In this guide, you’ll learn the key considerations, work through a practical example and find useful next steps. Take your time and use the free worksheets to put ideas into practice.
What you’ll take away
- Separate personal and business needs
- Estimate sales cautiously
- Identify cash commitments
Separate personal and business needs
Estimate minimum household spending and the money the business needs to operate. Keep records that distinguish business from personal transactions.
Estimate sales cautiously
Build a simple monthly forecast with realistic timing for customer payments rather than assuming invoices are paid immediately.
Identify cash commitments
Include stock, software, rent, suppliers, payroll, tax and annual renewals. Some costs arise before sales.
Stress-test the forecast
Model lower sales, delayed customer payments and an unexpected cost. Note the earliest month cash may run short.
Review frequently
Compare actual figures with the forecast and adjust assumptions. A profitable business can still run out of cash.
Try it yourself
Create a 12-month cash table: opening balance + cash received − cash paid = closing balance.
Important limits and risks
Forecasts are estimates, not promises. Funding and lending may involve regulated products or legal obligations.
Putting your learning into practice
Use the guidance above to identify the information you need and the questions to investigate. Consider:
- Separate personal and business needs.
- Estimate sales cautiously.
- Identify cash commitments.
- Stress-test the forecast.
This is general financial education, not a personal recommendation, an assessment of suitability or an invitation to buy or arrange a financial product. Check current official information and obtain appropriate professional advice for individual circumstances.
Further information
Official or independent UK information →
Educational information only. Family Money Matters does not recommend particular investments, pensions, mortgages, insurance policies, credit products or individual transactions. Seek an appropriately authorised adviser where regulated advice is needed, and a solicitor or accountant for legal or tax questions.
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