Definitive Business Plan, Second Edition, The

Using a surplus

There are two ways of looking at a cash flow surplus. If you are drawing up a business plan for part of a larger organization, your surplus might go to fund another part of the strategy. A worthy use. If you are looking at the entire enterprise, you have a problem. Why? Any surplus that remains after paying dividends or funding withdrawals from a partnership or sole trader's business will claw down your return on investment (ROI) – unless you invest it wisely. As we discuss later, the largest ROI should come from minding your own business. If ultimately you can earn more by putting the money in a bank, you might as well sell the business and sit on a beach. It is time to revisit your strategy and put the surplus to good use. Take ...