Choose the right finance when starting a business

Work out your financial requirements when starting up

When starting a business, you need to prepare a business plan. This should set out how you intend to operate your business and should include essential financial forecasts. These forecasts will help you determine how much funding your business requires, what it is needed for and when you will need it by. See write a business plan: step-by-step.

Good planning will also make it easier to raise the money you need by showing potential investors that you know what you are doing and that it is worth investing in your business. See use your business plan to get funding.

How much finance do you need - and when?

It's essential to have an accurate idea of your financial needs. Once you have calculated the amount you'll need to cover your initial start-up costs, you'll also need to factor in your running expenses. See the following guidance to help you plan your financial forecasts:

You should also remember that customers may not pay you immediately - but you will still need to pay all your bills to keep trading. It's sensible to have sufficient capital to cover projected expenses for at least six months. 

At the same time, you need to make sure that you have taken into account how much money you need to live on. In the early stages, a new business is unlikely to produce spare cash that you can spend on yourself. For more information, see managing business finance during the start-up phase.

Watch a video tutorial on what to include in your sales, profit and loss, and cashflow forecasts.

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