Model the future
As I proposed last week, planning a business does have some striking similarities to personal financial planning. So what are these? Surely business planning is completely different?
Startups by their very nature are breaking new ground. It’s perhaps ironic then that many are founded by entrepreneurs who have trodden this ground before, who know the ropes of setting up a business, driving customer acquisition and finding funding and bringing together positive teams.
We are delighted to announce that the Brixx team will have a stand at the London business show 2017. It’s happening in the Excel centre on the 17th and 18th May. We’ll be there to demo our financial planning software, show off what we have in the pipeline and generally talk all things related to starting up a business with everyone who is going.
A new update went live today with some new automated planning tools to make your life a lot easier. We have new options appearing inside the finance settings of your plan and inside many planning components. These cover VAT , National Insurance and Pension contribution.
Today I’m going to talk about content, and give a bit of a retrospective on our learning curve content-wise.
Becoming an online business is a steep learning experience. It has been nearly a year since we launched Brixx as a beta in April 2016, sticking our first toe in the waters of online business planning.
The cash flow statement is one of the more common reports used by accountants. It is a measure of all the incoming and outgoing cash activity of the business and is usually estimated at a monthly level. You may think that all that matters is your profit margin but cash flow is critical.
The key difference between a cash flow forecast and another report like the income statement is that it’s all about timing. When cash is parted with or received is vitally important. It will not take into account future sales received on credit. It’s a true reflection of your bank accounts inflows and outflows. Not what might be, but what is.
In the last two articles I talked about what financial modelling is and how this is different to the kind of planning present in many business plan templates. Today I’m going to outline the practical side of how a financial model (and a Brixx model in particular!) can help bring clarity to business planning, as well as being a great asset in the long run.
Last time we looked at what a financial model is in general terms. So how does this compare to traditional financial planning? In small businesses and startups, planning often takes a back seat to hard work and the pursuit of new opportunities. When planning is done it tends to be quite different to modelling, but the data to do modelling is all there.
Brace yourselves! It’s a series of articles about financial modelling… beginning with a really important question:
“Why model?” is the question we pose ourselves before embarking on every new project. It’s a question that you might find yourself asking too if you’ve come across the term “financial model”.
Modelling is a specific kind of financial planning. There are plenty of financial planning apps and services out there, and many of them are really great. But very few true financial modelling tools are available, especially on a scale suitable for startups and small businesses.