This is a good point to note the advantage of teams

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Unformatted text preview: learned about macroeconomics, and how to read financial statements, I discovered that the truth in business is almost always a combination of words and numbers, and can’t be explained with either one without the other. For example, when a Central American government announced a new federal budget that it said was going to both develop growth and reduce inflation, the numbers said that was a contradiction. You can’t do both; you can do one or the other. You could only see that by dealing with both words and numbers. A business plan is like that, too. You can’t describe a plan without both text and tables, both words and numbers. The single most important analysis in a business plan is a cash flow plan, because cash is the most critical element in business. With the way the numbers work, however, you can’t do a cash flow plan without looking at the income statement and balance sheet as well. You really can’t do the income statement without looking at sales, cost of sales, personnel expenses and other expenses, so you need those too. And you’d have trouble doing a sales forecast without understanding your market, so a market analysis is recommended. And then you have the break-even as part of the initial assessment, and tables for business ratios, general assumptions, and other numbers. Step by step, the business plan becomes a collection of tables and charts around the text. HURDLE: THE BOOK 14.2 ON BUSINESS PLANNING Although cash is critical, people think in terms of profits instead of cash. We all do. When you and your friends imagine a new business, you think of what it would cost to make the product, what you could sell it for, and what the profits per unit might be. We are trained to think of business as sales minus costs and expenses, which results in profits. Unfortunately, we don’t spend the profits in a business. We spend cash. Profitable companies go broke because they had all their money tied up in assets and couldn’t pay their expenses. Working capital is critical to business health. Unfortunately, we don’t see the cas...
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This note was uploaded on 01/26/2014 for the course BUINESS 102 taught by Professor Unknown during the Winter '09 term at University of Phoenix.

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