I will now cover the remaining 6 - Accounting and Business Questions

#7) What are the alternatives in financing a business?
          First, you need the commitment of your own funds; this will become the indicator of how serious you are about your business.  You may want to seek out investors that also believe in your idea for this business venture.           Banks are an obvious source of funds, but you must be properly prepared with a good business plan before you approach financing institutions. Banks are not in the venture capital risk business; they will not lend funds without sufficient collateral to back up the loan.  Other loan sources: are commercial finance companies, venture capital firms, local development companies, and life insurance companies.

#8) What kind of profits can i expect?
          This is not an easy question.  Profit is the funds left over after all expenses (from cost of goods through all expenses including your salary) are taken care of.  There are standards of comparison called "industry ratios" which can help you estimate the profits you can expect and will need.  These figures are published by several groups, and can be found at your library.  Help is also available through the SBA and the trade associations that serve your industry.

#9) What should i know about accounting and bookkeeping?
          Accounting and bookkeeping are the footprints leading you to what has happened economically to your business.  Therefore, a manager needs to know how to follow these footprints.  A manager needs to know the rules, such as: Generally Accepted Accounting Principles (GAAP).

#10) How do I set up my accounting and bookkeeping system?
          If you supply the input for setting up your accounting system, it will be a much more meaningful and useful program for you, and the financial statements will become management statements.  Some of the things that you should consider before setting up your accounting and bookkeeping systems are the following:
          How will the records be used?
          How important is this information likely to be?
          Is the information available elsewhere?
          Will you need management, or investment, or credit statements?
          What level of detail should be tracked?
          How can the information be of the most use to me?

#11) What Financial Statements will I need?
          You should plan for three kinds of statements:
          Standard Balance Sheet
          Income Statement
          Cash Flow Statement

#12) What does "Cover Your Nut" mean?
          The "Cover Your Nut" principle means that your sales and revenue must cover all of your costs and expenses over a given time frame.  To establish a "Cover Your Nut" or a "Break-Even" report you will need the following information:
          What are your projected sales and revenue?
          What are your fixed expenses?
          What are your variable costs?


We all would like the magic crystal ball that would answer all of ouir questions, but when you get right down to it, the requirements are simple.  You must carefully prepare all of the information about your proposed venture to find the answers.  Will it really work:  You must be diligent in the collection of this information and not expect to have the answers without the input of all of the key information.


I have diligently tried to make Practical Accounting easier for you to understand through my simple, straight-forward guide & reference book - "Cover Your Nut" by RG Bud Phelps.  You will find the book contains - 'Practical Accounting in Plain English for the Real World', and is available at Amazon, Barnes & Noble, and many of your local book stores.