Week 5 Finance 3 - may alter it due to unplanned needs that...

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In trying to figure out what I want to be when I grow up, I have been exploring the idea of opening my own business, so I looked into the capital budgeting process for a small business. The article below explains that for many small business entrepreneurs, the budgeting process may be confined to trying to get cash to be able to cover the next payroll. It may be difficult for a small business to find the time to plan financially and often times this causes their endeavors to fail. Putting together a financial plan means being able to control your cash flow instead of the opposite occurring. The article goes on to suggest that the best combination of effective budgeting includes a short-term monthly plan for the calendar year and a quarterly long-term plan to use for financial reporting. Some may leave their yearly plan unchanged, while others
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Unformatted text preview: may alter it due to unplanned needs that arise, such as an equipment purchase. Altering the budget accordingly is suggested as long as the owner maintains focus on doing business while trying to plan a smart budget. In this case, it is important to budget both eh income statement and the balance sheet. The following are the types of question that should be asked when starting the budgeting process: How much can my business sell in a year? How much growth will follow? How will the product or service be priced? How much will production and operations cost? How much inventory will need to be kept on hand? How many employees do I need? How much will rent, income taxes, and equipment be? Source: http://www.entrepreneur.com/money/moneymanagement/financialanalysis/article21942.html...
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