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12.4: Key Terms

  • Page ID
    50696
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    absolute capacity
    highest volume of units that a machine can produce within a specified time period
    baselining
    internal comparison of actual outcomes with expected outcomes
    benchmarking
    comparing one’s own company’s performance with an industry average, a leader within the industry, or a market segment
    business accelerator
    organization formed by an alliance of business professionals who assist entrepreneurs in their startup or early stage businesses in exchange for an equity investment in the entrepreneur’s company
    business incubator
    organization formed by a consortium of established professionals or organizations assisting startup or early stage businesses that provides office space, financial support, technical support, or advisors whose specialized skills in management and marketing complement the technical talents of the entrepreneur
    capital expense
    major purchase of a functional asset that is expected to last longer than three years or that still has financial value after being fully depreciated
    capital improvements
    major repairs or improvements that add to the life of an asset by improving its longevity, increasing its value or productivity, or extending its usefulness
    cash flow
    money collected by the business through revenue and funding versus money disbursed by the business through expenses
    closed group
    formal, structured group of individuals who have a strict process or specific criteria that applicants must meet before being accepted as members
    creditworthiness
    lender’s assessment of how reliable a company is in repaying a debt
    debt service
    repayment of a loan, including principal and interest
    down time
    time when production is not occurring due to repair, restocking inventory, or unscheduled work
    ergonomics
    study of how work is performed
    flat organization
    organizational structure where owners, executives, or key decision makers interact directly with staff at all levels, with very few if any mid-level managers
    hybrid group
    group of individuals who have a loose and flexible set of criteria for membership and function within a very broad set of guidelines; certain criteria may be required of regular members, but guests are frequently accepted with no long-term commitment expected
    inventory management
    business operations that include managing the quantity of inventory units in stock, scheduling and cataloguing replacement inventory, organizing shelf location for unit storage, paying for inventory received, and processing, fulfilling, packaging, and shipping customer orders
    line of credit (LOC)
    agreement between a bank and a depositor in which the bank makes available a maximum amount of money the depositor can borrow at any time during the term of the loan; the borrower pays a fee during the term, whether or not there is an outstanding balance, and also pays interest when there is a balance on the loan
    liquidity
    measure of a company’s ability to cover its immediate and short-term (i.e., due within one year) debts and obligations
    nepotism
    hiring family and close friends because of personal relationships rather than for their skill sets
    networking
    process of establishing and maintaining bilateral relationship with other people to exchange information, ideas, products or services, and money
    North American Industry Classification System (NAICS)
    standard used by US federal agencies to collect, analyze, and report statistical information about businesses
    open group
    informal, loosely organized group of individuals who have no formal process for joining or leaving the group, and who focus on a specific activity or social cause
    operational capacity
    number of units that can reasonably be expected to be produced within a specified time period
    operational expenses
    expenses associated with daily, ongoing activities of the business, such as inventory, office supplies, wages, insurance, and utilities
    operational reserve
    difference in unit capacity between absolute capacity and operational capacity
    outsourcing
    hiring an outside company or third party to perform a specific task, job, or process, or to manufacture goods
    pro forma
    financial statement that shows how much and where monies will be collected and spent in the early stages of business creation
    production time
    amount of time that a machine is actually producing products that are to be sold; also called up time
    self-performing
    when employees do most of the work in a business
    total cost of ownership
    comprehensive cost of owning large capital items, including initial direct costs, operating direct costs, and indirect costs
    trade association
    group of companies or employees of companies in a specific industry, business structure, or social cause

    12.4: Key Terms is shared under a CC BY license and was authored, remixed, and/or curated by LibreTexts.

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