How to Plan Finances For A Small Business

Some people are naturally organized with their finances, for instance, but many aren’t. Not managing your finances is the biggest single reason for small business failures in the UK. You must learn how to plan finances for a small business. Consider contingencies and unforeseen circumstances; these will happen at some point.

So how to do it? Devise a financial plan. This is an essential aspect of an overall Business Plan and needs careful and complete consideration. The Financial Plan demonstrates that the business is viable; revenue is projected and sufficient to cover all costs and obligations.

How to do money planning for your business

This can transform an idea into a reality and prepare you for any possible obstacles and provide a clear direction with set targets that are achievable and manageable. The Princes Trust provides an excellent business plan template. Templates ensure you are asking yourself the right questions and covering all areas of your business. – https://www.princes-trust.org.uk/help-for-young-people/tools-resources/business-tools/business-plans

Determine Your Status

Decide if you are going to be a sole trader, limited company, or partnership – www.gov.uk/set-up-business

Chose A Name for Your Business and Registered It

This can be completed directly with Companies House. https://www.gov.uk/government/organisations/companies-house. Some organizations will complete this for you and provide additional business services. Such as Companies Made Simple will do this for you for a small fee.  – www.companiesmadesimple.com

Open A Business Bank Account

When learning how to plan finances for a small business, don’t forget your business account. This ensures your personal finances are separate from the business. This is essential for tax reporting purposes and your liabilities. Business accounts offer various services, so comparison sites are a useful way to compare provisions www.businesscomparison.com.

Research Ways to Finance Your Business

There are various loans and grants available to new startups. www.gov.uk/browse/business/finance-support

You Also May Be Able to Claim Enterprise Allowance

This supports your personal income as you start your own business- https://www.gov.uk/government/collections/new-enterprise-allowance-campaign.

Plan A Budget for Projected Income and Expenses

This means identifying money planning for business from start-up equipment to websites, insurance, rental of premises, office supplies, staff wages, technology, raw materials, and many more.

This must be completed to ensure you can meet financial commitments and have sufficient cash flow. There are many budget management software products on the market. Here are a couple of examples https://meet.adaptiveplanning.com/https://software.board.com/https://www.sage.com/en-gb/bossit/

How to plan a business budget

It can be very tempting to want everything to be perfect from the start, so planning the initial start-up investment and ensuring you have sufficient cash flow to keep the business running while building its customer base is essential. Test your assumptions. This means not to assume you will have lots of customers demanding your service and willing to pay the prices you set.

I was familiar with a silk flower shop that opened its doors in an affluent village close to my home. It closed its doors within six months with a £40,000 debt. They clearly had not completed their research on the consumers in the area.

A walk-in storefront was most likely not the way to reach their target consumer, and an online service most likely would have been more successful. They did not plan their finances for a small business appropriately, made assumptions without testing them, and invested blindly.

Sourcing Suppliers

When looking for suppliers for materials, conduct a thorough search and invite them to sell their products to you. I did this whenever I wanted to change a wine list and ask 6 different companies to compete based on quality, price, deliveries, and reputation.

I would also insist on a tasting session for each wine and invite my staff to decide. This served two purposes: my team increased their wine knowledge level, which improved the quality of service and my staff felt valued and involved, which improved their loyalty.

Learn to Negotiate

Be prepared to negotiate the price of everything you need with all suppliers. No law says you have to pay the asking price, so don’t be shy about asking for discounts or a lower starting price.  Always plan your finances for a small business, not for something over your head. What’s the worst that can happen? They may say “no,” but they may also want to find a way forward and say “yes.”