Planning of cash flows at new enterprises is a fairly simple procedure . Without practical experience we can not plan receivables or availability of down payments, that’s why all cash incomes form the input cash flow. While all spending money form output cash flow. The difference between input and output cash flows forms the net cash flow for a certain period.
Any business planning implies accepting business risks. These risks predominantly derive from the inability to predict the economy and the behavior of people or markets. The economists deal with the calculation of possible losses for a given period when it comes to measuring risks.
Internal rate of return (IRR) is the discount rate at which the discounted net cash flow is equal to the discounted amount of investment.
What is the payback period of business?
The average payback period of business a few years ago was one or two years. Presently, these figures aren’t relevant. Business activity of small and medium-sized businesses does not have very bright prospects for development. This is especially true of business organized in big cities.
There are not so many venture funds and investors in the world that are ready to invest in the implementation of other people’s business ideas. In general, launching your own business, for example, in the USA is a pretty risky thing: only 3% of startups survive and only 1% of them really make a profit. So-called unicorn startups, i.e. projects that are an immediate success on the market and earn millions of dollars are even more rare.