Definitive Business Plan, Second Edition, The

Chapter 9. Getting to Net Profit

Where the money goes

Capital spending

Capital assets that you already own

Capital assets that you want

Accounting for fixed assets

Operating expenditure

Net profit

Other income and expenditure

Moving on

“If little money does not go out, great money will not come in.”

—Chinese proverb

This chapter looks primarily at the costs associated with operating your business. These can be divided into capital and current spending – also known as investment and consumption. The accounting treatment of each one is slightly different.

Costs are usually split into functional areas (R&D, production, marketing and sales, etc.). In accounting terms, production costs go into a manufacturing or trading account, and all other functional ...