Glossary of Self Employment Terms
Assets
- 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
Capital
- 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
Entrepreneur
- a person who organizes, operates and assumes the risk for a business venture
Entrepreneurship
- 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
Leverage
- 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
Liabilities
- 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.
Market
- a group of people or businesses most likely to use a particular product
Marketing
- 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
Microcredit
- loans usually under $25,000 made to entrepreneurs who typically cannot access forms of commercial financing for their businesses
Microentrepreneur
- an individual who owns/operates a microenterprise
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
Revenue
- 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
click here to return to resources page 
