"Count your pennies before your lucky stars", National Post, Jan. 28, 2008
This article talks about how many startup companies fail because they don't plan ahead. Thousands of businesses start every year without really understanding the financial concepts of revenue and expenses. Bankers advise that businesses should prepare forecasts of profit, loss and cash flow. It will show whether the business will be able to run, or will end up in net loss. Furthermore, cash flows should be calculated to know how much cash on hand the business would have. Meeting with people of the same industry of the business will also contribute to planning ahead and keeping the business running well.
In chapter three, we learned the importance of the entire accounting cycle. The income statement, balance sheet, and cash flow statement are very important in the well running of a business. That is why these financial statements are sometimes produced monthly. This article relates to chapter three by stating the importance of financial planning and how forecasting revenue and expenses are a major part of running a business well. If businesses didn’t keep track of revenues and expenses, they wouldn’t know how well they were doing. Furthermore, the financial statements help contribute to decision making about the future of a business.
In my opinion, I think that people shouldn’t just start a business when they want to. They should research about the industry and make predictions of how the company will profit. The article said that thousands of businesses fail every year because they do not plan well. I think that is just a waste of time and money if a business fails because of lack in planning. Getting to know more about the business industry and how other companies operate will certainly help plan your own company. I think planning ahead is very important, not just in business, but also for everything else in life.
http://www.nationalpost.com/todays_paper/Story.html?id=268215
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3 comments:
I agree with Jenny, I think that entrepreneurs should acquire some knowledge in accounting first before they start a business. If the owners have some background of accounting, they could even do the journalizing themselves, and save them from the expenses of hiring a bookkeeper. Also, if the entrepreneurs know accounting, then they can understand their businesses’ progress fully more. Furthermore, I agree that cash flows should be calculated. If cash flows aren’t calculated, businesses can’t tell how much money they are using, and how much they are receiving. If they aren’t aware of their companies’ progress, then of course their businesses won't run well.
I think the article is stating the truth because the people now a day do not think about the consequences for their false and careless moves especially for the teenagers who are going into the business work. Things happen for example some investors just listen to random people on which stock is going to rise in the stock market but in the end they would usually lose money by listening to false information that others provide. I think if we were going to invest in something, then you should be careful and research before you make that decision. Opening up a business is not a game so we should be careful and think it over before you do. Take some courses to develop a greater knowledge on how to start a successful business before you do so.
- Joanna Wong
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