Business Consulting Glossary of Terms
30 Years of Business Management Solutions
Accountability: In leadership roles, accountability is the acknowledgment and assumption of responsibility for actions, products, decisions, and policies including the administration, governance, and implementation within the scope of the role or employment position and encompassing the obligation to report, explain and be answerable for resulting consequences.
Budget: A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. In summary, the purpose of budgeting is to: Provide a forecast of revenues and expenditures, that is, construct a model of how our business might perform financially if certain strategies, events and plans are carried out. Enable the actual financial operation of the business to be measured against the forecast. Establish the cost constraint for a project, program, or operation.
Business Analysis: The discipline of identifying business needs and determining solutions to business problems. Solutions often include a systems development component, but may also consist of process improvement, organizational change or strategic planning and policy development. The person who carries out this task is called a business analyst or BA.
Business Consulting: The practice of helping organizations to improve their performance, primarily through the analysis of existing organizational problems and development of plans for improvement. Organizations may draw upon the services of management consultants for a number of reasons, including gaining external (and presumably objective) advice and access to the consultants’ specialized expertise.
Consultancies may also provide organizational change management assistance, development of coaching skills, technology implementation, strategy development, or operational improvement services. Management consultants often bring their own proprietary methodologies or frameworks to guide the identification of problems, and to serve as the basis for recommendations for more effective or efficient ways of performing work tasks.
Business Survey: The objective analysis of a business with the intent to identify individual strengths or weaknesses. Goal of the business survey, once weaknesses have been identified, are to work with ownership to create a realistic and achievable plan to correct the weaknesses with a focus on sales, profit, cash and ease of operations.
Consulting Company: Experts (consultants) providing professional advice to an organization or an individual for a fee. The primary purpose of a consulting company is to provide access to industry-specific specialists / consultants and subject matter expertise.
Cash Flow: The movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company’s value and situation.
Debt: An obligation owed by one party (the debtor) to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor. A debt is created when a creditor agrees to lend a sum of assets to a debtor. Debt is usually granted with expected repayment; in modern society, in most cases, this includes repayment of the original sum, plus interest. In finance, debt is a means of using anticipated future purchasing power in the present before it has actually been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.
Debt Restructuring: A process that allows a private or public company – or a sovereign entity – facing cash flow problems and financial distress, to reduce and renegotiate its delinquent debts in order to improve or restore liquidity and rehabilitate so that it can continue its operations.
Gross Profit: Gross profit equals sales revenue minus cost of goods sold (COGS), thus removing only the part of expenses that can be traced directly to the production or purchase of the goods.
Inventory Control: The supervision of supply, storage and accessibility of items in order to ensure an adequate supply without excessive oversupply. It can also be referred as internal control – an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or avoid fraud and error etc.
Management Consulting: The practice of helping organizations to improve their performance, primarily through the analysis of existing organizational problems and development of plans for improvement. Organizations may draw upon the services of management consultants for a number of reasons, including gaining external (and presumably objective) advice and access to the consultants’ specialized expertise.
Consultancies may also provide organizational change management assistance, development of coaching skills, profit improvement & cash management, technology implementation, strategy development, or operational improvement services. Management consultants often bring their own proprietary methodologies or frameworks to guide the identification of problems, and to serve as the basis for recommendations for more effective or efficient ways of performing work tasks.
Pay for Performance: A motivation concept in human resources, in which employees receive increased compensation for their work if their team, department or company reaches certain targets. Performance-related pay is money paid to someone relating to how well one works. Employees would be secure in knowing that their performance was evaluated objectively according to the standard of their work instead of the whims of a supervisor, or against an ever-climbing average of their group.
Profit in Accounting: The difference between revenue earned and the purchase and the component costs of delivered goods and/or services and any operating or other expenses.
Quality Control: A process by which entities review the quality of all factors involved in production. This approach places an emphasis on controls, job management, competence, skills, experience, and qualifications.
Solvency: In finance or business, the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity. Solvency can also be described as the ability of a corporation to meet its long-term fixed expenses and to accomplish long-term expansion and growth.
Turnaround Management: A process dedicated to corporate renewal and correction. It uses analysis and planning to save troubled companies and returns them to solvency. Turnaround Management involves management review. Once analysis is completed, a long term strategic plan and restructuring plan are created. These plans may or may not involve a bankruptcy filing. Once approved, turnaround professionals begin to implement the plan, continually reviewing its progress and make changes to the plan as needed to ensure the company returns to solvency.
Turnover or Staff Turnover: The rate at which an employer gains and loses employees. Simple ways to describe it are “how long employees tend to stay” or “the rate of traffic through the revolving door”. Turnover is measured for individual companies and for their industry as a whole. High turnover may be harmful to a company’s productivity if skilled workers are often leaving and the worker population contains a high percentage of novice workers.