Business terms every Business Owner should know

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AUTHOR

Bruce Coudrey

Common terms used in business and what they mean.

It does not matter what industry you work in, there always seems to be that inside language, the lingo which is usually spoken in acronyms. I am often asked (mainly by first time buyers or sellers) to clarify acronyms within our Business Broking industry, which in recent times has prompted me to be mindful not to use acronyms at all.

So, what are some of the most commonly used industry lingo or acronyms Business Brokers consistently use in their day to day advertising?

The acronyms:

WIWO - means the price advertised is walk in-walk out
SAV - means the price advertised, is the price plus stock at valuation
ROI - means the return on investment
EBIT - means earnings before interest and tax
PEBIT - means proprietors earnings before interest and tax
EBITDA or PEBITDA - is the same as points 4 and 5 above with depreciation and amortisation added
P and E- often used, which means plant and equipment
WIP - means work in progress
CPI - means consumer price index
POA - means price on appointment
ABN - means Australian business number
ACN - Australian company number
GST - means goods and services tax
PA - means per annum
PW - means per week
PM - means per month
ATO - means Australian tax office
DD - is referred to as due diligence

The Lingo:

Encumbered - means there maybe some plant and equipment that has a chattel mortgage or loan hold over it from a financial institute that needs to be dealt with prior to settlement.
Unencumbered - means the reverse of the above. The assets are completely owned outright without any encumbrance or hold over them.
Working Capital - the liquid funds available in the business owner's bank account to operate a business, post settlement/purchase.
Plus Legals - means the additional cost of a solicitor or accountant fee.
Plus Stamps - means there is Government Stamp Duty to consider (note: this varies from state to state)
Will Trial - the seller is willing for a buyer to come in and trail the business to access the financial performance of the business (conditions apply)

I hope these basics help you when reading marketing material.

If you are looking for more business terms, the Australian government compiled a list of common financial terms which you can find here:

https://www.business.gov.au/Finance/Accounting/Key-financial-terms

The free online encyclopedia Wikipedia (https://en.wikipedia.org/wiki/Main_Page) created a dynamic list with terms that are being used every day in the financial industry: https://en.wikipedia.org/wiki/List_of_business_terms

Another handy reference is the Glossary of business terms the independent Newspaper The Guardian (https://www.theguardian.com/au) compiled: https://www.theguardian.com/business/glossary-business-terms-a-z-jargon

Written by Ian Salter

Business Broker - Benchmark Business Sales and Valuations

Ian Salter …has been with Benchmark Business Sales & Valuations since September 2005 after leaving a corporate management position. Being a 100% performance-based broker, means that Ian is absolutely dedicated to producing the best results possible for his many clients through application of hard-earned knowledge, experience and insistence upon the upholding of professional standards.

https://www.linkedin.com/in/iansalter/