Glossary of Self-Employment Terms

– all items of value owned by an individual or business and constituting the resources of the individual or business

Balance Sheet
– a standardized format of analysis and comparison designed to show how the assets, liabilities, and net worth of a company are distributed at a given point in time

Break-Even Analysis
– a calculation that determines how much of the product or service needs to be sold in a month to cover the operating expenses of the business

Business Plan
– a working document that outlines the business background, the proposed resources and strategies that will be used as well as the expected results of a business for a stated period of time

Cash-Flow Projection
– a prediction of future cash income and outflow, forecasted sources of cash, and forecasted uses of cash

– money, typically for a business start up, in the form of a loan to be repaid in installments; and/or, equity as the posession of equipment, supplies and inventory that the individual has purchased for the business

Capital Equipment
– equipment used to manufacture a product, provide a service, or sell, store, and deliver merchandise

Community Development Financial Institutions
– private financial institutions that have community development as a primary mission and who develop a range of programs and methods to meet the needs of low-income communities. CDFIs extend loans that may be considered unbankable by conventional industry standards and serve borrowers, investors, and customers not serviced by mainstream financial institutions. CDFIs are funded by the US Department of Treasury, Community Development Financial Institution Program, which is a significant source of loan capital for microenterprise programs

Credit Guarantee
– a financial instrument that encourages financial institutions, in this case microlending organizations, to lend to individuals that have good prospects for success but are unable to provide sufficient collateral or do not have a suitable record of financial transactions to prove their creditworthiness. The guarantee functions as a promise by the guarantor to the lender that, in the event of borrower default, the guarantor will repay the lender for the amount of principal risked

– a person who organizes, operates and assumes the risk for a business venture

– a process through which individuals and groups pursue opportunity, leverage resources, and initiate change to create value.

Feasibility Study
– a written evaluation of the possibilities and challenges of a proposed business idea. Included is an understanding of the financial realities and the technical capacity of the owner to perform the duties of the business. A feasibility study precedes the preparation of a complete business plan and should be done before declaration of a vocational goal and the writing of an IPE

Financial Analysis
– the evaluation of accounting (financial) data and interpretation of the results to determine the company’s financial condition and performance

– the use of capital to increase the return possible; for example, an institution may place $50,000 in capital on deposit to borrow $100,000, thereby leveraging their capital 2:1

– the claims of creditors against the assets of a business; what is owed

Loan Loss Reserves (LLR)
– funds set aside in the form of cash reserves or through accounting-based accrual reserves that serve as a cushion to protect an organization against potential future losses from loan default. Establishing a LLR does not take the place of a loan policy, risk rating system or other important credit management techniques.

– a group of people or businesses most likely to use a particular product

– moving goods and services from the provider to the consumer. This involves advertising, publicity, packaging, promotion, pricing, sale and distribution of the goods and services

Marketing Analysis
– research aimed at predicting or anticipating the demand and profitability of a product or service, based on technical data about the product and the potential market; a study to define a company’s market; a forecast of market direction with a view toward sharing or exploiting new trends

– loans usually under $25,000 made to entrepreneurs who typically cannot access forms of commercial financing for their businesses

– an individual who owns/operates a microenterprise

– a subset of small businesses with fewer than five employees and start-up costs less than $25,000

Microenterprise Development
– a grass roots field of publicly and privately funded organizations that target traditionally underserved segments of the population who are most likely to rely on public assistance

Microenterprise Development Organizations (MDOs)
– non profit organizations that provide business development services to people who are currently operating, or are interested in starting, a microenterprise.

Niche (Target) Marketing
– further defining a business’ market into smaller groups that have similiar interests, income, buying tendencies or other common characteristics. These sub-markets can then be marketed to specifically in a way that is more appealing to their tendencies and preferences

Projected Income Statement
– a budgeting tool estimating income and anticipated expense of a business

Profit and Loss Statement
– a summary of all income less expenses to determine the profit or loss of a business

– an inflow of cash and accounts receivable to a business resulting from the sales of goods and services

Self Employment
– a business operated alone by the owner

Small Business
– a business with less than 500 employees and start up costs greater than $35,000

Supported Self Employment
– a business in which the individual with a disability is supported by other individuals to perform the necessary functions of the business

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