The Language of Small Business Texts and Vocabulary Training (for students of Economics) Part 2. Учебное пособие

Definitions of Terms

Trader – a person whose occupation is to buy and sell goods with his own money and for his own profit; a merchant.

Sole trader – a trader who owns his own business, manages its affairs, provides the capital, and bears all the risk.

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The Language of Small Business

Partnership – an unincorporated (unregistered) association of two or more persons carrying on business together for the purpose of making a profit. In England and Wales, a partnership is not a separate legal person (but in Scotland it is). Contracts made with the partnership are made with the partners themselves. The partners share in the profits in agreed proportions, they do not draw salaries, nor get interest on their capital.

Syn. a firm; a co-partnership.

Limited company (Limited liability company) – a joint-stock company, the financial liability of whose members is limited by law. If the company is limited by shares, the liability of each member is limited to the amount unpaid on his shares, and he may have to lose the cost of his shares, but no more, if the company goes into liquidation because of its debts. If the company is limited by guarantee, the liability of each member is limited to the amount he has personally guaranteed (promised) to pay if necessary in the event of liquidation.

Private limited company – a limited company which must not invite the public to subscribe for its shares or debentures, and does not allow its members to transfer their shares without the agreement of the other shareholders. It must have at least two but usually not more than fifty members.

Public limited company – a limited company which enjoys a monopoly for supplying essential services to the public, such as gas, electricity, water, transport and many others. It is under government control in fixing prices and in obtaining money for expansion and development, and is often partly or wholly owned by the government.

Unlimited company – a company of which the liability of the members is unlimited, i.e. each member has to pay his full share of the debts of the company if it is brought to an end.

Cooperative – a business organization owned and run by a society of persons whose aim is not to make a profit but to give benefits to the members, Syn. cooperative society

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Your Business Identity

Liability sing. LAW@FIN (1) the state of being bound by law to settle a debt or to make good possible loss or damage. (2) the debt itself, or the amount of the loss or damage. Opp. Exemption immunity. (3) ACCTS. An amount owing by a business or other organization to other persons or concerns; debts of all kinds.

Liabilities, pl. ACCTS. the debts owned by a business to its creditors and to its owner(s).

Assets, pl. ACCTS@COM. – all things owned by a person or business and having some money value, especially if they can be used to pay debts, produce goods, or in some way help the business to make a profit. Assets are of many kinds:

Active assets – assets that earn interest. Syn. productive assets.

Available assets Syn. liquid assets – possessions which consist of cash in hand, or cash with bankers, and anything which can be quickly turned into cash, e.g. bills receivable and marketable securities.

Capital assets Syn. fixed assets – possessions of a longlasting and unchanging nature such as land, buildings, machinery, trade investments, etc. used for making and selling the products of the business and not intended for sale or to be turned into cash as long as they are useful to the business. Syn.: capital assets; permanent assets. Opp.: current assets.

Current assets. Syn. circulating assets, floating assets – assets which may be consumed (used up) or turned into cash fairly soon in the ordinary course of business, e.g. stock-in-trade, raw materials, stores, etc. Opp. fixed assets.

Deferred assets – the unused part of expenses which have been paid wholly or partly in advance.

Frozen assets – assets which cannot immediately be turned into cash, either because they have been put under some sort of limiting control, e.g. a court order, or because their sale would bring a severe loss.

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The Language of Small Business

Illiquid assets – those that cannot be sold for cash at short notice.

Intangible assets – assets which are valuable in helping the business, but since they have no material form, are not easily turned into cash, e.g. goodwill, patents, copyrights, trademarks.

Operating assets – those being used in the active operations of the business.

Quick assets – assets which are held in cash or can immediately by turned into cash without serious loss. Syn.: realizable assets.

Real assets – property other than money, such as buildings, machinery.

Slow assets – assets that cannot be quickly sold for cash. Tangible assets – assets which have material form and there-

fore can be turned into cash fairly quickly, e.g. securities, cash, cheques, etc.

