With all of the new social media and marketing terms floating around the web it’s easy to lose track of the actual business terms that we should be using when talking about…business. It doesn’t matter if you’re talking to a business or talking to someone about business, at the end of the day you need to remember that it’s still about BUSINESS. This means that if I ask you about ROI and you respond in terms of links and traffic that I can tell you’re a bit nuts (or drunk). Having said that, I decided to put together a little list of some business terms that I think we all need to remember.
Return on Investment (ROI)
A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments.
ROI = (Gain from Investment – Cost of Investment) / Cost of Investment
Profit
A financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity.
Profit = Total Revenue – Total Expenses
Revenue
The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the “top line” or “gross income” figure from which costs are subtracted to determine net income.
Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold.
Profit Margin
A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings.
Brand
A name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller.
Brand Image
The perception of your product or your brand by the consumer.
The Eighty-Twenty Rule
A rule-of-thumb that, for the typical product category, eighty percent of the products sold will be consumed by twenty percent of the customers.
Unique Selling Proposition
The unique product benefit that the competition can not claim.
Social Media
Social media is online content created by people using highly accessible and scalable publishing technologies. At its most basic sense, social media is a shift in how people discover, read and share news, information and content.
Have any others you think are important? (I know there are tons but I tried to keep this simple).
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