Discounted Cash Flow

Discounted cash flow (DCF) is the sum of a series of future cash transactions, on a present value basis. DCF analysis is a capital budgeting technique used to quantify and assess the receipts and disbursements from a particular activity, project, or business venture in terms of constant dollars at the outset, considering risk-return relationships and timing of the cash flows.

Discretionary Income

Discretionary income is the amount of income consumers have left over after paying their necessary expenses, such as food, rent or mortgage payments, utilities, and insurance. A similar concept is disposable income, which is the amount of income consumers have left over after paying their taxes.

Distribution Channels

Distribution channels move products and services from businesses to consumers and to other businesses. Also known as marketing channels, channels of distribution consist of a set of interdependent organizations—such as wholesalers, retailers, and sales agents—involved in making a product or service available for use or consumption.

Distributorships and Dealerships

Distributorships and dealerships are in essence a license to distribute a product. Both dealers and distributors work with a manufacturer to get its goods to the buyer.


Diversification is the process of entering new business markets with new products. Such efforts may be undertaken either through acquisitions or through extension of the company's existing capabilities and resources.


Dividends and stock repurchases are the two major ways that corporations can distribute cash to their shareholders. Dividends may also be distributed in the form of stock (stock dividends and stock splits), scrip (a promise to pay at a future date), or property (typically commodities or goods from inventory).


Dot-com is a shorthand term for an Internet retail business. The term comes from the ".com" extension on most business Web sites, which stands for "commerce." Perhaps no other sector in the business world has experienced as much drama, excitement, triumph, and tragedy in such a short amount of time as the dot-com businesses.

Double Taxation

Double taxation is a situation that affects C corporations when business profits are taxed at both the corporate and personal levels. The corporation must pay income tax at the corporate rate before any profits can be paid to shareholders.

Downloading Issues

Downloading issues are the risks and liabilities to which a small business may be exposed as a result of providing Internet access and e-mail service to its employees. Many companies provide Internet access to employees for legitimate business purposes—such as conducting research—and find that such access improves productivity.

Drug Testing

Drug testing is the process wherein companies utilize the resources of scientific laboratories to determine whether any of their employees use illegal drugs. Drug testing, which most commonly requires workers to submit urine samples for analysis, is utilized in businesses and industries throughout the United States, although the practice continues to generate controversy.

Due Diligence

Due diligence is a program of critical analysis that companies undertake prior to making business decisions in such areas as corporate mergers/acquisitions or major product purchases/sales. The due diligence process, whether outsourced or executed in-house, is in essence an attempt to provide business owners and managers with reliable and complete background information on proposed business deals, whether the deal in question is a proposed acquisition of another company or a partnership with an international distributor, so that they can make informed decisions about whether to go forward with the business action.

Economic Order Quantity (EOQ)

The Economic Order Quantity (EOQ) is the number of units that a company should add to inventory with each order to minimize the total costs of inventory—such as holding costs, order costs, and shortage costs. The EOQ is used as part of a continuous review inventory system, in which the level of inventory is monitored at all times, and a fixed quantity is ordered each time the inventory level reaches a specific reorder point.

Economies of Scale

Economies of scale refer to economic efficiencies that result from carrying out a process (such as production or sales) on a larger and larger scale. The resulting economic efficiencies are usually measured in terms of the unit costs incurred as the volume of the relevant operation increases.

Economies of Scope

Economies of scope are cost advantages that result when firms provide a variety of products rather than specializing in the production or delivery of a single output. Economies of scope also exist if a firm can produce a given level of output of each product line more cheaply than a combination of separate firms, each producing a single product at the given output level.

8(A) Program

The 8(a) Program is a Small Business Administration (SBA) program intended to provide assistance to economically and/or socially disadvantaged business owners. The initiative, which originated out of Section 8(a) of the Small Business Act—hence its name—provides participants with access to a variety of business development services, including the opportunity to receive federal contracts on a sole-source or limited competition basis.


Elasticity is a measure of the responsiveness of one variable to changes in some other variable. For example, advertising elasticity is the relationship between a change in a firm's advertising budget and the resulting change in product sales.


