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50 Business Terms You Should Know as a Boutique Owner

June 24, 2021 08:09

50 Business Terms You Should Know as a Boutique Owner

50 business terms you should know

 

You don’t need a fancy business degree or a bunch of investors backing you to be a successful business owner. As long as you have a great idea and the willingness to do whatever it takes to help your business succeed, you really can earn a great living by starting your own boutique. 

 

But if you’re totally new to this, you might find yourself wondering if the people you’re trying to work with are speaking a totally different language. MOQs? MSRPs? Gross profits vs net profits? Sometimes, all that business lingo can be really intimidating.

 

Sure, if you got a business degree at a fancy school, you’d probably already know all those unfamiliar words… but if you’re jumping into the business world headfirst, a quick crash course is plenty!

 

We’ve compiled a list of 50 commonly used business and finance terms any boutique owner should be familiar with, along with simple definitions anyone can understand. Learn these terms, and you’ll be able to better communicate with suppliers, customers, colleagues, and anyone else you happen to do business with. (It’ll help you sound like you totally know what you’re talking about!)

 

50+ Business Terms You Should Know as a Boutique Owner

women working on accounting for business

Accounting Terms

 

  1. Gross Profit

No, it doesn’t mean disgusting. In the business world, gross profit is the financial gain after subtracting sales costs. It’s calculated as total sales minus the costs directly related to those sales (including raw materials, manufacturing expenses, labor costs, marketing, and transportation of goods.) For example, if you pay a supplier $5 for a bracelet, sell that item to a customer for $20, and ship that item for $4, your profit would be $20-$5-$4, or $11.

 

  1. Net Profit

Net profit margins are another measurement of profitability. It measures profit after all expenses, including sales costs as well as taxes, interest paid on debt, and operating costs. It’s expressed as a percentage, showing how much of each dollar collected translates to profit.

 

  1. Revenue

Revenue is the money a company earns from the sale of its products and services. It’s the income a company generates before any expenses are taken out.

 

  1. COGS

COGS stands for Cost of Goods Sold. These are the expenses that directly relate to the creation or purchase of a product or service. For example, the money you spend to purchase a wholesale product would fall under COGS, but the money you spend on rent for your boutique’s physical location would not.

 

  1. Accounts Payable

Accounts payable represent money owed by your company to its creditors. This might include merchandise you’ve purchased from a supplier on credit.

 

  1. Accounts Receivable

Accounts receivable represent money owed to a company by its debtors. This might include unpaid invoices you’ve issued for services or products provided.

 

  1. Balance Sheet

This is a financial statement illustrating the financial health of your business. It’s a summary of your business’s assets and liabilities, giving a snapshot of your company’s net worth at a specific point in time.

 

  1. Liabilities

A liability is something your company owes, usually a sum of money. Liabilities might include loans, accounts payable, or mortgages.

 

  1. Assets

An asset is a valuable resource that your business owns with the expectation that it will provide a future benefit. It might be something that can generate cash flow, reduce expenses, or improve sales in the future. Assets might include cash, inventory, and accounts receivables.

 

  1. Profit and Loss Statement

Also known as an income statement, a profit and loss statement is a financial statement that summarizes revenues, costs, and expenses incurred during a specific period.

 

  1. Bottom Line

The bottom line refers to a company’s earnings, profit, or net income. It gets its name from the location of the net income number on a company’s income statement.

 

  1. Cash Flow

Cash flow is the total amount of money being transferred into and out of a business. Cash flow statements record the company’s cash transactions into the business and out of the business during a specified period. 

 

  1. ROI

ROI stands for Return On Investment. It refers to all of the benefits received from the investment – usually monetary benefits, but others as well.

 

  1. Capital

Capital is a term that can be used to describe anything that confers value or benefit to the company that owns it. It might include inventory, intellectual property, financial assets, and money. It often refers to the money a business has available to pay for its everyday operations and fund future growth.

