No matter what business you're involved in, cash will be your number one priority from the outset. You'll need to get a firm grasp of the business's cash flow as well as a good understanding of the costs of running your business.
Start-up costs
You usually need some cash to get your business up and running at the beginning. You'll know how much by working out your start-up costs.
Make a list of all the costs you will incur when you start the business. Here's a very simple example in the case of Doctor PC. As a one-man band working from home, it's pretty straightforward. He needed transport, a set of the latest tools, some software packages and a few workshop and office items to get started.
| Second-hand van |
£5,400 |
| Tools |
£550 |
| Software packages |
£175 |
| Workshop furniture/fittings |
£180 |
| Stationery |
£140 |
| Insurance |
£350 |
| Total: |
£6,795 |
Below that he sets out the business's cash assets - in his case, a redundancy payment, savings and the safety net of an overdraft agreement with his bank.
| Redundancy payment: |
£5,500 |
| Savings: |
£3,500 |
| Total: |
£9,000 |
|
|
| Agreed overdraft limit: |
£4,000 |
"I'd always wanted to have my own clothes shop and one day I was driving along when I saw the perfect place to rent. It was too good an opportunity to miss, so I went for it. I was amazed how straightforward it all was. I simply wrote a business plan and asked my bank for a loan. I also got a loan from the Prince's Trust."
Jane Richards
Pebbles, Mumbles
