Page 29 - 342_

DO YOU NEED TO BORROW?

Many businesses start and you should be able to an exact reflection of the

prosper without any assess the costs very way your financial year

outside finance. Others - accurately. But you also works out in reality. Even

either at the beginning or need to work out how so, you should break the

later - need some. Will much money you will year down into monthly

your business need need to keep your financial periods, and

working capital? Will you business going on a assess how your income

deal mainly in cash, or day-to-day basis, to and outgoings will

credit? Will you want the cover any gaps between compare in each period.

flexible borrowing power your income and your This will allow you to see

of an agreed overdraft? Or outgoings. This is when your borrowing

will you need a loan to known as ’working requirement is going to be

buy equipment such as capital’. It is very greatest.

machinery or vehicles, or important to seek the

premises? right amount of finance How are you going to
- too much would cost pay it back?

How much will you need? you more than you You need to be

“That depends”, you would want to pay, and confident that your

might answer. But your too little would, business is going to

bank manager will want to obviously, not be generate enough cash to

know what it depends on. enough. repay the borrowing

within the agreed term.
Your cashflow forecast
will give you a good And when? If you agree an overdraft

indication. Fог a start, You should be able to facility to supplement

how much are you assess your overheads working capital you

investing yourself ? If fairly accurately, but must be sure that you

you are borrowing to buy your first cashflow are able to pay the

forecast is unlikely to be interest as well as being
equipment or premises,

28