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When starting your business you will need to make a realistic forecast of your personal financial needs. A personal budget is a plan detailing the personal living expenses you will need to fund from the business or other sources. It should set limits to the amount you plan to spend each month on items like rent, food and housekeeping.

How to draw up a personal budget

Some expenses, such as your rent or mortgage, are likely to be fixed, whilst your spending on other items may change from month to month. You need to keep a close eye on the areas where savings can be made - such as leisure or travel.

Track your personal spending

Tracking your personal spending can help you find out how much money you will need to take from the business. You can download our personal budget spreadsheet (XLS, 13K) and adapt it to your individual needs.

Forecast your yearly expenses

If you multiply the monthly figure by 12, and make adjustments to cover one-off spending such as holidays or car tax, you will know how much you need to live on during your first year of trading.

Be realistic and plan for adjustments

It is important to be realistic. You may need to find other funds, borrow money or ask HM Revenue & Customs or whether you qualify for tax credits or benefits. 

Funding the first year of business

The first year in business is vital, so you may have to accept that a financial sacrifice may be required to keep on trading.

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• 91香蕉黄色视频 for entrepreneurs on low incomes
• starting a business when unemployed
• starting a business when on benefits

There are ways you can save money on goods and services, both at home and in your business.

Making personal savings when starting up

You may be able to reduce the amount of money you pay out each month, simply by shopping around for services and loans. If you already have personal debts, for example on credit cards or personal loans, seek advice from an independent adviser or your bank as it may be possible to reduce your outgoings this way as well.

You can also try to reduce your everyday expenses. Tracking your personal spending can help you identify areas where you can reduce your personal spending.

You can download our personal budget spreadsheet (XLS, 13K) and adapt it to your individual needs.

Making savings in your start-up business

You can cut business costs and make savings by:

• Implementing simple cost control systems across your whole business to identify scope for savings.
• Cutting unnecessary or excessive costs, for example, by not heating your premises at night or finding low price suppliers for goods or services.
• Adopting 'green' practices such as switching off computers when not in use can also save money as well as reducing your carbon footprint - see how to save money by using energy more efficiently.
• Considering leasing goods or buying them second hand - see how to decide whether to lease or buy assets.
• Considering whether you can save money by running your business from home - see how to start a business from home.

You need to identify how much money your business is likely to bring in over the coming year and then how much profit you hope to make.

You can do this by:

• estimating your total income from sales
• estimating your expenses
• working out a figure for salaries and dividends, including tax
• working out the difference between your financial requirements and the amount you are prepared to take out of the business

This will leave you with the amount you potentially need to find from other sources. For advice on what you will need to take into account and plan for, see how to write a business plan: step-by-step.

Forecasting profit and cashflow for your start-up

It may not be easy to calculate exactly how much your business will make in its first year, so it is important to concentrate on managing cashflow rather than profit.

Profit is the difference between the total amount your business earns and the costs it must pay out over the trading period - usually a year.

Cashflow is the balance of all the money flowing into, and out of, your business. It covers actual payments of money, as opposed to what is owed by your debtors or to your creditors. Cash pays the bills and allows trading to continue. The need for cash is even greater if your business is growing and extending credit to more customers.

The main outflows of cash are:

• wages and salaries
• overheads such as rent and rates
• capital spending on plant and equipment
• working capital such as stock and raw materials

If you sell on credit, your cash inflow is delayed until you are actually paid so effective credit control is important. A business that buys on credit and is paid in cash, such as a retailer, is at a great advantage in cashflow terms. Businesses which make sales over the internet can also be cash positive.

Many businesses rely on bank overdrafts and quickly reach their borrowing limits. It is therefore important to think carefully about your cashflow and reduce the need to rely on an overdraft - see cashflow management.

You can download and reuse a sample cashflow projection spreadsheet (XLS, 29K).

You will almost certainly have to find other ways to finance your needs during the early days of your business.

There are a number of options open to you.

Use personal savings 

Consider using your personal savings to fund your business. It鈥檚 important make sure that you have an emergency 'rainy day' fund which should add up to three months spending. See advantages and disadvantages of using your own money to start a business.

Start your business while employed

You can start your business while keeping your current job, using your spare time to run your business. See starting a part-time business.

Release equity from assets

One option is to release equity from existing assets, such as selling your car and purchasing a cheaper one. This can provide extra cash flow without taking on debt.

Sell unwanted assets

Many people have things that they do not use or want. You can sell these assets through auctions, online marketplaces or private sales. See transferring and selling assets.

Borrow from family and friends

You can get a loan from your family and friends. In most cases people who borrow from family or friends do not pay as much interest on such loans. However, be aware of ill feeling that may be caused if you are unable to repay on time. See financing from friends and family.

Seek local enterprise funding

Look for low-cost startup funding options managed by a local enterprise agency or community organisation, which may offer grants or loans to 91香蕉黄色视频 small businesses.

Use factoring and invoice discounting

Borrow against future income by selling debts owed to you to a third party. See factoring and invoice discounting.

Bank loans or overdrafts

Get an overdraft or loan from your bank. Remember that the overdraft or loan will have to be repaid, and the interest rate may be high. See bank finance.

Leasing or hire purchase

Instead of buying fixed assets outright, consider leasing or hire purchase to fund fixed assets such as vehicles or equipment.

Seek equity investment

You can seek external investors willing to provide capital in return for a share in your business. See equity finance.

Take a second or part-time job

A second or part-time job can provide a useful source of income but it is important that it does not distract you from your priority of running your business.

For further information on business financing see business financing options - an overview.

Other sources of financial 91香蕉黄色视频

If your business is new or expanding, you could be eligible for business development grants or other government 91香蕉黄色视频 schemes. Use our Northern Ireland business 91香蕉黄色视频 finder to help you find publicly-funded and not-for-profit sources of assistance you may be eligible to apply for.

Watch a video highlighting the finance options available to start-up businesses.

Once you have gathered all your key financial data, including estimates, overheads, and expenses, the next step is to produce a financial plan.

The first step is to draw up a budget - a plan for spending and saving your money.

You should:

• Prepare budgets showing the level of sales and profits you expect to achieve, and the costs involved in doing so - see set up a profit and loss account for your business.
• Estimate your total sales - see forecast and plan your sales.
• Prepare monthly or weekly cashflow forecasts (which should be regularly updated), looking ahead one year - overheads such as rent can be accurately predicted - see cashflow management.

Download a spreadsheet containing cashflow forecast, profit and loss forecast and sales forecast templates (XLS, 21K).

Stick to your budget

Once you have drawn up your budget, it is important to stick to it so you don't risk overspending or running out of money for essentials. The key to budgeting is maintaining simple but up-to-date records. You will need to keep track of where your money comes from and where it goes.

For more information on preparing a financial plan see business budgeting.

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