Eldercare is an important issue for many members of today's work force, and is thus a relevant matter for employers to study as well. Analysts contend that many businesses lose valuable production from the estimated 30 percent of working Americans who have to contend with the needs of elderly parents and other relatives, and they point out that America's changing demographics are likely to make this an even more important issue for employers and employees in the coming years.

Electronic Bulletin Boards

Electronic bulletin boards (also known as message boards or computer forums) are communication systems online where one can share, request, or discuss information on just about any topic. While e-mail is a way to converse privately with one or more people over the Internet, electronic bulletin boards are totally public.

Electronic Data Interchange

Electronic data interchange (EDI) is the electronic movement of data between or within organizations in a structured, computer-retrievable data format that permits information to be transferred from a computer program in one location to a computer program in another location without rekeying. EDI includes the direct transmission of data between locations; transmission using an intermediary such as a communication network; and the exchange of computer tapes, disks, or other digital storage devices.

Electronic Mail

"Electronic mail"—or "e-mail," as it is commonly called—is the process of sending or receiving a computer file or message by computer modem over telephone wires to a preselected "mail box" or "address" on another computer. E-mail can also be sent automatically to a large number of electronic addresses via mailing lists.

Electronic Tax Filing

Electronic tax filing refers to various systems that enable individuals and small businesses to file their tax returns and make tax payments through electronic data transfer. In 1996, the Internal Revenue Service (IRS) began requiring businesses that owed more than $47 million in payroll taxes annually to make their monthly payments via telephone or computer through the Electronic Federal Tax Payment System (EFTPS).

Emerging Markets

Emerging markets are those countries or geographic regions in which a previously untapped potential for U.S. exports or investment might be anticipated.

Employee Assistance Programs

Employee assistance programs (EAPs) are plans that help identify and resolve issues facing troubled employees through short-term counseling, referrals to specialized professionals or organizations, and follow-up services. Many EAPs also train business owners and supervisors to recognize and deal with behavioral problems in the workforce.

Employee Benefits

Employee benefits encompass a broad range of benefits—other than salary—that companies provide to their employees. Some of these benefits, such as workers' compensation, social security, and unemployment insurance, are required by law.

Employee Compensation

Compensation is a primary motivator for employees. People look for jobs that not only suit their creativity and talents, but compensate them—both in terms of salary and other benefits—accordingly.

Employee Hiring

Hiring employees is a process crucial to the success of a business, and as most successful small business owners know, the hiring process does not begin with the interview and end with the job offer. Rather, it involves planning and considering the job prior to an interview, recruiting and interviewing wisely to bring in the right person, and providing new workers with an orientation that enables them to get off to a strong start with the company.

Employee Leasing Programs

Employee leasing programs are arrangements in which businesses lease their employees through an outside contractor that attends to the various personnel-related activities commonly associated with human resources management. Employee leasing programs have become particularly popular among small-and mid-sized companies, who view leasing as:1) a viable option for increasing the benefits that their work force receives, and 2) an effective strategy for getting rid of burdensome and time-consuming paperwork.

Employee Manuals

The employee manual or handbook can be a valuable tool for any business organization. Ideally, it should provide detailed guidelines for the employment relationship and document company policies and procedures for the benefit of both employer and employee.

Employee Motivation

Employee motivation is the level of energy, commitment, and creativity that a company's workers apply to their jobs. In the increasingly competitive business environment of recent years, finding ways to motivate employees has become a pressing concern for many managers.

Employee Performance Appraisals

An employee performance appraisal is a process—often combining both written and oral elements—whereby management evaluates and provides feedback on employee job performance, including steps to improve or redirect activities as needed. Documenting performance provides a basis for pay increases and promotions.

Employee Privacy

Employee privacy issues have surged to the forefront of the business press in recent years, spurred on by changing workplace dynamics and a litigation-conscious business environment. Observers say that advances in telecommunications—such as e-mail and the Internet—coupled with heightened concerns about vulnerability to litigation, have exacerbated management concerns about monitoring employee behavior.

