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Additional resources, glossary of terms, cash flow templates, income statement template and business plan template

Glossary of terms

This section provides you with definitions for many terms that you’ll find throughout the Toolkit. If there are other terms you don’t understand, you can find definitions in dictionaries or online. It’s important to understand the language that business people use, even if you choose not to build your business in similar ways.

You can find additional terms in the BDC’s Financial Glossary for Entrepreneurs.

Accounts payable

Money that your business owes for goods and services. The businesses that sell to you will usually require payment within 30 to 90 days. Once you’ve received the delivery and before you pay for it, the amount owing is called an Account Payable.

Accounts receivable

Money that a customer owes to your business for goods and services. Unless you’re in a cash business or retail, you’ll probably deliver goods or services before you’re paid for them. Try to get paid as quickly as possible. Until you’re paid for something that you’ve delivered, the amount owing to you is called an Account Receivable.

Accrual accounting

This type of accounting is commonly used in business. It allows you to report income when it’s earned and expenses when they’re incurred. This means that if you make a sale today, but don’t get paid for it for 90 days, you report it now. On the other hand, if you pay for a year’s worth of insurance now, you only record it as paid as you go along. The other way to record revenue and expenses is called cash basis accounting, which reports income when received and expenses when paid. Cash basis accounting is more commonly used in the non-profit sector.

Administrative expenses

Operating costs incurred in the normal course of running a business, such as telephone, management and office salaries, professional fees, property taxes, etc.

Amortization

Amortization refers to the process of paying off a debt or mortgage, usually by equal monthly payments.

Assets

An Asset is something that has value, or that contributes to creating value, for your business. Assets can be tangible (such as raw materials and equipment) or they can be intangible (such as the skills and experience that you bring to the business or your reputation).

Audit

An annual review of a business’s accounts and transactions to ensure that they’re accurate.

Balance sheet

A financial statement listing all assets, liabilities and equity of a business at a certain point in time. It provides a quick “snapshot” of a business.

Book value

Value of an asset as shown on the balance sheet. The book value takes into account depreciation and is often different from its market value.

Breakeven point

The point in time at which a new business’ revenues equals its fixed and variable expenses. A breakeven point is determined by conducting a ‘Break Even Analysis’.

Budget

An estimate of future income and expenses over an accounting period (quarterly, yearly, etc.) used as a financial control for business.

Capital

The owner’s equity in the business. It can take the form of the proprietor’s or partners' capital, or if incorporated, that of common stock, preferred shares and retained earnings.

Cash basis accounting

See accrual accounting

Cash flow

Money coming into and going out of your business. It’s important to track how money moves into and out of your business because you need to know whether you’ll have enough money to pay important bills on time, such as your employees’ pay cheques.

Cash flow budget

A spreadsheet of monthly inflows (e.g., earnings) and outflows (e.g., expenses) of cash in the business during an accounting period (usually one year). It helps a business to plan its financial requirements.

Closing inventory

Value of the total inventory or the number of units (goods) that a business has on hand at the end of the accounting period.

Competition, competitor

A competitor is another business that is selling a similar product or service to yours, in the same geographic location. Competition arises when your business and another business are trying to sell the same or similar things to the same customer. In order to make a sale, you may have to change something: charge a lower price or offer better service, for example.

Corporation

A legal entity incorporated under federal or provincial legislation. This entity is distinct from parties or individuals that own it. Shareholders are not liable for the debts or obligations of the corporation.

Cost of goods sold

Abbreviated as COGS, also called cost of sales. Direct cost of producing or providing the business' goods or services. It includes direct labour expenses/costs and production overhead, plus opening inventory, plus purchases, less closing inventory.

Customer, client

Customers purchase goods or services from your business. Clients usually have ongoing relationships with a business. The business provides advice and sometimes a sense of protection to a client

Debt

Something owed, usually money. A debt can take the form of a loan, a line of credit, a credit card balance, or a mortgage. In each case, the lender will usually charge interest or a fee until the debt is repaid.

Depreciation

Depreciation means to reduce the value of an asset over the lifespan of that asset. For example, if you buy a large piece of equipment that you expect will last 10 years, you ‘depreciate’ the asset by showing that its value is reduced by a certain amount each year. Your accountant will help you to determine the amount of depreciation to show each year on your Income Statement.

