One of the things I love about working with clients who have their own business is how they come in thinking that they can’t put a spending plan in place for their business, because they don’t know how much they’ll invoice each month.

And that their business spending is completely logical.

Neither of these things are true.

First, I get them to the point where they know:

• How much money they need to make from their business (because we’ve done a personal spending plan)
• The investment that their business needs to run well this year (because businesses have needs, too.)

And then we’re ready for the ‘classic’ version of setting up a cashflow – standard expenses and income.

Just like personal expenses, business expenses break down into regular or periodic.

Regular bills happen every month. You probably know your main ones off the top of your head – rent, power, phone etc. Even so, get a report from your accounts package for the last 12 months, or at the very least, get the last 12 months of transactions from your business bank accounts and credit cards.

There’s usually a lot more going on than just rent, power and phone. Business spending is subject to exactly the same sort of problems that we face with personal spending. The classic “How much do you spend on coffee?” question is often answered by business owners with “Oh, that’s a business expense.” OK, but how much is your business spending on coffee? Is it worth the cost?

If most of your payments are automated, or you leave the numbers to your bookkeeper or accountant, you may be surprised at what you’re paying for, and / or what it’s really costing you on a monthly basis. Feel free to cancel subs or software licences for things you no longer use but are still paying for.

Periodic expenses are the costs that don’t come up every month, and can cause cashflow hiccoughs. Things like insurance premiums, accountant or lawyer fees, industry conferences and workshops. They are vital to put into your plan so you can see when you are looking like you’ll hit the overdraft limit.

You will not know the exact amount for each cost, and that’s OK. Ballpark it.

For things like transport costs, when the actual cost is going to be who-knows-how-much-higher than last year, plan in an amount that you would feel comfortable if you knew it was there. No point in a plan for 2022-23 that’s pretending 2021 costs still apply.

Now: income. Who knows how much this will be? No-one, really. If we did know, being in business would be easy and everyone would have one.

Consider past performance, current conditions, and new launches, products or services that you know will come online for you in the next 12 months. Be conservative. Then take your best shot.

Now you have all these numbers, where to put them? I recommend MoneyGrit for business. It can be personalised to each individual business, you can upload your bank account and credit card transactions to it, and review it monthly.

Or your accounts package may have a cashflow module. Your accountant or bookkeeper may be able to give you an excel format if you’re not up to setting one up yourself.

Yes, your accountant or bookkeeper could absolutely do the whole thing for you, but cashflow is crucial to your business’s survival.

There’s a big difference between being handed a sheet with numbers on it that you’re told don’t look good, and doing the numbers yourself and seeing that if you continue down this current road, you’ll run out of money in November.

When you know and understand the reality behind each number on the page, the story that the numbers tell becomes visceral. Rather than some vague projection, this is something that will definitely happen if nothing changes.

Luckily, it’s your business. What could change? That’s largely up to you.