Question

please be sure to use a minimum of two in text citation and work references

Besides writing a business plan, list and describe three other steps that are important in the startup of a new business. Then, describe home-based businesses and explain why and how home-based businesses have become the fastest growing segment of business startups. Would you run a start-up business from your home? Why or why not? Next, • Compare and contrast the four categories of financial ratios we discussed in class. Discuss how business owner and potential investors could benefit from these ratios. What are clear indicators of success spoor operations?

Answer 1

Startup of business requires three requirements as most important namely the breakeven analysis which is when firm turns profitable, the total equity share capital which decides fund raising plan and lastly the sustainability of businesses which decides growth patterns in future. Home based business grow enormously due to lower capital investment, lesser need for labor and overhead costs, and lastly easiness in operation and flexibility and scalability associated. Hence is most recommended to start business from home for better command control.

References :

1. Six ways to measure small business success, by Mike Kappel Contributor, Forbes
2. Business evaluation checklist, by the Entrepreneur.

Four categories of financial ratios are:

1. Liquidity ratio in which current ratio and quick ratio is measured
2. Return on Investment ratios in which Return on Assets, earnings per share and net profits are calculated
3. Leverage ratios in which debt to equity and debt to Ebitda ratios are calculated
4. Efficiency ratios in which Inventory turnover and Inventory to asset ratio is calculated

The only Similiarity is that all are analysed before purchasing stocks and options of the company. Business owners can benefits from this as they can have firm view on future cash flows and current scenario as well as organisations balance sheet more closely. The clear winners are thise in which ratios are in line with industrial standards and thus are neither undervalued or overvalued.

References :

By Casteuble, Tracy. "Using Financial Ratios to Assess Performance., Association Management, July 1997.

By Clark, Scott. "You Can Read the Tea Leaves of Financial Ratios." In Birmingham Business Journal, 25 Th of February 2000.