| Working Capital
You also need to determine your working capital needs - that is, how much money do you need to have on hand to cover operating expenses while you get your business off the ground. Working capital also provides cash to finance accounts receivable if you offer your customers credit terms. While you are waiting for them to pay, working capital is what pays your bills.
Working capital is also important to have on hand for seasonal businesses, where all your sales are made during a certain time of year. To determine how much working capital you need to have on hand as you start or grow your business, a good rule of thumb is to have enough money to cover three to six months of your operating expenses - based on the financial projections you calculated in the business planning process. For a simple worksheet to build your list of start up costs and project monthly expenses, visitBusiness Know How.net.
|
|
|
