Author: Anderson Josiah
Word Count: 508
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Planning a financial budget is certainly one of the most
important things a company can do, It is defiantly impossible to
get anything done correctly in company without a financial
budget, and in the more experienced company models it is against
the law not to have financial budgets that shows you exactly
what is the company's financial position in terms of cash flow
and cash availability.
Planning your financial budget is probably the most importantly
thing you can ever do to help company. A well planned financial
budget that is well executed is going to be a good help to any
company, naturally a badly planned financial budget will
defiantly be the collapse of any company before they even have
the chance to be successful.
So, what is it that actually makes a great financial budget?
Well, in a nut shell any financial budget that has incoming
money that covers the out going monies is a great start. Even
more so, the cash inflows must at least be equal if not in more
than of the cash outflows and the cash outflows together have to
produce something that is very competitive to the company
itself. So simply put you need to make more money than you
A great rule to follow when putting together a budget is the
cost efficiency principle. This principle simply says that you
should try not be tentative to spend y amount of money if you
are will get z amount of money in return with z being at equal
to y if not higher. Now, this is a very interesting idea but
some might argue that it is not doable in the early stages of a
company because a company needs to spend a lot of money to get
itself off and running successfully.
This is a very critical point, but one that is very superficial
at best. Although each item y might not produce a gross income
of z, you can add other items together to receive that result.
Suppose you have a + b + c resulting in e + f + g and both of
these equations are equal to D, then there is nothing to be
worried about because you are following to the cost efficiency
principle in your financial budget.
This should be exactly how you plan a good budget. You identify
exactly what has to be done from a financial point of view and
then make sure to do it out in a way that will allow you to
apply the cost efficiency principle. Do not ever invest money in
a company unless you plan to make profits (or something more
valuable than the as money you invested) out of it; If this does
not happen you need to ask your self, what was the reason for
starting a company. If you would like to know more on this topic
check out the link below and get a free copy of "Dotcomology"
the art of making money on the internet.
About The Author: Andy The Home Biz Wiz recommends for more
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