Definitions of Basic Business Terms
by Ron Kurtus (updated 19 January 2022)
If you are involved in business, there are various words and terms used in business that you should understand. The following list defines major business terms.
The list is by no means comprehensive, but it gives a good background on what certain words mean in business. It is worthwhile to understand the terms used, when studying business.
Questions you may have include:
- What are the basic terms?
- What do they mean?
- How are they used?
This lesson will answer those questions.
A business is an enterprise or entity that provides products or services to customers. Business is doing commercially viable and profitable work. Commerce is buying and selling products or services.
A business: A legally recognized organization or enterprise that operates with the objective of earning a profit from the sale of goods or services
Alliance: Close association of groups or businesses
Business: The activity in which you participate in order to earn money (i.e. "I'm in the computer business.")
Client: A regular customer that receives your professional services
Commerce: The buying and selling of goods
Company: Usually considered a business that has employees.
Contract: A formal agreement to do work for pay
Consultant: A person hired to give advice to business management
Contractor: One who agrees to do perform a service or deliver a product for a fee
Customer: The person or company that purchases and pays for product or service; note that the customer may not be the user of the product; also note that some companies think in terms of internal and external customers
Delivery: When the product is delivered to the customer or the job is completed
e-Commerce: Buying and selling done over the Internet
Employee: A person working for a company
Enterprise: An industrious, systematic activity, especially when directed toward profit; A business organization
Firm: A commercial partnership of two or more people, especially when unincorporated
Internal customer: The person or department within a company that provides you or your area with money in exchange for delivery of products or services
Marketing: The commercial functions involved in transferring goods from producer to consumer
Product: Something produced; goods
Proposal: A formal document given to customer that outlines proposed work to be done by the business
ROI: Return-on-investment; how much money a business gets from a capital investment that is intended to improve profits
Service: Work done for others; changing the state of a product, which is then delivered; for example, cleaning a dirty floor results in "delivering" a clean floor to the customer
Supplier: The person or company that provides goods or services needed to do your job
User: The person or company that uses a purchased product or service; could also be called the consumer
You should be familiar with these commonly used business terms.
(If you have other suggested important business terms, let us know.)
Define what you're talking about
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Basic Business Definitions