Buying assets or businesses, establishing a new venture and disposing of an existing business activity all represent projects that need to be assessed and evaluated. Let us assume that the project is of a size that justifies time and effort to analyse, which will depend upon its absolute size and its size relative to the whole business. Clearly a £2,000 investment will be material for a small business but represents ‘small change’ for a large one.
Before pursuing a new project or initiative, take the time to forecast its performance. Become familiar with several ways you can evaluate the project's potential impact on cash flow.
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