How do I survive until my business is off the ground?

This guide gives advice on how to keep your business afloat in the early days of starting up. It will help you estimate your profits and financial needs, reduce your expenditure, re-invest your money and find alternative funds.

A financial adviser or accountant can help you address these issues in the early days.

Forecast your financial needs

When starting your business you will need to make a realistic forecast of your personal financial needs. This personal budget is a plan detailing your domestic financial needs for the year. It should try to set limits on the amount you plan to spend each month on various categories like rent, food and housekeeping.

Tracking your personal expenditure can help you find out how much money you will need to take from the business. You can now work out how much money you will need each month. If you multiply the monthly figure by 12, and make adjustments to cover one-off expenditure such as holidays or car tax, you will know how much you need to live on during your first year of trading.

It is important to be realistic. You may find you will need to secure alternative funds or borrow money. Financial advisers generally assert that the equivalent of three months money should be held on deposit for a rainy day.

Some expenses, such as your rent or mortgage are likely to be fixed, whilst your expenditure on other items may vary from month to month. You need to keep a close eye on the areas where savings can be made - such as leisure or travel. The first year in business is vital to its success and you may have to accept that a financial sacrifice of some sort is required to keep on trading.

Make savings

There are many ways you can save money on essential goods and services. Many utility companies offer attractive deals when you change to a new supplier. You could think about changing your telephone, electricity, gas or water supplier. Look carefully at precisely what is being offered by each of the utility suppliers. You may find, for example, that you can make savings if you receive both your gas and electricity from a single supplier.

Consolidating your debts can reduce the amount of money you pay out each month. This might mean taking out a further loan to cover all your existing commitments. One single monthly payment will often work out cheaper than a number of separate payments to credit card companies or banks. Many credit card companies now offer 0 per cent APR on six-month periods with balance transfers, but again you should look carefully at precisely what is being offered.

You can also try to reduce your everyday expenses. For example, you could sell your car and buy one that is cheaper to run or use public transport. You will make savings, but your quality of life is not likely to be significantly affected.

You could implement simple cost control systems across your whole business to identify scope for savings. You could cut unnecessary or excessive costs, such as heating your premises at night or by finding low price suppliers for the goods or services.