 

  1. Fixed Costs

Fixed costs are one of two main types of a business’s total costs. Fixed costs are costs that do not change with an increase or decrease in the number of products sold. They are expenses that have to be paid by a company regardless of specific business activities. They are usually established by contract agreements or schedules. Rent is a good example of a fixed cost.

 

  1. Variable Costs

Variable costs are the other type of business costs. A variable cost is an expense that changes in proportion to how much a company sells. Shipping is a good example of a fixed cost since it changes in proportion to sales.
 

  1. YTD

YTD stands for Year To Date. It’s usually used when measuring sales units or profits. You may also hear WTD (week to date) or MTD (month to date).

 

  1. Payroll

Payroll is the total of all compensation a business must pay to its employees, whether for a set period of time or on a given date. It also refers to the process of paying a company’s employees, including time-tracking, pay calculation, and payment distribution.

 

  1. KPI

KPI stands for Key Performance Indicator. It’s a measurable value indicating progress toward an intended result. KPIs are often tied to revenue and profit margins, but may also include measures of repeat customers, conversions, and other values depending on a company’s goals.


 

women in red shirt working on laptop

Boutique Sales Terms

 

  1. Inventory

Inventory or stock means goods available for sale. It classifies the goods a company has purchased to sell to its customers that remain unsold. It also includes items used to manufacture products for sale.
 

  1. Supply Chain

The supply chain is the network between your company and your company’s suppliers to manufacture and distribute a product to its final buyer. It might involve factories, manufacturers, wholesalers, and retailers. Supply chains can help reduce costs and produce products faster.

 

  1. Wholesale

Wholesale is the selling of goods in larger quantities to be retailed by others. Retailers who buy wholesale buy goods from manufacturers or wholesale suppliers, store them, and resell them to the end-user for a profit.

 

  1. MOQ

MOQ stands for Minimum Order Quantity. It’s the minimum number of items you can purchase from a wholesaler for the bulk wholesale price. Most wholesalers have set MOQs, but others like Supplied do not.
 

  1. Drop-Shipping

Drop-shipping is a distribution method where customers place their orders with a retailer, but the order is fulfilled and shipped directly from the supplier. Retailers who drop-ship promote, market, and price their products, but they don’t have actual inventory on hand.

 

  1. MLM

MLM stands for multi-level marketing. MLM companies recruit individual distributors to purchase their products and sell them at a markup to customers. MLM participants earn commission from sales they drive as well as sales driven by distributors who sign up beneath them.

 

  1. MSRP

MSRP stands for Manufacturer’s Suggested Retail Price. It’s a price wholesale vendors recommend retailing an item for. However, it’s merely a suggestion – as a retailer, you can choose to sell an item for higher or lower than the MSRP.

 

  1. Retail Price

A retail price is the cost of an item at a retail store. It’s the price that final consumers pay at retail outlets, typically marked up from the wholesale price paid by the retailer. It’s sometimes called the selling price.

 

  1. Factory-Direct

Factory-direct refers to wholesale items that are sold and shipped directly from the factory they were manufactured in. Factory-direct items are typically priced much lower than other wholesale goods since they eliminate middleman markups.

 

  1. Keystone Pricing

Keystone pricing is an easy pricing strategy used to determine a good retail price. The keystone pricing method simply marks up all merchandise by double the wholesale price. For example, if you purchased a headband at a wholesale price of $6, you’d mark it up to $12 in your shop with this strategy.

 

  1. Margins

Margins represent the profit you’ll make from each sale. It’s usually expressed as a percentage. To calculate your profit margin, you’ll take the retail price minus the wholesale price, divided by your retail price. For example, if you sell a necklace for $30 and the wholesale price you paid was $12, your profit margin would be (30-12)/30, or 60%. You can calculate margins for individual products or for overall sales.

 

  1. Lead Time

Sometimes called turnaround time, lead time is the number of days between when an order is placed and when an order is shipped. It typically does not include shipping time. Be sure to note your supplier’s quoted lead time when placing an inventory order.

