Starting your own business is exciting, naturally there will be worries and concerns at the same time about whether you are doing the right thing. This is completely natural as you will want to make sure that to the best of your abilities that your new business will be a success and give you the rewards that you want to achieve.
Although there is no guarantee that you will be successful in your new venture, you can do many things that will give your business idea the greatest opportunity of the business success that you desire. There are 3 things that you can do:
Make sure that your business idea is well thought out by writing a business plan with your Business Advisor;
Work out how much you need to survive and does the business make financial sense by preparing a financial forecast with your Business Advisor.
Engage a competent, well-qualified Business Advisor who will work with you and challenge your ideas to ensure that they are robust and well thought through.
Our forecast spreadsheet contains 6 tabs which can feel overwhelming at first, so it’s a good idea to break it down into chunks.
Start with the Personal Survival Budget which is about your personal expenses and how much you need to maintain your current lifestyle. Then move onto the sales forecast, thinking only about the income your business will generate. And finally, complete the cash flow forecast tab and expenses you will incur. The forecast template also enables you to enter sales and expenses for your second year of trading.
When completing the sales forecast, plot out the different months of the year and consider how events and customer behaviour at different times of the year may affect your sales. For example, retailers may find that the run up to Christmas is the busiest time of the year but for garden maintenance businesses December may be one of the quietest months.
If you have a lot of different products or services then it won’t be possible to list every separate item in your sales forecast. Instead you could consider what your average customer will spend and use that for your forecasts, or take it a step further and identify groups of customers such as high spend, medium spend and low spend.
When thinking through your business expenses it is easy to think about the big costs you incur such as rent, equipment, stock or marketing. While these expenses have the largest impact on your cashflow remember to also include the expenses that come around month after month and are easily overlooked – things like stationery, postage, credit card processing costs and online software subscriptions.
Figuring out your sales before you’ve started your business can be tricky. One solution is to start with your monthly expenses, then work backwards to figure out how many units you need to sell to cover those expenses. This will give you a basic breakeven point from which you can work on your sales forecasts further.
... or for more information on how Business Starts can help you launch your business Contact Us today.