5: Financial Resources

Financial Aspects which could relate to my business are discussed below:
Firstly, I will be planning and creating a personal survival budget to see if I will be personally solvent once the business will be up and running.
Estimated annual expenditure £
Mortgage 1700.00
Council tax 6000.00
Food 2000.00
Clothing 2000.00
Personal savings 6000.00
Loan repayment 3600.00
Motor expenses 3500.00
Bills (BT, SKY, Internet) 800.00
Entertainment 5000.00
Others (emergency) 1500.00

Total 32,100.00

Estimated annual income £
Partner’s income 30,000.00

Total 30,000.00

As it can be seen from the personal survival budget that I’m short of approximately £2100.00 annually, which means I will have to take out £175.00 monthly from my business just to survive.
Cost of premises is yet another financial aspect that is likely to have some impact on my flower shop. It is absolutely vital that I find an appropriate premise to base my business upon. In order to find an appropriate location, I will be contacting the estate agencies, who are likely to find me a location which would be near of potential customers which is economically growing. Also features like storage facility, expansion at later stage, competitors’ position etc plays a huge role when it comes to find an appropriate business property. As my business is going to be a small sole trading business therefore, I believe, it would be best for me to rent an empty shop rather than buying or taking it on lease.
Equipments are another major cause of cost when starting up a small business. As my business is going to be a flower shop, therefore, I will have to organise the store as a nursery with the right equipments.
I will have to have suppliers for fresh flowers supply. The closure the suppliers will be the better it would be for my business, as I would get more fresh flowers in less time. Usually flowers markets are best solutions in these circumstances.
In order to operate the business successfully, I’ll employ few employees. Although the entire recruitment and selection process will be expensive for the business still I’m determined to employ the best possible candidates who can help me establish the business in the long term.
Running costs are one of the major costs when operating a business. Under these costs fall the rent of the premises, bills, wages of the employees etc and many others. I will be extra vigilant to ensure that these costs are kept to the minimal.
Pricing policy of my business could be vital to the success of my business. In order to attract and retain customers I will be using the “cost plus” pricing policy. This way, while I will be making minimum profit, however I will be competitive in the market.
Cash flow forecasting is important, as it can deter the future of the finance for the business. Many businesses fail to establish due to inefficient cash flow forecasting. Therefore, I have decided from the beginning to be careful with the financial planning. As a result of that I am currently having approximately £7,500.00 coming into the business monthly, from which £4000.00 is going out leaving me with £3500.00 monthly.
From my forecasted finance of the business it would beneficial to create a profit loss budget account and a balance sheet to observe the business’s financial progress therefore take necessary steps when needed to avoid any financial disruption.
It is important to calculate the break even point for my business. Then I will know exactly how much sale I need to make in order to keep my business afloat. To calculate the break even point for my business, the formula to us would be as following:
Fixed costs/selling price – Variable costs = Break even point
Sources of finance for my new business venture are extremely crucial. There are many ways to bring money into the business or to get the money to start up a business. It is likely that my business will be nurtured by the money from the following sources:
I will be investing money from my own savings into the business to help the business start up effectively and be able to provide the customers with unforgettable service. While there are no risks of collectors however if the business makes loss then the invested savings interests will be wasted.
Another source of finance which could be used in my business is loan from financial service providers like banks or building societies. There are various different types of loans available to the small business owners. To get these sorts of loan a complete business plan has to be presented to the bank manager and the loan will only be granted if the business plan gets approved by the manager, if the manager can recognise the potentials in the business venture.
Record keeping is an extremely sensitive and important factor for not only my business but every business. This is especially important to show the tax collector or the HM Revenue and Customs.

All the above stated factors are to be taken into account when starting a new business as these will ultimately help the business owner and keep them trading safely and legally.