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How to Plan Your Start-Up Business Budget

How to Plan Your Start-Up Business Budget

As the economy continues to improve, more and more people are growing increasingly confident in starting up their own business. The internet provides a great platform for most businesses to start for relatively low expenditure; reducing the need for physical premises which can be very costly. While it does seem a hugely attractive proposition, there are still things the potential start-up needs to plan meticulously to ensure they don’t fall at the first hurdle. Failing to do so usually means the business will fail, when in fact a stricter hold on the planned finances may mean success.

Planning is Key to Success

At the face of it, starting a new business can be a daunting prospect. As well as planning the overall business model, you need to see if you have the capital to get the idea off the ground in its infancy. While the initial outlay for a business is often relatively straight forward for people to calculate as they intuitively understand that they will need to pay for rent, desks, computers and the like, the piece that people find more difficult to model and understand is their cash flow and working capital.

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In particular, holding and ordering stock can cause real issues. When stock has to be paid for (for new businesses generally on delivery), and in what quantities it has to be ordered often impacts an early stage business’s cash flow far more than the more easily understood items such as rent, salaries and the like. Obviously if you don’t have sufficient capital to fund the period between paying for your stock and receiving the cash from your sales of that stock, then you won’t be able to continue trading. So this is critical to understand and think about before starting a business. Also, if your customers pay later than they are supposed to and you have staff that are due to be paid, do you have the capital to cover this? These are all things that, although difficult, when planned properly are very manageable issues that your business can sustain.

Free Start-Up Business Budget Planning Tool

We’ve recently had a number of people on our Excel training courses trying to build financial models to understand how a business that they are looking at might work. Given that, we have created a simple model that can be used to map out all associated costs in the start-up of a new business.

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    This business plan template is designed to allow you to quickly and simply assess approximately how much capital you need to launch your start up idea. The sheet overleaf ‘Inputs’ asks you to answer a number of straight forward questions and will then automatically generate a set of financial forecasts for your business and estimate how much capital is will require. This is shown on the ‘Outputs’ sheet.

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      It’s been designed with web based businesses in mind but can easily be used for any small business. If you’re a physical retailer or a cafe your website development and advertising costs won’t be much but equally you’ll have physical fit out costs and ongoing marketing and promotion so just use those boxes for the equivalent for your business.

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      To use the tool, click the link below, make a copy and fill in your details. It’s that easy.

      Start up business plan template supplied by Acuity Training

      Please note: these forecasts are for illustrative purposes and should not be relied upon. This financial model is general in nature and you should take appropriate specific detailed professional advice before deciding to start a business. These forecasts should not be treated as a recommendation or endorsement of your business idea and Acuity Training Limited accepts no responsibility actual or implied.

      Featured photo credit: Business man/Kim Andre Ballovarre via flickr.com

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      Last Updated on June 6, 2019

      The Average Retirement Savings and How to Save Wisely

      The Average Retirement Savings and How to Save Wisely

      Are you on track for retirement?

      If not, don’t worry, I’m not sure either. I save each month and hope for the best.

      Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

      But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

      If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

      What Does the Average American Have Saved for Retirement?

      Saving for retirement is tricky.

      Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

      Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

      Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

      Here are the average savings Americans hold by age bracket:

      20’s – $16,000

      During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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      Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

      30’s – $45,000

      At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

      Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

      40’s – $63,000

      This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

      50’s – $115,000

      During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

      60’s – $172,000

      By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

      Ways to Save Money on a Tight Budget

      The sad reality is that most Americans aren’t saving enough for retirement.

      Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

      First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

      Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

      Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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      How to Save Money Each Month

      By this point, you know the average amount of money you should have saved for retirement based on your age.

      But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

      Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

      Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

      Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

      Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

      Top Money Saving Challenge Tips

      To prepare for your financial future and not be another statistic you need to be different.

      How?

      By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

      Automatically Contribute Towards Retirement

      If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

      Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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      Use the Right Tools to Know Where You Stand

      Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

      When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

      Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

      Bring in Experts to View Your Blind Spots

      If you have too little or too much money saved, you should consider hiring financial experts.

      Why?

      You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

      Regardless of the reason, getting help may help improve your financial situation.

      Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

      Speed up Your Retirement Contribution

      After learning how to manage your money well, the next best thing is to earn a higher income.

      You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

      By starting a side-business.

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      This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

      The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

      So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

      Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

      Reach Financial Freedom with Confidence

      What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

      My guess is that you’d feel happy and relieved.

      Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

      For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

      If you do, you’ll save money and pay debt faster.

      Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

      Featured photo credit: Huy Phan via unsplash.com

      Reference

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