Disbursements

Funds paid out of a business in settlement of obligations.

Dividend

A sum of money paid to shareholders of a corporation out of earnings.

Drawings

Withdrawals of assets (usually cash) from a business by a sole proprietor or a partner.

Equity

Equity refers to the value of the business, after debts have been paid. If you invest $10,000 in the business and don’t have any debts, the equity in your business is $10,000. If you use the $10,000 as a down payment to purchase equipment worth $20,000, you would have $10,000 in debt and $10,000 in equity.

Equipment

All machinery and equipment used by the business to earn revenue. It has a limited lifespan and thus is subject to depreciation.

Financial statements

Formal reports, prepared from accounting records, describing the financial position and performance of the business. They comprise the Balance Sheet, the Income Statement and the Statement of Changes in Financial Position. Also see these definitions.

Financing

The term ‘financing’ refers to money that investors and lenders put into your business. Investors become owners of the business because they’re hoping that the business will grow. They’ll get a return on their investment when you pay dividends, or if someone else buys their ownership share for more than they paid for it. Lenders don’t become owners of your business. They expect to receive their money back with interest within a set period of time.

Fixed assets

Also called capital assets. Property or equipment, not intended to be sold, owned by a business for use in its operations and expected to have a useful life of several fiscal periods. Included in this are land, buildings, vehicles, furniture and equipment.

Fixed costs

Amounts that don’t vary with changes in the volume of sales or production (e.g., rent, depreciation, interest payments).

Forecast

When you’re planning your business, you’re often required to estimate or predict what your revenues and your costs will be in the future. This is called a forecast, or sometimes a projection. Forecasts can be made on a monthly, yearly or even multi-year basis. The longer the term, the less accurate the forecast will be.

Funding

The term ‘funding’ refers to money offered as subsidies or incentives by Governments (First Nation, municipal, provincial and federal) or the private sector. These institutions often provide money to businesses that operate in certain places, or that hire new employees, or purchase new equipment. unders don’t usually expect to be repaid, but they’ll expect businesses that receive funding to report on their activities. They’ll want to know that you’re spending the money as you promised and that you’re achieving the intended results (e.g., jobs created).

Gross profit

Net sales less the cost of the goods sold. It represents the profit made by the business before deducting selling, administrative and financial expenses. It helps to evaluate sales performance, buying policies, mark-ups and inventory controls.

Income statement

Financial statement showing revenues, expenses and net income of a business over an accounting period.

Intangible assets

Assets that cannot be touched, weighed or measured. They cannot be used for payments of debts and include goodwill (probability that a regular customer will remain so), patent, trademark, and incorporation costs. They may produce income and can be sold; that is why they’re listed under assets.

Interest

Interest is the fee that a lender charges to a borrower. It’s usually expressed as an annual percentage of the amount owing. For example, “She borrowed money at 5 per cent to buy a delivery van” means that if she owes $1,000, she must pay the lender $50, as well as repaying at least some of the debt (called the principal of the loan) each year. The word “interest” can also refer to a share of ownership in a business (e.g., Joe has an interest in the Gas Bar).

Inventory

The merchandise and raw materials that a business has on hand to be sold or to be turned into goods to be sold. Each year, a business must count its entire inventory and report it on its Balance Sheet.

Inventory turnover

Financial ratio that measures the number of times inventory has been sold in a given year. If it’s low, it means that products are not selling well.

Investment

When someone invests money (or time) in a business, they do so with the expectation that they’ll generate a profit as a result. People may hold investments in many businesses by purchasing shares on a public stock exchange. They may also make an investment of time in developing their own business.

Labour expenses

Total direct cost to the business for its employees during an accounting period. Includes actual wages paid and cost of all fringe benefits, unless listed separately.

Lease

Legal contract covering the use of property drawn up between an owner (lessor) and a tenant (lessee) for a stated amount of money (rent) and for a specified length of time.

Leasehold improvements

Renovations and other improvements to the leased property at the expense of the lessee.

Letters patent

Letters Patent are granted by the Government to certain corporations to permit them to undertake certain activities. Such corporations are usually non-profit or charitable.

Liability

A liability is an amount that is owed by a business, whether to employees, suppliers or lenders.

