The Importance of Cash Flow Forecasting in a Business Plan

Putting a business plan together can be a daunting task for most people. Approaching a lender or investor with a nascent business idea is intimidating and off putting for even the most confident and talking about how wonderful a business idea is can even seem boastful and even tasteless. Getting over our natural reticence can mean the difference between securing the funding required for our start up and failing to get the project off the ground. Birmingham has a vibrant and growing economy and the UK as a whole is recovering from the downturn. Now like never before is an excellent time to start a new business and putting in the ground work of a robust business plan is the first step in becoming your own boss.

Creating a business plan in Birmingham can be broken down into a series of steps which have been covered in previous blog entries, but it is worth a quick recap. First of all be clear about the goals you wish to achieve and specific about how you will go about achieving them. A well formulated mission statement is a great way to introduce your idea to a potential investor, but it will also be the touchstone by which your business grows in the future. It is very important to point out why your business will succeed - what makes it different and gives it the edge over established competitors. If there are no competitors ask yourself why? Is it because it has been tried before and not worked? Include profiles of all of the key players that will be part of your business and how their experience and knowledge will help the business succeed.

Cash flow forecasting in Birmingham as part of the business plan can be the most confusing and easy to get wrong part. Begin by formulating a sales forecast. Sales forecasting is basically educated guesswork but you should have a good knowledge of your potential customer base and how effective your marketing strategy will be. Once you have an idea of how, where and when you will make your sales you will get an idea of where the money will come in. Once you know how much, then you need to know when. Offering 30 days or more credit is standard in many business to business companies, but retail usually requires payment before goods are provided. Any credit offered should be factored in as this will have a direct impact on company cash flow and has the potential to become a headache. Cash flow forecasting in Birmingham should also include details of any loans that have or will be procured and how those loans will be paid back, over what period and any interest that will be incurred.

KSA Associates specialises in helping business start ups and small businesses to succeed. We can offer advice on any aspect of starting a business and can help you to create a robust and investor-attractive business plan in Birmingham. We can help you to secure funding for your business idea and we will always be available to talk you through your options.