Employee References

Employee references are the positive or negative comments about an employee's job performance provided to a prospective employer. In most cases, a prospective employer will contact a person's current or former employer to seek references as part of the process of considering that person for a new position.

Employee Registration Procedures

When a business hires a new employee, it is legally obligated to make sure that certain information about these new hires is provided to relevant government agencies. This information, which is provided by employees who fill out specific forms on their first day of employment, is used for tax purposes and to ensure that they are legally eligible to work in the United States.

Employee Reinstatement

In the past, it was a rare occurrence if an employee left a company and then returned to it at a later date, either in the same position or a completely new one. Many companies strictly enforced policies that discouraged this sort of hiring of ex-employees, while the employees themselves would consider it an embarrassment to have to crawl back to their former workplace after failing to achieve success at another job.

Employee Retention

Employee retention refers to policies and practices companies use to prevent valuable employees from leaving their jobs. How to retain valuable employees is one of the biggest problems that plague companies in the competitive marketplace.

Employee Retirement Income Security Act (ERISA)

The Employee Retirement Income Security Act of 1974 (ERISA) is a U.S. federal law that regulates most private sector employee benefit plans, including 401(k) plans, profit-sharing plans, simplified employee pension (SEP) plans, and Keogh plans.

Employee Reward and Recognition Systems

In a competitive business climate, more business owners are looking at improvements in quality while reducing costs. Meanwhile, a strong economy has resulted in a tight job market.

Employee Rights

Employee rights is a broad term used to describe the range of legal protections that are afforded to individuals and groups that are in the employ of business organizations. Employee rights can be broken down into four primary categories: rights relating to labor union organizing and collective bargaining; rights relating to working hours and pay; rights relating to workplace safety and workers' compensation; and rights relating to discrimination in hiring or in the workplace.

Employee Screening Programs

Trustworthy, qualified employees are an essential part of any business. This is especially true of small businesses, where every employee counts and where interpersonal dynamics often assume heightened importance.

Employee Stock Ownership Plans (ESOPS)

An Employee Stock Ownership Plan, or ESOP, is a qualified retirement program through which employees receive shares of the corporation's stock. Like cash-based retirement plans, ESOPs are subject to eligibility and vesting requirements and provide employees with monetary benefits upon retirement, death, or disability.

Employee Strikes

An employee strike is an episode wherein a company's work force engages in a work stoppage in an effort to elicit changes from its employer in such areas as wages, benefits, job security, and management practices. Strikes are typically engineered by labor unions, whose memberships accounted for approximately 15 percent of all employees in the United States in the late 1990s (about 10 percent of all private sector employees).

Employee Suggestion Systems

The term "employee suggestion systems" refers to a variety of efforts businesses make to solicit and utilize input from their employees in hopes of achieving cost savings or improving product quality, workplace efficiency, customer service, or working conditions. These efforts range from simply placing suggestion boxes in common areas to implementing formal programs with committees to review ideas and rewards for those that are adopted.

Employee Termination

Employee termination is the process by which an organization ends an individual's employment against his or her will. Termination may occur "for cause," examples of which include poor job performance, lack of "fit" with the organization, inability to perform job responsibilities, conflict with managers or other employees, or misconduct.

Employee Theft

Employee theft is a problem of considerable size for many companies. Many corporate security experts estimate that 25 to 40 percent of all employees steal from their employers, and the U.S.

Employer Identification Number (EIN)

A federal employer identification number (EIN), also sometimes referred to as a tax identification number, is a nine-digit code that businesses use to identify themselves for tax reporting, banking, and other purposes. Sole proprietorships without employees are allowed to use the owner's Social Security number for tax reporting purposes.

Employment Applications

The employment application is an important part of the hiring process, for it provides employers with clear and relevant information about applicants. An application is also a legal document and it becomes a part of a person's permanent file once they are hired.

Employment Contracts

Employment contracts are written agreements between an employer and an employee that detail the workplace duties and responsibilities of the employee and the compensation that the employer provides in return. Employment contracts typically lay out the wages, bonuses, vacations, medical leaves (including maternity/paternity), stock options, and other benefits and compensation that the worker receives for fulfilling his/her obligations to the employer.

