Many start-up businesses stop at determining their beginning Equity. After putting up the initial capital for your business, you have to determine the optimum Working Capital to position your business on the road to profitability and growth.
Specially during these times of high transportation costs and constricted markets, f you do not put up enough money for Working Capital, you will be forced to incur debt or inordinately prolong accounts payable so that you get into trouble with your suppliers. Not having adequate Working Capital will place your business in an unsustainable cycle of debt.
After you have determined the …read more

A business wimp (whether small business or large corporation) is a venture with inadequate Working Capital.
A business wimp will be forced to incur debt or inordinately prolong accounts payable so that it gets into trouble with suppliers. Not having adequate Working Capital will place the business in an unsustainable cycle of debt.
The business wimp has to borrow to finance Cost of Goods Sold and Operating Expenses. The interest expense will bloat Operating Expenses. There will have to be more borrowing to be able to pay suppliers (Cost of Goods Sold), pay salaries (Operating Expenses), and interest. …read more

I’ve always maintained that accounting is also for business. It’s concepts, relationships among accounts, system of balances are applicable in almost anything in life.
Accounting Solver presents a Balance Sheet for Living:
Just like Cash in a business Balance Sheet, Health in the Balance Sheet for Living is much affected by Liabilities. Among the Liabilities in a business Balance Sheet, the major items would be Notes Payable and Accounts Payable. In a Balance Sheet for Living, the major item would be Stress (on the job or from relationships).
Just like Notes Payable and Accounts Payable, Stress cannot be avoided; but they …read more

I’ve always maintained that accounting is also for business. It’s concepts, relationships among accounts, system of balances are applicable in almost anything in life.
Accounting Solver presents a Balance Sheet for Living:

Health is like cash which you spend on what you have to do and/or want to do. The healthier you are, the more time you can have for family & friends, for yourself, for work; the more you can enjoy nature (i.e., smell the roses); the better you can earn prestige or a good reputation.
The healthier you are, the more productive you can be in building up …read more

I’ve always maintained that accounting is also for business. It’s concepts, relationships among accounts, system of balances are applicable in almost anything in life.
Accounting Solver presents a Balance Sheet for Living:

As in any Balance Sheet for business, Equity is what you start out with or put into the business and which constitute your Assets. Following the basic accounting equation: Assets – Liabilities = Equity, after you deduct your Liabilities from your Assets, what is left is what you get out of the business or what you actually own.
It’s the same case in life (or your Balance Sheet …read more

The Pareto Priniciple (also called the 80% – 20% Rule) has been applied in a variety of fields & disciplines; e.g., business management, time management, management of sales people, project management, development economics, etc. Basically, the Pareto Principle states: in any endeavor, a 20% segment can explain the status of almost anything and can influence what can or will happen to the undertaking. The Pareto Principle has also been called the Rule of the Vital Few and the Trivial Many.
For small businesses, it is best if you consider the 20% as critical and the 80% as …read more

The Pareto Priniciple (also called the 80% – 20% Rule) has been applied in a variety of fields & disciplines; e.g., business management, time management, management of sales people, project management, development economics, etc. Basically, the Pareto Principle states: in any endeavor, a 20% segment can explain the status of almost anything and can influence what can or will happen to the undertaking. The Pareto Principle has also been called the Rule of the Vital Few and the Trivial Many.
For small businesses, it is best if you consider the 20% as critical and the 80% as …read more

The Pareto Priniciple (also called the 80% – 20% Rule) has been applied in a variety of fields & disciplines; e.g., business management, time management, management of sales people, project management, development economics, etc. Basically, the Pareto Principle states: in any endeavor, a 20% segment can explain the status of almost anything and can influence what can or will happen to the undertaking. The Pareto Principle has also been called the Rule of the Vital Few and the Trivial Many.
For small businesses, it is best if you consider the 20% as critical and the 80% as …read more

Working Capital funds the cost of the labor & materials that go into the goods you sell (or the services you render) and what you use to pay for salaries, rent, office supplies, etc (i.e., your operating expenses).
The basic structure of your Income Statement determines whether you should fund your Working Capital from Equity or whether you can afford to fund it from Debt. If your Cost of Goods Sold eats into your Revenues by not more than 30%, and your Operating Expenses are more or less equal to your Cost of Goods Sold, you can afford to fund …read more

Working Capital funds the cost of the labor & materials that go into the goods you sell (or the services you render) and what you use to pay for salaries, rent, office supplies, etc (i.e., your operating expenses).
After you are convinced that you have a marketable product or service and there is an accessible market sufficient to meet your profit objectives, you have to determine how much money you need to put up for the business. Oftentimes, the focus is on the fixed assets; e.g., office improvement, production & office equipment, furniture, etc. Not enough attention is paid …read more