Licence

A licence is permission to practice a certain business, trade or profession. Licences are also required to operate some kinds of equipment. Obtain information on the licences you require from your Band Office, local government office, or from your industry or trade association. Some licences require specialized training and testing. Remember that everyone who operates a vehicle for your business must have a driver’s licence!

Line of credit

Agreement between a lender and a borrower under which the latter can borrow continuously up to a fixed maximum amount.

Market

The exchange of goods and services, or a place where the needs of one person are satisfied by the offerings of another. A market has at least one seller and one buyer and usually has many more of each. In a free market, every buyer has information about every seller and can decide, based on price and other factors, which product to purchase. Also, a group of consumers that can be described in a specific way (e.g., men aged 25 to 35 with an annual income of over $40,000 and living in the Toronto area).

Market segment

Part of a market (e.g., men aged 25 to 35 with an annual income of over $40,000 who live in the Toronto area and are interested in the arts).

Mortgage

A form of debt that is used to purchase a piece of property (real estate). A mortgage has a fixed term, usually many years, and a fixed payment schedule. It’s usually secured, or guaranteed, by the property. That is, if the borrower does not make the required payments, the lender will take ownership of the property. It may not be possible to purchase property with a mortgage on reserve. Check with your Economic Development Officer or Band Office, as rules and programs change frequently.

Net profit

Total revenue less total expenses for an accounting period calculated in accordance with generally accepted accounting principles.

Net profit margin

Net profit divided by sales; expressed as a percentage.

Niche market

Part of a market segment (e.g., men aged 25 to 35 with an annual income of over $40,000 who live in the Toronto area and are interested in performance arts).

Opening inventory

Value of total inventory or number of units a business has on hand at the opening of the accounting period.
Operating forecast

Anticipated earnings of a business determined by estimating sales and subtracting expected expenses.

Operating income

Excess of revenue of a business over its expenses, excluding income derived from sources other than its regular activities (i.e., extraordinary income and expenses, income taxes, dividends, bonuses, withdrawals by owners).

Overhead

Costs not directly attributable to the production of a good or service (e.g., salary of factory manager, property taxes).

Partnership

Form of business ownership in which two or more individuals (or companies) provide the equity capital for a business enterprise. Partners share in the profits as well as the losses of the business.

Prepaid expenses

Expenses paid in advance during an accounting period (e.g., a two-year insurance premium), part of which will be "used up" in the upcoming accounting period. The unused portion of the expense is considered a current asset and recorded as such on the Balance Sheet.

Ratio analysis

Analysis that compares financial ratios of a business from one year to another to determine the change in performance over time; it also compares financial ratios of a business to that of other similar businesses or to that of its industry to determine its performance in relation to others.

Regulatory regime

Every business is subject to regulation. Each level of government and every jurisdiction has its own set of rules and regulations. It’s essential, before you begin your business, to find out which regulations will apply to you and what you must do to comply with them. Sometimes regulations are enforced by industry itself, so also check with your industry or trade association to find out what the rules are.

Retained earnings

Profits not spent or distributed among owners of a business, but reinvested in it.

Return (on assets)

Financial ratio that indicates how efficiently the business has used its available resources to generate income.

Return (on investment)

Financial ratio that measures the profitability of the business for its shareholders.

Resource management

The availability of raw materials may be controlled by governments that limit access to certain resources. For example, there may be limits on how much ground water can be withdrawn by a supplier of bottled water. There may be limits on how many fur-bearing animals can be harvested in a particular season. By restricting supply, governments manage the wellbeing of the resource and the community; the effect on business is to drive up the cost of the raw material and the value of everything produced from it. In every case where your business relies on access to natural resources, work with your Band Council to find out what this means for you.

Revenue

Gross proceeds received by a business from the sale of goods or services during an accounting period. It also includes gains from the sale or exchange of assets, interest and dividends earned on investments and other increases in owner’s equity.

Sales

Total value of goods sold or revenue from services rendered. Returns and discounts must be shown as a reduction from total sales.

Selling expenses

Operating costs directly related to the selling of a product or service (selling salaries, commission, advertising, etc.).

Sole proprietorship

Form of business owned and operated by one individual who is responsible for the debts and obligations of the business.

