Question

Why is it important for an entrepreneur not only to create a cash budget, but also to decide how it will be used within the firm?

Answer 1

It is the job of an entrepreneur to create a cash budget for the expenses that are going to be incurred in the project. It is also their job to present a plan as to how this money will be utilized in the company. This is due to the fact that a long established and planned level of expenditure at the start presents the company with a sense of direction and also lays an outline beyond which company doesn't spread its expenditure. This will enable the company to maintain the cash flow and essentially control it and not the other way round. The plan should not be either short or long but a concerned plan which should take into account both the factors and essentially allow the company to function efficiently.