 

  1. POS

POS stands for Point Of Sale. Simply put, the point of sale is the place where a customer makes a payment for products or services at your store. If you sell a product in-person, the point of sale is the cash register. If you sell a product online, the point of sale is the checkout window. Learn more about POS systems for retail here.
 

  1. eCommerce

Also known as online shopping, eCommerce or e-commerce is the buying and selling of goods and services over the internet.

 

  1. Brick-and-Mortar

Brick-and-mortar refers to a traditional retail business that sells goods to customers face-to-face in a store the business owns or rents. Many brick-and-mortar boutiques also have connected eCommerce businesses.

 

women planning marketing with whiteboard in background

Marketing Terms

  1. Marketing

Marketing is the action of promoting and selling your products. It refers to the activities associated with buying, advertising, distributing, promoting, and selling your business’s products or services.

  1. B2B

B2B stands for Business to (2) Business. It’s a transaction or business between one business and another. For example, purchasing products from a wholesale supplier for your retail business is a B2B transaction.

 

  1. B2C

B2C stands for Business to (2) Consumer. It’s a transaction or business between a business and a customer. Most retail businesses are B2C businesses. Every time you sell a product to a customer, that’s a B2C transaction.

 

  1. USP

USP stands for Unique Selling Proposition. It’s what pinpoints exactly what makes your business or product so unique in such a competitive landscape. Identifying your company’s USP will aid you in targeting your sales efforts.

 

  1. A/B Testing

Also called split testing, A/B testing is comparing two versions of something to figure out which performs better. It’s commonly used on web pages, apps, and emails. 

 

  1. Conversion Rate

Your conversion rate is the percentage of visitors to your website that complete a desired goal, or conversion. Depending on your website, that might be signing up for your mailing list or checking out in your online store.

 

  1. SEO

SEO stands for Search Engine Optimization. It’s the practice of increasing your website traffic and brand exposure through organic search engine results.

 

  1. CRM

CRM stands for Customer Relationship Management. It’s a process by which a business interacts with existing and prospective customers during the sales process. CRM software can assist in using data to build and improve customer relationships.

 

  1. Brand

The dictionary defines brand as, “A type of product manufactured by a particular company under a particular name.” But in practice, a brand is much more complex than that. It encompasses a person’s perception of a product or business as well as their overall gut feeling about it. Anything that affects a person’s perception of your business is part of its overall brand.

 

  1. Affiliate Marketing

Affiliate marketing is a marketing strategy where an online retailer pays commission to an external website or individual for sales generated by its referrals.

 

  1. Cart Abandonment

Have you ever added a product to your cart on an eCommerce website, then changed your mind before checking out? That’s known as cart abandonment – when a potential customer starts a check-out process but then drops out of it before completing the purchase.

 

  1. Customer Avatar

Also known as a customer persona, your customer avatar helps you understand who your ideal customer is so you can more easily find them. It’s essentially a detailed profile of your ideal customer, including demographics, pain points, and values.

 

  1. Niche

A niche is a focused area of a larger market that businesses serve to differentiate themselves from the competition. For example, let’s say you own a clothing boutique. The market of women looking for clothing is enormous… but you could niche down to focus on maternity clothing for budget-conscious pregnant women, business-casual clothing for tall thirty-somethings, etc.

 

  1. Target market

A target market is a small group of customers at which a product is aimed. Your niche is the product or service you specialize in offering to your target market.

 

  1. Inbound Marketing

Inbound marketing is a marketing strategy that attracts customers by creating valuable content tailored to them. It helps potential customers find your business, often before the customer is even ready to buy. It draws customers in. 

 

  1. Outbound Marketing

Outbound marketing is a marketing strategy that involves reaching out to people to see if they’re interested in a product. It might include cold calling, door-to-door sales, TV commercials, or print ads.

 

 

 

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