In our previous post, we discussed how a business’s function is to make a return to its owner, through some combination of cash flow and asset appreciation. 

From that post, we were able to answer “the what” of a functioning business. But now we ask ourselves, how?

How does a business operate?  Financially, a business will operate in terms of managing assets, liabilities, and equity to generate a return.

As hard as it may be to believe, all companies run the same way. Your business. My business. The plumber’s, the veterinarian’s office, the corner store and the online shop. They all are organized around three cycles.  

Our next series of posts will take each cycle in turn. First up: The Operating Cycle.

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