Cash Flow Forecast

When doing a cash flow forecast for our business i wanted to make sure everything was included in there. During the lecture whilst discussing cash flow we had put in an allowance for the bank account as usually businesses pay for the use of a bank account, i have found that Natwest offer free banking for the first two years to new businesses and there is some useful information on thier website

http://www.natwest.com/business/starting-a-business.ashx

Another thing i wanted to research was the cost of a business loan to cover our start up costs and give us some cash whilst we are setting up the business.

Given the figures that Sara has given from the equipment list i think a figure of £20000 is more than enough to cover costs and give us some security for our first year in business.

It could be argued that its better to take a shorter term and repay the loan as soon as possible but with this being a new business i think low monthly payments are a priority, if the business over-takes our expectations and it is viable we could always pay off the loan earlier- although this does incurr a charge of 2 months interest for early repayment. So i have decided to work with a term of 5 years giving us a monthly repayment of 388.99 which i will build into the Cash Flow.

When we discussed the case flow in a group we decided to work through the expenditure of the business first to enable us to decide how much to charge and what our profit targets will be.

For the purpose of the workflow i have used a figure of £15000 for the start up costs, this will cover the cost of the equipment list given by Sara and a large amount of advertising and promotion that will be required to get the first customers through the door.

The £15000 figure will include:

Equipment- Cameras, Lighting, Computers & Software etc

Props

Deposit on the Studio

Furniture

Advertising

Consumables

Fridge & Kettle for Refreshments

Above is the first attempt at the cash flow forecast, at the moment i have used provisional figures for the income. I have suggested to the team that we discuss this further in the next team meeting and change the cash flow where necessary. There are a few decisions that need to be made as a group before the cash flow can be totally completed.

I aslo need to include the Insurance when Sara has obtained a quote for the equipment list.