Below are a list of some of the main pitfalls in financing a business:
- Underestimating the investment needed (the golden rule is to double your original estimate).
- Not including room to manoeuvre in your budget for the start up period.
- Forgetting your own personal financial requirement.
- Not putting aside money to pay taxes when they are due.
- Underestimating the difficulties of getting paid.
- Cash flow planning means looking at every item of income and expenditure and estimating when it will impact the business.
- A business plan is vital to the success of any new business – remember if you fail to plan you plan to fail.
- It is worth plenty time and effort.
- If you are starting up a business and have no previous figures to go on with the budget – be very thorough in your estimates.
- In your operating budget you should forecast, turnover, gross profit overheads and net profit.
- Include depreciation in your costs.
- Know how to calculate costs of sales.
- Dont underestimate your living expenses – be realistic, and include this figure in your budgets under drawings.
- Cash flow is just as important as profit, a profitable business can still fail due to lack of cash.
- Plan carefully so you can still meet all reasonable contingencies.
- Match how your outgoings coincide or otherwise with your income.
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FDC Financial Services Ltd is regulated by The Central Bank of Ireland. Registered Office FDC House, Wellington Road, Cork. Registered in Ireland No: 069045