Lease LAW – an agreement in writing by which one person gives the right to use property, usually for a fixed number of years, in return for either a single sum of money called a premium or a series of regular payments called rent. The person giving the lease is called the lessor, the person to whom it is given is the lessee or tenant.

Capital gain TAXN – an increase in the money value of a capital asset such as buildings, land, or shares in a company. The gain may be realized, i.e. turned into money, when the asset is sold, but unlil then it remains an unrealized gain. Cf.: capital loss.

Balance sheet ACCTS. – a statement showing the financial position of a business at certain date, usu. the end of the financial year; it contains the balances of the ledger accounts separated into liabilities. (mainly capital invested, creditors, reserves, e.g. for future taxation, and provisions, e.g. for staff pensions) and assets (mainly land and buildings, machinery, amounts receivable from debtors).

Memorandum of Association LAW @’MAN – an important and essential document in which the persons associating together

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Your Business Identity

to form a new company set down in detail the objects of the company, its name, and the country in which its registered office will be, whether the liability of its members will be limited, the amount of its authorized capital and the number and value of its shares.

Articles of Association

LAW@MAN – an important document, essential by law, recording article by article the way in which a company shall be managed and giving the rules by which its internal affairs shall be dealt with. It covers matters concerning shares, formal meetings, the powers of the directors, the election of officers, and the approval of accounts.

Declaration of Compliance

LAW – one of the documents which must be sent to the Registrar of Companies when a new limited liability company in formed. It is a statement signed by a solicitor or by a company secretary declaring that all action required by the Company Act has been taken.

Audit ACCTS. – an official examination and checking of the annual accounts of an organization by an independent qualified person, called an auditor, in order to make certain that they show accurately the true financial position and do not hide any dishonesty, and also that they are presented in proper form ordered by law.

Definitions of terms

С ограниченной ответственностью – ответственность по обязательствам компании ограничена номинальной стои- мостью имеющихся у каждого члена акций.

Пассив – часть бухгалтерского баланса, отражающая ис- точники финансирования средств предприятия; обязательства.

Активы – в широком смысле слова – всякие активы, имущество, за счет которых могут быть произведены платежи

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The Language of Small Business

ипогашение обязательств их владельцем; в узком смысле – средства банка: денежные средства, иностранная валюта, цен- ные бумаги, золото, чеки, векселя, переводы, аккредитивы, ко- торыми производятся платежи и погашения, или ликвидная часть активов, включая денежные средства, находящиеся в банке, легко реализуемые ценные бумаги, которыми их владе- лец может распоряжаться; в международных расчетах – вклады в зарубежные банки в иностранной валюте.

Легко реализуемые (или ликвидные) активы; Основные средства, основные фонды – средства произ-

водства: производственные здания, сооружения, земля, маши- ны и оборудование, переносящие свою стоимость на произво- димый товар по частям;

Оборотные средства – денежные средства компании, ис- пользуемые на финансирование текущей деятельности, счета в банках и др.; Мертвые активы – активы компании, не прино- сящие дохода;

Замороженные средства – остатки на счетах или креди- ты, временно блокированные вследствие предъявления су- дебных исков или обострения политической обстановки;

Государственные авуары за границей; Аренда – наем на срок недвижимого имущества, средств

производства за определенную плату с правом использования

иизвлечения доходов.

For Discussion

1.What are the types of business?

2.What are the reasons for choosing a particular type of business?

3.Is your liability limited or unlimited if you are a sole trader?

4.Is your liability limited or unlimited if you form a partnership?

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Your Business Identity

5.What do business debts include?

6.What is a businesslike approach while forming a partnership?

7.What are the formalities if you start a limited company?

8.Dwell on the accounts in various types of business.

9.Now high are the rates of tax in various types of business and what are the rules for paying tax?

10.Speak on capital gains in the business.

11.How can money be raised?

12.Describe the proceedings of setting up as a sole trader; as a partnership;

as a limited company.

