The point of a business plan, no matter what stage of business you are at, is to set out your goals, strategy and action plan for achieving them. In this article, I run through how to write a business plan – and why it’s a great idea.
Start-ups can happen very quickly. Or at least, that’s how they look from the outside. This guide goes through the steps to start up a business in the UK, including writing a business plan and marketing plan.
So, you’re making a business plan. You know your business, that’s the easy part. Making a financial plan, well, that sounds harder, right? This article is all about making a simple financial plan for your business. Each element of the business that you need to consider will be broken down into steps, which when added together make a full financial picture of the business.
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.
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.
Startups can happen quickly
Or at least, they appear to from the outside.
The first business I was involved with was a startup in the UK. When I started writing my university dissertation the business just didn’t exist. By the time I handed in my 60 pages of literary analysis the company had been running for a month and I was lucky enough that they were looking for new content writers to join their team.
When I first came to Brixx I didn’t know the first thing about finance.
But I did know something about small businesses and how they operated.
Within a week I was starting to understand that the Dark Art of accountancy wasn’t so dark, it’s just rarely explained in terms non-accountants understand. The reason why a balance sheet should balance, or the difference between retained earnings and opening cash is lost to most non-accountants. Business people and entrepreneurs see the world divided in different ways to the rules of accountancy.
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