Self-Employment Financial Challenges and Solutions
Explore the financial challenges faced by small businesses and learn about cash flow management and forecasting for improved financial efficiency. Discover the root causes of cash flow problems and ways to identify and address financial inefficiencies.
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Presentation Transcript
The Momentic Self Employment Service Finance
Challenges for small businesses 20% of small businesses in the UK fail in their first year, and around 60% fail within the first three years (Office for National Statistics)
Root causes of cash flow problems Inconsistent sales patterns Poor Inventory Management Delayed customer payments
Root causes of cash flow problems Overhead costs and expenses Inadequate cash reserves
Why is Cash Flow Forecasting important? The Importance of Cash flow Why produce a Cash flow? The figures in a Cash Flow are not guess work. They reflect the research and costings in your strategy and business plan.
Personal Survival Budgets MONTHLY OUTGOINGS 1000 MONTHLY INCOME 500 1000 - 500 = 500
Cash Flow Forecast Creating a cash flow is simply mapping out and planning your finances for your next year of trading
Terminology Cash flow Profit and loss
Different types of Running Costs FIXED COST (also called Overheads) Costs that do not vary with sales Example: Rent, Business Rates, Insurance, Wages, VARIABLE COST (also called Direct Costs) Costs that vary with sales Example: Materials, Packaging, Postage, Fuel
Break Even Point Breakeven point is that level of activity at which TOTAL SALES = COSTS therefore PROFIT is ZERO Why is it useful to know?
Next Session - Bookkeeping Date: Wednesday 15 January Time: 10:00am
