Definitions of Basic Business Terms

There are various words and terms used in business that should be completely understood. The following list defines major terms. The list is by no means comprehensive, but it gives a good background on what certain words mean in business. It is worthwhile to understand the terms used, when studying business.

Questions you may have include:

• What are the basic terms?

• What do they mean?

• How are they used?

Basic terms
A business: An organization or organized effort that operates with the objective of earning a profit from the sale of goods or services

Alliance: Close association of groups or businesses

Business: The activity in which you do to earn money (i.e. "I'm in the computer business.")

Client: A regular customer that receives your professional services

Commerce: The buying and selling of goods

Company: Usually considered a business that has employees.

Contract: A formal agreement to do work for pay

Consultant: A person hired to give advice to business management

Contractor: One who agrees to do perform a service or deliver a product for a price

Customer: The person or company that purchases and pays for product or service; note that the customer may not be the user of the product; also note that some companies think in terms of internal and external customers

Delivery: When the product is delivered to the customer or the job is completed

e-Commerce: Buying and selling done over the Internet

Employee: A person working for a company

Enterprise: An industrious, systematic activity, especially when directed toward profit; A business organization

Firm: A commercial partnership of two or more people, especially when unincorporated

Internal customer: The person or department within a company that provides you or your area with money in exchange for delivery of products or services

Marketing: The commercial functions involved in transferring goods from producer to consumer

Product: Something produced; goods

Proposal: A formal document given to customer that outlines proposed work to be done by the business

ROI: Return-on-investment; how much money a business gets from a capital investment that is intended to improve profits

Service: Work done for others; changing the state of a product, which is then delivered; for example, cleaning a dirty floor results in "delivering" a clean floor to the customer

Supplier: The person or company that provides goods or services needed to do your job

User: The person or company that uses a purchased product or service; could also be called the consumer

Summary
You should be familiar with these commonly used business terms.

(If you have other suggested important business terms, let us know.)






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