Summary

1.Компания с ограниченной ответственностью имеет не- сколько преимуществ: ограниченная ответственность, большее доверие, более низкие налоги, более благопри- ятные условия назначения пенсии, большие возможно- сти изыскания денег и более простые способы продажи части бизнеса.

2.Единоличный бизнес и партнерство характеризуются менее затруднительными правилами относительно сче- тов и аудита, более низкими выплатами на националь- ное страхование, налоговыми льготами.

3.Если вы организуете партнерство, воспользуйтесь по- мощью адвоката при составлении письменного согла- шения о партнерстве.

4.Простейший способ организации бизнеса – начать с еди- ноличного предпринимательства.

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The Language of Small Business

UNIT 2.

The Business Plan

Life can be very chaotic when you are starting or running a small business. The telephone calls to make, the letters to write, the decisions to take – all the day-to-day emergencies can push aside the sort of long-term strategic planning which is essential to keep your enterprise on the right track. Do not let short-term problems divert you from your longer-term objectives.

Writing a business plan is merely encapsulating your longerterm objectives, estimates and forecasts on paper. Once you have put down your plan, do not necessarily accept that it is set in concrete. Forecasts and objectives change as new bits of information and your better experience emerge. The important point is to incorporate your best estimate, given your current state of information. There is nothing like writing something down to help clarify your mind and reveal your uncertainties and weaknesses.

THE OBJECTIVES OF THE PLAN

The two most important reasons for producing a written plan are:

−to show to outsiders to help raise money;

−to use within the business to keep yourself on your planned course or to alert you to things which are not going according to your strategy.

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The Business Plan

−To persuade someone to lend or invest enough money in your business enabling you to achieve your strategy, you will need to:

−show that the lender or investor stands a good chance of being paid back or getting a good return on the investment;

−instil confidence about your abilities to manage the business and, if applicable, show that you already have the beginnings of an experienced management team;

−demonstrate that there is a good market for your product or service.

To achieve these objectives you must bring out what is exciting about the prospects of your business, combined with a thoroughly prepared presentation of the back-up figures and research.

Beware of filling your plan with nothing but a turgid series of facts and figures; you must allow the reader of your plan to be able to identify instantly what is so interesting about your business. You need to do this to persuade your reader that it is worthwhile studying the detailed forecasts, which can be very timeconsuming. Lenders and investors can be presented with so many plans for consideration that unless yours grabs the reader’s attention it could be consigned to the bin before your carefully prepared figures are looked at.

HOW MANY PLANS?

As there are two reasons for having a written plan, will one plan suffice? The answer to this depends on who is advising you. A bank manager, or other person who may be providing finance, may say there should be only one plan, as they would like to know the absolute truth about what is happening in your business. But some small businesses adopt a different strategy and have two plans. One plan is for outsiders; this plan must be one which will not fail and so

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it will be fairly conservative about projected sales and costs. The reason for adopting a conservative approach with outsiders is that you must not be seen to fail as this can erode confidence in you and your judgement. This could make it difficult to keep the support of your bank manager when you need it later. Of course, if your plan is being used to raise money, your figures must achieve a balance between optimism and realism if you are to persuade banks and others that your business will be successful and so worthy of a loan or an investment. You must always remain confident that the figures are really achievable; if you are misleading the lenders and investors, you are also misleading yourself.

The second plan is for your own use and will set higher targets, although you must believe you can do that level of business. If you pitch the figures too low, you might not achieve as much as is possible. The well-known fleas-in-the-box analogy applies to your plan; if you put a lid on the box, the fleas learn to jump to that height only, but, if there is no lid, they jump as high as they are capable of doing. Your business plan should set that lid higher.

WHO SHOULD DO THE PLAN?

It is your job. You will know the product and the market better than anyone else. You have to be prepared to present the plan to banks or other sources of finance, so you need to be fully confident about all the statements and forecasts. You will have that confidence if you have provided the data.

However, as it is so important for your plan to look professional, you may consider seeking advice and help on its production. This is available from:

−enterprise agencies and training courses. Many of the counsellors will be prepared to help you put your plan together. This help is often free.

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