Entrepreneurship and Small Business Management

Section 2: Managing Your Finances

Section 21.2 Summary
Business owners must plan for profit by forecasting sales, evaluating profit potential, controlling costs, and budgeting. For a business to be successful, control of cash is essential. Cash flow is the life blood of the business. If it flows out faster than it flows in, your business dies. Monitoring your cash and taking steps to have a positive cash flow are critical aspects of good management. Business owners must also plan for capital expenditures, long-term commitments of large sums of money for buying new equipment and replacing old equipment. There are many legal obligations to consider when you own your own business. One of the most important is managing your taxes. It is important to keep up-to-date on tax laws and carefully track your expenses. The main advantage of extending credit to customers is increased sales volume. The main disadvantage is collection of the money owed in a timely manner.

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