Business · Topic 1: Investigating small business
Putting a business idea into practice
What a new business sets out to achieve, how revenue, costs and profit are calculated, when a business breaks even, why cash matters more than profit in the short term, and where the money to start and grow comes from.
Lessons
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1
Business aims and objectives
Every business sets out to achieve something. Some aims are financial - survival, profit, sales, market share and financial security - and some are not, such…
7 terms -
2
Revenue, costs and profit
Revenue is the money coming in from sales; costs are the money going out. Profit is what is left when costs are taken from revenue. This lesson covers every…
7 terms -
3
Break-even analysis
A business breaks even when its revenue exactly covers its costs. Break-even analysis tells an owner how much they must sell before making a profit, how safe…
4 terms -
4
Cash and cash flow forecasting
A business can be profitable and still fail if it runs out of cash. This lesson explains why cash matters, how it differs from profit, and how to calculate and…
9 terms -
5
Sources of business finance
Starting and running a business takes money. Short-term finance - overdrafts and trade credit - covers day-to-day gaps; long-term finance - savings, venture…
8 terms
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- Business aims and objectives.pptx Built from the lesson script on 25 September 2026. View
- Business aims and objectives - Completed Notes.docx The full notes for the lesson, to revise from. Built from the lesson script on 25 September 2026. View
- Business aims and objectives - Exam Questions.docx Built from the lesson script on 25 September 2026. View
- Revenue costs and profit.pptx Built from the lesson script on 25 September 2026. View
- Revenue costs and profit - Completed Notes.docx The full notes for the lesson, to revise from. Built from the lesson script on 25 September 2026. View
- Revenue costs and profit - Exam Questions.docx Built from the lesson script on 25 September 2026. View
- Break-even analysis.pptx Built from the lesson script on 25 September 2026. View
- Break-even analysis - Completed Notes.docx The full notes for the lesson, to revise from. Built from the lesson script on 25 September 2026. View
- Break-even analysis - Exam Questions.docx Built from the lesson script on 25 September 2026. View
- Cash and cash flow forecasting.pptx Built from the lesson script on 25 September 2026. View
- Cash and cash flow forecasting - Completed Notes.docx The full notes for the lesson, to revise from. Built from the lesson script on 25 September 2026. View
- Cash and cash flow forecasting - Exam Questions.docx Built from the lesson script on 25 September 2026. View
- Sources of business finance.pptx Built from the lesson script on 25 September 2026. View
- Sources of business finance - Completed Notes.docx The full notes for the lesson, to revise from. Built from the lesson script on 25 September 2026. View
- Sources of business finance - Exam Questions.docx Built from the lesson script on 25 September 2026. View
Key terms in this chapter
All 35, gathered from every lesson.
- Aim
- A general, long-term goal a business wants to achieve.
- Objective
- A specific, measurable target that helps a business achieve its aim.
- Survival
- Continuing to trade rather than closing down.
- Market share
- The percentage of total sales in a market made by one business.
- Financial security
- Having enough money to cover costs and deal with unexpected problems.
- Social objective
- An aim to help society or the environment.
- Social enterprise
- A business whose main aim is social, using its profits to do good.
- Revenue
- The money a business receives from sales. Price × quantity sold.
- Fixed costs
- Costs that do not change with the number of products made or sold, such as rent.
- Variable costs
- Costs that change directly with the number of products made or sold, such as raw materials.
- Total costs
- Fixed costs + total variable costs.
- Profit
- Total revenue minus total costs, when revenue is greater.
- Loss
- When total costs are greater than total revenue.
- Interest
- The cost of borrowing money, paid on top of the amount borrowed.
- Break-even
- The point where total revenue equals total costs, so there is no profit and no loss.
- Break-even output
- The number of units a business must sell to cover its costs.
- Margin of safety
- The difference between actual sales and break-even output.
- Break-even diagram
- A graph showing fixed costs, total costs and total revenue, and where they cross.
- Cash
- Money a business has available to spend immediately, in the bank or in the till.
- Cash flow
- The movement of cash into and out of a business.
- Cash inflows
- Money coming into a business, such as cash sales and loans.
- Cash outflows
- Money going out of a business, such as wages, rent and stock.
- Net cash flow
- Cash inflows minus cash outflows.
- Opening balance
- The cash a business has at the start of a period - last period's closing balance.
- Closing balance
- Opening balance plus net cash flow.
- Insolvency
- When a business cannot pay its debts when they are due.
- Cash-flow forecast
- A prediction of a business's cash inflows and outflows over future months.
- Overdraft
- An agreement allowing a business to spend more than is in its bank account, up to a limit.
- Trade credit
- When a supplier allows a business to pay for goods some time after receiving them.
- Personal savings
- The owner's own money put into the business.
- Loan
- A fixed sum borrowed and repaid with interest in regular instalments.
- Share capital
- Money raised by selling shares in a business.
- Venture capital
- Investment in a new or small business with high growth potential, in return for a share of it.
- Retained profit
- Profit kept in the business to be reinvested.
- Crowdfunding
- Raising money from a large number of people, each investing a small amount, usually online.