Starting a Business: Focus on cash planning




The basics of cash-flow forecast forecasting

 

- Cash: To allow for future slippages, borrow or invest more than the forecast says you need.

 

- Sales: It takes time to build up. Give a modest estimate for the starting months.

 

- Purchases: Overstocking a bit is okay at start. It takes time find usage levels.

 

- Sales tax/VAT: Add the tax to all purchases and sales, other wise you may face huge tax outgoings in future.

 

- Employment costs: Give a cushion (allocate extra staff in the starting days) to allow for employee onboarding and training.

 

- Tax: Pay promptly and regularly. Allow for periodic payments instead of one time huge payouts.

 

- Marketing costs: Give a cushion here as well. Early-state marketing is also like experimenting.

 

- Loan repayments: Include EMIs (Estimated monthly installments) etc in your forecast.

 

- Slippage: Allow for late payments by your customers, and be ready to have extra cash at hand.

 

Thank you for reading.
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