Statement of changes in financial position

Financial statement showing the fluctuation of capital of a business over an accounting period.

Supply chain

A supply chain is the network of businesses that take a raw material, transform it and bring it to the end consumer. The supply chain links the forest, field, or mine, to processing, manufacturing, packaging, shipping, displaying and ultimately selling. The supply chain includes purchasing, inventory management, warehousing and many other functions. A business may be involved in only one link in the chain, or may be involved in many of them.

Term loan

Loan having a fixed term of repayment greater than one year, and a monthly or seasonal principal reduction schedule.

Total debt-to-equity ratio

Financial ratio that measures the solvency for the business: if this ratio is high, the business is at higher risk of not meeting its obligations should a drop in sales occur.

Transaction

A sale or transfer of goods or services in exchange for money.

Variable costs

Expenses that vary directly with changes in the volume of sales or production (e.g., raw material costs and sales commissions).

Working capital

Financial ratio that measures the amount of cash a business has to develop itself as opposed to the capital it has invested in fixed assets. A high ratio means the business can convert some assets into cash or obtain cash readily to meet its current obligations and represents a safety cushion for creditors.

Appendix: additional resources

The Ontario government has developed an Aboriginal business directory to help businesses raise awareness of their products and services, and to connect Aboriginal businesses to industry, government and other businesses to encourage partnership development and Aboriginal procurement opportunities in Ontario. You can register your business or search for existing Aboriginal businesses by visiting the Aboriginal Business Directory. The federal government maintains a similar directory.

The Aboriginal Human Resource Council creates and markets a wide range of resources to help Indigenous people participate fully in Canada’s economy.

A list of Agreement holders in Ontario. These organizations deliver Aboriginal labour market programming, including employment, training and business development support to Aboriginal people across the province.

CAMSC operates as a private sector-led, non-profit membership organization that’s composed of major multinational corporations operating in Canada. CAMSC delivers programs and processes to promote and facilitate procurement opportunities between major corporations in Canada and suppliers of all sizes owned and operated by Canadian Indigenous peoples and Minorities.

CCAB is a national, non-profit association to support Aboriginal-owned businesses.

CAPE Fund’s mission is to further a culture of economic independence, ownership, entrepreneurship, and enterprise management among Indigenous peoples, on or off reserve through the creation and growth of successful businesses. CAPE Fund will provide equity and quasi-equity capital, business expertise, and mentoring on individual projects that are capable of providing both a financial and social return.

CANDO provides a national body for Economic Development Officers (EDOs) that focuses on the training, education and networking opportunities necessary to serve their communities and/or organizations as professionals. CANDO is Aboriginal-controlled, community-based and membership driven, and is directed by a regionally represented volunteer board of elected EDOs. CANDO is unique because it’s the only national organization that focuses on education and professional development for EDOs working in Indigenous communities or organizations.

The Ontario Federation of Indigenous Friendship Centres provides a number of services to Indigenous people, including access to employment and business support programs.

A membership-based not-for-profit association that provides a network for Economic Development Officers (EDOs), professionals and students from First Nation communities to stimulate economic growth and generate business activities.

Banks / professional services

A not-for-profit association to help Aboriginal people better manage and govern their communities and organizations through a focus on enhancing finance and management practices and skills. AFOA also has a list of Certified Aboriginal Financial Managers, available on their website under the Certified Aboriginal Financial Manager Program section.

Government resources

A Government of Canada site devoted to helping Canadian entrepreneurs succeed. It provides business information and tools, as well as referrals to other supports, organizations and sources of funding.

CBO provides business support, guidance and resources specific to Ontario, including a business financing search engine, as part of the Canada Business Network. CBO Works with ServiceOntario, the Ontario Ministry of Economic Development, Employment, and Infrastructure, and community partners to ensure consistency of information across levels of government.

FedDev is a development agency for southern Ontario whose programs will support economic and community development, innovation, and economic diversification, with contributions to communities, businesses and non-profit organizations.

FedNor is a federal regional development organization for Northern Ontario that works with a variety of partners to help create an environment in which communities can thrive, businesses can grow and people can prosper. FedNor provides programs, services, and financial support for community-based economic development projects.

Federal department of Indigenous and Northern Affairs.

