FINANCIAL PLAN

• Top reasons why small businesses fail

  • Pricing and Cost issues
  • Losing focus
  • Running out of cash
• Before you can focus on the budget


  Identify what aspects of your business you'd like to focus/improve
• Types of business goals

  • Short term goals
  • Long term goals
• How to create a business budget for your small business

  1. Analyze costs

  2. Negotiate with suppliers

  3. Estimate your revenue

  4. Know your gross profit margin

  5. Project cash flow
• Fixed costs


  Rent, mortgages, salaries, internet, accounting services, and insurance
• Variable costs


  Cost of goods sold, commissions for labor
• Start-up costs


  Costs for new business
• Gross profit margin


  The cash you are left with after your business has dealt with all the expenses at the end of the year
• Components of cash flow

  • Customer payments
  • Vendor payments
• To encourage timely payments

  1. Flexible payment terms

  2. Payment channels

  3. Strict business policies on paying late
• Budgeting process


  1. Factor in seasonal and industry trends

  2. Set spending goals

  3. Provide a system to check if money is being spent on the right areas

  4. Bring it all together with an accounting system
• Budgeting is an essential process, especially for small businesses, as it allows business owners to estimate and allocate money for different business activities