What you need to think about…
Personal Survival Budget
You need to think about your personal survival budget. Think about what you need to live on each month. Look at your average monthly income minus costs and expenses. This will tell you how much you need to take from the business to pay your bills etc.
Start-up costs are the costs you will incur when setting up your business. They will vary from business to business. They can include costs for equipment; premises; training; marketing; and insurance; registration of your business. You need to carefully consider the costs required to establish your business so that you can be sure that you can cover expenditure as it occurs.
Cash Flow Forecasts
A cash flow forecast is essential to ensure that the organisation does not run out of money and it also identifies how much funding needs to be raised in order to operate the business.
There are many cash flow forecast templates available online, including from Start Up Loans, who also provide guidance regarding the completion of the cash flow forecast:
When you have chosen a cash flow forecast template start by putting in all the costs, with your best estimate of when they will occur, including salaries; premises costs; hire of equipment; utilities etc. This will give you the break even figure that you will need to achieve on a monthly basis to cover your costs and work towards becoming a sustainable enterprise. Most enterprises that survive and prosper have a cost base that is 75-80% of their revenue or income. Any surplus can be reinvested in the enterprise and used for future development.
Profit and Loss
An income and expenditure forecast is a statement of how you expect the business to perform over a given period, taking into account the profit that you would expect to achieve (in relation to your expected income) and the costs of providing your product or service.
For a detailed guide to profit and loss see this useful guidance from Start up Loans Company
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