Cash flow forecasting
A cash flow forecast is the most important document you are ever likely to use in a business; most commonly these are spreadsheets. It helps you determine how much money is coming in, and how much is going out, usually on a month-by-month basis for the next 12 months. You add up all your predicted sales and take away all the predicted expenses. If you get this the wrong way round (more money goes out than comes in), you can quickly see how long you have left in business. If you get this the right way round (more money comes in than goes out), then you can plan for new opportunities, markets, products and growth.
If you have never created a cash flow forecast before, or if you are looking to start a business from scratch, then the hardest aspect of a cash flow forecast is trying to predict sales. How can you determine what sales you will get before you have started? Start by calculating your break-even point, as that will tell you what you need to cover costs. Then, access the free online training module on financial forecasting, and on page 6 there is a free cash flow template you can download.
Setting up and keeping a simple cashbook
A cashbook is a record of your business’s income and expenses. It’s a way to track the money going in and out of your business.
Dealing with cash flow problems
Before resorting to asking your bank for a loan examine these methods to see if you can free up cash from within your business to solve your cash flow problems.
Calculating your break even point
When considering if you should start or buy a business, or if you are evaluating a new product, it's useful to know what your break even point is.
Setting terms of payment
Getting paid on time is often affected by setting expectations with your customer early on in the transaction. Learn what your payment agreement should include and how you can present it on your invoices.
Tax obligations when setting up a business
Will you operate as a sole trader, partnership or limited liability company? Before you decide, it's important to understand the basic tax requirements of each structure. Learn about your tax obligations or any registrations you may need to complete, and where you can go for free tax education and advice.
Pricing your product
The price you charge for your product or service ultimately determines how much revenue your business generates and how profitable your business is.
