"Cover Your Nut" Rule
You must understand that the only reason that you are starting a business is to make money, and to do so you must have the tools to accomplish this. "Cover Your Nut" is a general term for covering the costs and expenses of your business to make a profit, and something that is often left out in the early planning stages of a business. In order to make money with your business, the first step should be to see at what point in time, and with what revenue, will I cover all of my costs and expenses. The "Cover Your Nut Principle" is the most important step that you can make toward being successful in reaching that original goal for starting a business, (making money).
The term "Cover Your Nut", so the story goes..........
A peddler drove his team and wagon, full of his goods to sell, into a small Western town. He drove his team to the front of the local hotel and seeing the Innkeeper out front of his hotel said, "I have this wagon full of goods to sell, but I ran out of money. Would you consider letting me stay at your hotel with my promise to pay you when I sell enough of my goods?" The Innkeeper, being a smart businessman, said, "You take that nut off of your wagon wheel, lean the wheel against the your wagon, and give me the nut. When you have sold enough of your goods, you will "Cover Your Nut".
Practical Accounting in Plain English for the Real World.
You must understand that the only reason that you are starting a business is to make money, and to do so you must have the tools to accomplish this. "Cover Your Nut" is a general term for covering the costs and expenses of your business to make a profit, and something that is often left out in the early planning stages of a business. In order to make money with your business, the first step should be to see at what point in time, and with what revenue, will I cover all of my costs and expenses. The "Cover Your Nut Principle" is the most important step that you can make toward being successful in reaching that original goal for starting a business, (making money).
The term "Cover Your Nut", so the story goes..........
A peddler drove his team and wagon, full of his goods to sell, into a small Western town. He drove his team to the front of the local hotel and seeing the Innkeeper out front of his hotel said, "I have this wagon full of goods to sell, but I ran out of money. Would you consider letting me stay at your hotel with my promise to pay you when I sell enough of my goods?" The Innkeeper, being a smart businessman, said, "You take that nut off of your wagon wheel, lean the wheel against the your wagon, and give me the nut. When you have sold enough of your goods, you will "Cover Your Nut".
Practical Accounting in Plain English for the Real World.
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