Cost Benefit Analysis in Business Ventures

Simply put, Cost Benefit Analysis adds up the value of the benefits of a course of action and subtracts the costs associated with it. With regards Company formation, fundamentally it would be in the interests of the parties involved to employ this kind of examination to their venture, it is an important aspect of risk management. When putting together these calculations, one must take into account that benefits come over time, and costs will either be on-going or once off payments. CBA is often used by Governments and Governmental bodies in evaluating the practicality of a given pursuit.

It would be wise, in such matters, to make calculations refer mainly to cash, because cash is of course the lifeblood of all businesses. But CBA is not only important for setting up a new enterprise, it can also be of use to existing companies in evaluating new business plans or proposals. Whether these plans be cost cutting measures or fresh proposals for new avenues of business, it is of vital importance that every precaution is seen through. Practicality is key. Bad debt has been the breaking point of many businesses.

Naturally there are much more basic principles a company can follow alongside using CBA. With regards customers, it may be of use to conduct a study of customer loyalty, if there are some that are too risky, it might prove useful to avoid them. Also, managing bad debt and maintaining strong credit control will increase a business' chance of survival. For new ventures there are also programmes to be taken advantage of, in late April Fingal County Council Enterprise Board launched a package of supports for start-up companies, known as Start-Me-Up. Chief Executive Oisin Geoghegan said, "We are aiming to maximise the prospects of business success for the participating companies and we are hopeful that the supports provided will ensure that the businesses are given every opportunity to succeed."

The Start-Me-Up initiative will provide intensive practical supports for up to 50 new businesses with the aim of creating long-term employment. As for those existing businesses, or even those not lucky enough to be one of the 50, there are other establishments in operation who specialise in the support of company formation and the solving of any problems a company might be suffering.



Lorraine McInerney is currently working as a Freelance Web Content Article Writer. She has an Arts Degree in English Literature and Ancient Classics, and she is currently a post-graduate student of English, specializing in Post-Colonial Literatures. She will be writing her thesis this summer on "Liminality in Post-Colonial Women's Writing".