|
Consider the cash flow
for your home given the following
assumption.
Inflow:_
Income from providing childcare
$10,000_
Outflow:_
House payment plus taxes
$8,600_
Net
Balance:
$1,400_
You have
a positive cash-flow of $1,400 per year.
|
Cash-Flow Cycle:
Starts when
money is spent; ends when
money from prodcut or service
sold is received.
|
|
Most Small Business
Owners
only consider a purchase an
investment if it will return quick
positive cash flow.
In this case your home is
an
Asset because it creates positive
cash flow and a place to live.
Your home may also become
more valuable over time which
would provide additional income
if you choose to borrow against
the equity in your house.
However, real estate can
also
lose value making your house
worth less than you owe.
|
_
Bill are paid with
cash, not profit.
You must have enough cash
on-hand
to pay bills even if you do not have
income flowing in.
Major creditors will
quickly foreclose
on a family or small business.
Inability to pay
bills is why most
small businesses go bankrupt.
__________________________________
|
