Capterra Glossary
Cost Benefit Analysis (CBA)
Cost benefit analysis (CBA) is an analytical tool used by businesses for crucial decision making. This tool is referred to as CBA since it measures the cost associated with making a beneficial decision minus the cost of taking action. The initial phase of CBA is where the project planning takes place. A business must understand their situation and goals in order to move forward to CBA. Once the framework of the project is established, the next step is to determine the project's costs. Next, the benefits of moving forward with a proposed project will be taken into account. Finally, the analysis calculations should be computed. If the analysis shows that the benefits are worth the associated costs, the findings will be presented to management and the business will likely move forward with the project.
What Small and Midsize Businesses Need to Know About Cost Benefit Analysis (CBA)
Cost benefit analysis (CBA) is a common analytical method used by small and midsize businesses to determine the short-term and long-term financial consequences and benefits of their business decisions. It's crucial for small businesses with limited budgets to conduct a cost benefits analysis for all of their proposed and planned projects, as bad business investments can severely damage their bottomline.
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