The NOHFC offers programs and support for fostering job creation and strengthening the economies of northern Ontario communities.

The Community Futures Program is a Government of Canada initiative which supports 65 Community Futures Development Corporations (CFDCs) in Ontario. CFDCs, in collaboration with FedDev and FedNor, offer a wide variety of programs and services supporting community economic development and small business growth.

This webpage provides information on government-funded programs and services for Ontario businesses, as well as support for starting and operating a business in Ontario.

A searchable database of Government of Ontario forms.

The Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) offers programs, tools, and resources to help identify local economic development priorities, make informed decisions, and carry out strategies to achieve your community’s goals.

The Ontario Ministry of Economic Development and Growth delivers programs, services and tools to help businesses innovate and compete in today’s fast-changing global economy, including business support and youth entrepreneurship programs, strategic investments and international trade and export expertise.

The Ontario Ministry of Finance provides information on taxes applicable to businesses across the province.

MTCS’ Tourism Research website includes tourism-specific research and analysis for prospective tourism businesses.

ONE provides a one-stop resource centre for Ontario-based entrepreneurs looking for support on starting, growing or financing a business.

ServiceOntario provides a variety of business tools, supports and services for Ontario businesses, including licences, permits, registration forms and grant information.

Small Business Enterprise Centres are dedicated to providing tools, support and services to small business throughout Ontario. There are numerous locations across the province.

Information and guide on how to do business with the Ontario Government provided by the Ontario Ministry of Government Services.

The Aboriginal Youth section of the Youth Canada website lists a number of programs and services specific to the needs of Indigenous youth, including education, training, professional support and job support.

Case studies

  • Cape Breton University’s Purdy Crawford Chair in Aboriginal Business Studies website has a collection of case studies that are accessible online at no cost.
  • The website for the Purdy Crawford Chair in Aboriginal Business Studies at Cape Breton University also hosts a number of excellent reports, articles and resources for Indigenous business development, including case studies, success stories and guidance documents.
  • The Conference Board of Canada has published reports highlighting successful Indigenous businesses from across Canada. Please visit the links below to access two of their reports:
  • From Vision to Venture: An Account of Five Successful Aboriginal Businesses
  • True to Their Visions: An Account of 10 Successful Aboriginal Businesses

Books and journals

  • You may want to consider exploring the Journal of Aboriginal Economic Development, jointly published by the Centre for the Advancement of Native Development Officers (CANDO) and Captus Press. The Journal focuses on economic development from an Indigenous perspective and is peer-reviewed by a distinguished academic editorial board to ensure high quality Indigenous content. The Journal regularly focuses on lessons from experience, lessons from research and relevant book reviews.
  • The Journal of Aboriginal Management is a journal for Aboriginal Professionals working in the finance, management and leadership fields. Produced by the Aboriginal Financial Officers Association (AFOA) Canada, the journal focuses or professional trends and innovations in Aboriginal management, and includes interviews with leaders and articles from experts that profile community-based initiatives and best practices.
  • Natural Resources and Aboriginal peoples in Canada is a book by Robert Anderson and Robert Bone that details the inter-relationships among Indigenous people, non-Indigenous people and natural resources. Published by Captus Press in 2009, the book includes selected articles that reflect an ever-increasing range of business ventures and economic development by First Nations, Inuit, and Métis, and document the incorporation of traditional environmental knowledge, culture and values into natural resource initiatives.
  • Although published in 1996, by Katherine Chiste’s book Aboriginal Small Business and Entrepreneurship in Canada (published by Captus Press) examines Indigenous small business development across Canada. The book includes information related to small business opportunities, financing considerations and daily management processes that can take you from an initial business idea through the development of a business plan to the expansion of a business. Each chapter includes problems and discussion questions, as well as a selection of recommended readings.
  • Published in 2002, Aboriginal Entrepreneurship and Business Development is a book by Robert Anderson and published by Captus Press that focuses on Indigenous entrepreneurship and is a comprehensive resource for Indigenous business development, focusing on opportunity identification, business planning, forms of business organization, and management tools and techniques such as financial accounting and human resources planning. The book also includes selected real-life case studies, exercises to assist in entrepreneurial skills development, as well as sample business plans and templates.
Updated: June 14, 2022
Published: December 02, 2015