PRODUCING YOUR OWN CASH FLOW PLAN
You will need to know how and where your income is coming from and how often.
Your own tailor made cash flow plan will take account of your own needs and overheads.
You will be able to forecast your targets and made sure that you stay on line.
The individual cash flow plan will act as an early warning system if things should start to go wrong
FINANCING THE VENTURE
Armed with your business plan and details of your personal investment in the company, you could approach your bank for a loan or overdraft facility.
Out side financial help is required by many firms to begin with and can be obtained in various ways including;
Overdraft Loan Government small firms loan Guarantee Scheme
Your bank manager will be able to advise you on these and many others. You may also qualify for the Government Enterprise Allowance Scheme which entitles you to £** per week for the first year of trading.
Remember that your bank manager is a small businessman himself and his future depends on encouraging enterprises like yours.
Also like yourself he is there to make a profit. FROM YOU!
Only when you have drawn up your business plan and done your cash flow forecast will you be able to know how much cash you require.
Before you run round to the bank to see if you can get the overdraft you require, take a further look at the amount of money you require. Supposing things don't go quite according to plan? Going back to the lender and asking for more money in a short space of time doesn't install confidence. You are likely to find your second request refused.
Starting a new business you need money for "Once in a lifetime expense"" of setting up the business. ,ie. Money to spend on premises, furniture, equipment, legal and professional
costs, and for initial marketing costs.
You will also require working capital. This is what you need to keep yourself going in the time gap between paying out cash for raw materials or stock and collecting the monies from the people you sell to.
Remember all business' need working capital, the amount varies depending on the credit terms you can arrange with your suppliers and the amount of credit you extend to your customers.
The fact is that if you don't invest in your own business idea, then you cannot expect other people to invest in it.
If you have personal savings or other collateral then you should be sufficiently committed to your business plan to invest a proportion of your own wealth or assets. If you don't have the confidence to rise to this commitment, then don't go into business.
The bank manager is the obvious first point of call. The advantage of going there is that you have been a good creditworthy customer for a number of years. But there are a couple of reasons no to head straight there.
Your presentation of the business plan will improve each time you give it, so it will pay to practice on an other bank that does not know you. This will give you the opportunity to get to know the questions likely to be asked and give you a chance to prepare suitable answers.
Secondly each bank manager has his own limits as to what he can lend, you therefore might find yourself in a situation where your application may have to be transferred to another department and you will fail to get the sympathetic ear you expected.
The moral is shop around and don't be put off by a refusal, try another bank or branch that might be more use to business deals.
Government small firms loan Guarantee Scheme
This scheme was set up to help new and established businesses that could not get a conventional loan because of lack of security. The DTI steps in to provide security by guaranteeing 70 per cent of the loan (85 per cent if you have been trading more than two years )
Apart from standard requirements the banks will loo
CONTROLLING YOUR CASH FLOW
If your cash flow runs out your business will fail. It is that simple.
There are important steps in in conserving cash:
Know how much cash you have and need
Speeding up cash flow intake from your customers
Slowing done cash flow output to your suppliers.
( This does not mean not paying for supplies )
Preparing your business plan will have helped you to know how much cash you need in the business.
You can help to conserve cash by paying by instalments for equipment cars etc.
When cash is tight you should take more stringent measures and institute a control system;
Daily cash balance
Weekly bank statement
Weekly forecast of cash payment from customers
Obviously when cash is short you need to bank as quickly as possible and send payments by second class post.
Remember that sell to someone that doesn't pay on time is worse than not selling at all.
Few businesses can confine their sales to totally safe customers, there is usually an element of risk with all sales.
If the worse happens see the section on collecting though the courts.
Taking credit from suppliers is a significant way of sourcing a small business, but remember that they themselves may be short of funds.
Unfortunately always being open with your suppliers may not pay off. Saying you are short of cash may cause a panic and your creditor may issue a writ without delay and your future credit rating could be affected.
k at the soundness of your business plan and the amount of money that you have invested yourself.
Convention testimonials Thanks for your note Juliet, I had a wonderful convention, met so many fab new people and of course cemented old friends. Thanks for everything. Morag MacDonald
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