used to measure things like financial performance, customer satisfaction, employee engagement, and operational efficiency.
Key Performance Indicators (KPIs)
KPIs are metrics that are used to measure progress toward important business goals. KPIs can be financial or non-financial in nature. Common financial KPIs include revenue growth, profitability, and return on investment (ROI). Common non-financial KPIs include customer satisfaction levels, employee engagement levels, and social media engagement levels.
Profit and Loss Statements (P&L)
A P&L statement is a financial document that summarizes a company's revenue, expenses, and profits over a given period of time (usually one month or one year). P&L statements can be used to track progress toward financial goals and spot problems early on.
Accounts Payable vs. Accounts Receivable
Accounts payable refers to the money that a company owes to its suppliers. Accounts receivable refers to the money that a company is owed by its customers. Monitoring A/P and A/R is important because it can help prevent cash flow problems down the road.
A balance sheet is a financial document that summarizes a company's assets, liabilities, and equity at a given point in time. Balance sheets can be used to assess a company's financial health and make informed decisions about things like investing in new equipment or expanding into new markets.
Cash flow is the money that is flowing into and out of a company over a given period of time (usually one month or one year). Positive cash flow means that more money is coming in than going out; negative cash flow means the opposite. Monitoring cash flow is important because it can help prevent financial problems down the road.
Fixed costs are costs that do not change based on production levels. For example, if you own a manufacturing company, your rent would be considered a fixed cost because it doesn't go up or down based on how many products you produce.
An LLC, or limited liability company, is a type of legal entity. LLCs offer many of the same protections as corporations, but with fewer formalities, making them attractive to small businesses. Currently, you can start an LLC in Maryland for free (plus state fees) if you file through Zenbusiness.
SEO stands for "search engine optimization." It refers to the process of optimizing your website for Google search with the goal of achieving higher rankings and increased traffic.
One Term at a Time
There's a lot to learn when it comes to starting your own business, but don't let all this terminology overwhelm you. Just take it one step at a time, and soon you'll be up to speed on all things business-related.
And don’t forget to join your local Chamber of Commerce! The Caroline County Chamber of Commerce is the perfect place to help solidify your footing in the business world.