Financial planning
for businesses
business decisions. It will also highlight flaws
in your plans and hopefully help you avoid
making costly mistakes.
Start-up costs
The first 12 months of a business are likely to
be the hardest financially as you may need
to invest considerable amounts of money
long before sales start coming in. Before you
start trading, calculate what you will have to
spend money on during the first year of your
business. Compare this to how much money
you have to fund your business and how
much you realistically expect to earn in the
first year.
Premises can often be the most expensive
initial outlay, which explains why many
businesses now begin at home. You may also
need to factor in the cost of refitting, making
a building legally safe and running costs.
Costs to consider in the first year include:
Financial planning is essential to the success
of any business, whichever stage it is at.
Having an accurate idea of your current and
likely future finances can help reduce the
impact of any unforeseen challenges and let
you get on with running your business.
Financial planning
for start ups
Before you set about turning your
entrepreneurial dream into a reality, you
need to objectively assess whether your idea
will work as a business. An amazing idea will
not translate into a profitable business if no
one is willing to buy your products or services
at the price you want to charge.
A business plan is a useful tool to help you
decide whether you have a viable business
strategy. There are no set rules about what to
include but most business plans detail:
•
the business
•
the opportunities and threats
•
the risks
•
its objectives
•
the strategies to achieve its objectives
•
the market
•
financial forecasts.
This document can be used to help secure
funding and act as a road map to guide your
ACTIVE PRACTICE
UPDATES
SEPTEMBER 2014
Business UPDATE
This guide looks at how financial planning
can help you and your business succeed.
If you can’t afford to cover these costs, you
may need to consider applying for external
finance or scaling back your plans.
Financial forecasts
Financial forecasts help business at all stages
of development get a clear short, medium
and long-term picture of their finances.
The 2 primary financial forecasts are:
•
profit and loss, including the sales and
gross profit margin
•
cashflow, including monthly peaks.
Profit and loss
forecasts
A profit and loss - or P&L - forecast is
usually made up of 2 parts:
The sales forecasts
Sales forecasts are an estimate of the
sales revenue you expect to generate
each month. This allows you to plan
your sales strategy and prioritise
resources accordingly.
One off costs
Regular outgoings
Equipment
(including
installation)
Rent or mortgage
repayments
Initial stock
Insurance
Marketing and
advertising
Wages
Vehicles
Bills
Henwood House Henwood
Ashford TN24 8DH Kent
01233 630000
