Do the sums
Every new business needs money. Even before your first sale, you have to buy equipment, rent or lease an office space and spend money on marketing. Once you’re trading, you’ll need cash to pay the bills and keep the business going.
Growing pains
Make sure you have taken into account how much money you need to live on. In the early days you might not earn spare cash that you can spend on yourself. You may need alternative sources of income while your business is growing. Many businesses can earn enough to cover their outgoings, but don’t make a profit in their first year. If you do make a profit, you may want to reinvest it to help your business develop.
Personal finances
Make a realistic forecast of your personal financial needs when starting your business. A personal budget should detail your domestic financial needs for the year. Set limits on the amount you plan to spend each month on items like rent, food and housekeeping.
Track your personal spending over a month. To find out how much money you will need to take from the business, multiply the monthly figure by 12, and make adjustments to cover one-off spending such as holidays or car tax. Then you should have a good idea of how much you need to live on during your first year of trading.
Our favourite links
businesslink.gov.uk Business Link offers advice on how to survive until your business is off the ground.
Find out more about sources of start-up funding in our next steps section on Money matters.