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Recognize the Essential Terms You Must Know When Starting a Business!

Admin BFI
1 December 2023
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Recognize the Essential Terms You Must Know When Starting a Business!

When entering the business world, you will quickly realize that the business language has a set of distinctive terms and phrases. Understanding these terms is a crucial step in planning, managing, and comprehending your business.

 

Also Read: Apply for a Loan Through BFI Finance Now!

 

1. Business Terms You Must Know

1.1 Above the Line (ATL), Through the Line (TTL), and Below the Line (BTL)

1. Above the Line (ATL) is a marketing term referring to advertising strategies targeting a broader audience. It includes traditional media like TV, radio, newspapers, and outdoor advertising. ATL aims to create brand awareness widely and reach a larger audience.

Conventional Media: ATL encompasses conventional media such as TV, radio, newspapers, magazines, and outdoor advertising, reaching a large-scale audience.

  1. Brand Awareness Objective: One of ATL's main objectives is to create widespread brand awareness. TV and radio ads are often used to reach a broad audience.
  2. High Cost: ATL advertising is often expensive, especially when buying ad slots on popular TV networks or radio stations.
  3. Less Targeted: ATL media tends to be less focused on specific audience segments. TV ads, for example, can be seen by diverse individuals with various interests and demographics.

 

2. Through the Line (TTL): An approach that combines elements of both ATL and BTL to achieve marketing goals.

  1. Media Integration: TTL aims to integrate various media and marketing channels effectively. This includes ATL advertising for creating awareness and BTL marketing for direct consumer interaction.
  2. Awareness and Interaction: TTL allows brands to create awareness through ATL advertising and then interact directly with customers through BTL campaigns. It combines a broad approach with a more focused one.
  3. Integrated Marketing: TTL emphasizes the importance of integrated marketing, combining various communication channels. This may include the use of social media, content marketing, promotions, and more.

 

3. Below the Line (BTL): A targeted marketing strategy aimed directly at a specific audience.

  1. Audience Segmentation: BTL leverages audience segmentation to reach people with specific interests, demographics, and behaviors, allowing for more focused campaigns.
  2. Consumer Experience: BTL often focuses on creating direct experiences for consumers, such as event promotions, product demonstrations, and direct marketing.
  3. Action Objectives: One of BTL's goals is to drive direct actions from consumers, such as product purchases, contest participation, or signing up for loyalty programs.
  4. Flexible Costs: BTL often has more flexible costs compared to ATL, as it focuses more on specific activities and consumer engagement.

 

Also Read: The Best Way to Start an Online Business in 7 Steps!

 

1.2 Acquisition

Refers to a company's action of purchasing or acquiring another company. The goals of such acquisitions can vary, including acquiring technology, customer bases, or the assets of the target company. Acquisition is one way companies expand their businesses.

 

1.3 Added Value

Refers to the increase in value provided to a product or service through improvements, enhancements, or additional features. It can be a crucial strategy to win customers and compete in the market.

 

1.4 Affiliate Marketing

A marketing strategy where companies pay commissions to affiliate partners for each conversion or sale generated through their affiliate marketing efforts. It's an effective way to market products or services through a broad network of marketers.

 

1.5 Annual Report

A yearly report prepared by a company to provide information about its performance over the year. The report includes financials, achievements, future plans, and various other business aspects. Annual reports are typically addressed to shareholders and the public.

 

1.6 Arbitration

An alternative dispute resolution process where parties involved in a dispute submit their dispute to an independent arbitrator. The arbitrator decides on the dispute, and their decision is usually binding. Arbitration is often used to settle business disputes without involving the courts.

 

1.7 B2B and B2C

  1. B2B: Stands for "Business to Business"and refers to business transactions that occur between two businesses or companies.
  2. B2C: Stands for "Business to Consumer" and refers to business transactions that occur between a company and end consumers. Understanding these differences is crucial in designing your marketing and sales strategies.

 

1.8 Branding

The process of building a strong brand image and brand identity. It includes the brand name, logo, vision, and brand values displayed by the company. Strong branding can be a valuable asset that sets a company apart from its competitors.

 

1.9 Business Partnership

Refers to a business collaboration between two companies or individuals who share resources, responsibilities, and profits. Business partnerships can help companies expand their reach, share risks, and achieve common goals.

 

1.10 Dividends

Payments made by a company to shareholders as a distribution of profits. Dividends are usually paid periodically, and the amount depends on the company's performance.

 

Also Read: Pastries Business Tips and Estimated Profits

 

1.11 Deficit and Surplus

  1. Deficit: Refers to a situation where expenditures exceed income.
  2. Surplus: Refers to a situation where income exceeds expenditures. Understanding deficits and surpluses is crucial in business financial planning.

 

1.12 Profit

The earnings generated by a company after deducting all costs and expenses from revenue. Profit is a key indicator of a company's financial health.

 

1.13 Balance Sheet

A financial statement that presents a company's assets, liabilities, and equity at a specific point in time. The balance sheet helps shareholders and stakeholders understand the company's financial position.

 

1.14 Stakeholder

Individuals, groups, or entities with an interest in the business and can influence or be influenced by the company's operations and decisions. Stakeholders include shareholders, employees, customers, suppliers, and more.

 

1.15 Brand Awareness

The level of consumer awareness of a company's brand. High brand awareness can help increase sales and customer loyalty.

 

1.16 Gross and Net

  1. Gross: Refers to the total amount before deductions.
  2. Net: Refers to the total after deductions. For example, "gross income" is income before taxes or other expenses, while "net income" is income after all deductions are considered.

1.17 Revenue

 The total income received by a company from the sale of products or services. Revenue is a key metric in measuring business performance.

 

With an understanding of these business terms, you'll be better prepared to run your business effectively. Understanding the language of business is the key to communicating with your stakeholders, partnering effectively, and making informed decisions in managing your business. So, as you start or expand your business, be sure to delve deeper and grasp these commonly used business terms.

 

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