Employment Interviews

Interviewing is an integral part of the hiring process. It provides small business owners with their primary opportunity to learn about a candidate's work experience, education, and interpersonal abilities, as well as characteristics—such as enthusiasm—that are rarely conveyed in resumes; similarly, the interview process often provides would-be employees with their best opportunity to inquire about various aspects of company operations and expectations.

Employment of Minors

Businesses in some industries rarely utilize minors as employees, but in many other sectors, teenagers comprise a large component of the total work force; indeed, some enterprises engaged in various retail, restaurant, and other businesses rely on minors to a considerable degree. The primary advantage associated with employing minors is that compensation is far less costly than if the employer decided to hire adults as staff.

Employment Practices Liability Insurance

Employment practices liability (EPL) insurance is a type of coverage that protects businesses from the financial consequences associated with a variety of employment-related lawsuits. Some of the events that may be covered by EPL insurance include liability lawsuits involving a company's directors and officers, negligence lawsuits affecting a company's human resources department, and liability lawsuits over fiduciary duty.

Empowerment Zones

An "empowerment zone" is an economically distressed American community that receives tax incentives and grants from the federal government under the Empowerment Zones and Enterprise Communities Act of 1993. The act provided for the designation of 11 empowerment zones nationwide as well as 94 enterprise communities, which receive similar benefits on a smaller scale.

Endorsements and Testimonials

Endorsements and testimonials are modes of advertising in which a business utilizes the statements and/or support of outside individuals or organizations in order to increase consumer interest in the product and/or services it sells. The term "endorsement" tends to be more frequently associated with advertising messages featuring public figures (such as celebrities) and organizations, while the term "testimonial" more frequently refers to advertising campaigns that utilize ordinary consumers and clients.

Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP) is a method of using computer technology to link various functions—such as accounting, inventory control, and human resources—across an entire company. ERP is intended to facilitate information sharing, business planning, and decision making on an enterprise-wide basis.

Entrepreneurial Couples

Many of today's small business enterprises are co-owned and co-managed by entrepreneurs who are also partners in their personal lives. These partnerships, which most commonly take the form of husband-wife teams, can be immensely positive experiences, strengthening each person's commitment to and enjoyment of both the business and personal sides of the partnership.


An entrepreneur is one who organizes a new business venture in the hopes of making a profit. Entrepreneurship is the process of being an entrepreneur, of gathering and allocating the resources—financial, creative, managerial, or technological—necessary for a new venture's success.

Environmental Audit

Environmental audits are reviews of a company's operations and processes for the purpose of assessing compliance with environmental rules and regulations. Environmental audits cover a broad spectrum of business activities and areas, including buildings and building sites; activities and procedures; industrial and commercial developments; and engineering hazard and operabilities studies.

Environmental Law and Business

Environmental laws and regulations deal with myriad pollution problems, including the contamination of our air, surface waters, drinking water, ground waters, and land. Pollution or contamination of the environment is found inside as well as outside the walls of factories and other business facilities Those affected include workers and their families as well as other members of their communities.

Environmental Protection Agency (EPA)

The U.S. Environmental Protection Agency (EPA) was created on December 2, 1970, by executive order of President Richard Nixon to "permit coordinated and effective government action on behalf of the environment." Fifteen different environmental programs from various federal offices were combined and placed under the jurisdiction of the newly created EPA.

Equal Employment Opportunity Commission

The Equal Employment Opportunity Commission (EEOC) was established to enforce provisions of Title VII of the Civil Rights Act of 1964. Title VII forbids discrimination in the workplace based on race, age, handicap, religion, sex, or national origin.

Equipment Leasing

A lease is in essence an extended rental agreement wherein the owner of the equipment (the lessor) allows the user (the lessee) to operate or otherwise make use of the equipment in exchange for periodic lease payments. "There are a number of reasons that companies sometimes prefer to lease equipment rather than buying it," said Richard A.