Staying on top of your finances helps your business in so many ways. It makes it easier to meet your current commitments. It also helps you plan for the future. You need well-kept accounts to meet certain laws and regulations. They can also help you gain funding when you need it.

This lesson is full of tips to help you manage your finances and find possible sources of funding.

“Financial management is at the heart of running a successful business.”



  • Know top tips to help you plan and manage your finances
  • Be able to find tools to help
  • Identify potential funding sources

Read time:

12 mins

Chapter 1

Why you need to plan and manage finances

Read time:

1 min

Why should you plan?

You may be starting out or want to make a change. Whatever stage you’re at, you need to plan your finances.


Planning can help you to:

  • See if your business is making a profit
  • Forecast future profits and prepare for challenges
  • Meet tax rules
  • Calculate funding needs
  • Know if you’re financially able to grow

What’s right for you?

What matters most is what’s right for you. This lesson will give you some ideas and tips to start. Then you can use these – and your own research - to work out what is best for your business.

Chapter 2

Record-keeping, bookkeeping and accounting essentials

Read time:

3 mins

What you need to know

Let’s start by talking about each of these terms.


Record-keeping and bookkeeping

This means keeping receipts and tracking money going into and out of the business. There is some overlap with accounting, but mostly here, we’re just talking about recording any money that moves in or out.



This is when you look at the records you have, and use them to:

  • See the financial state of the business
  • Create end of year statements
  • Send tax returns
  • Plan ahead


When you take time to keep your records up to date, you can track your cash flow and prepare accurate financial statements. And with the right accounting tools and a regular look at metrics, you can make the right decisions for your business.

So these two work together to help your business thrive.

In this chapter, we have some hints and tips to help you make the most of both.


Record-keeping and bookkeeping tips

Keep track of your stock

What are your people costs?

Know your business assets

Write a cashflow statement

Keep track of your stock

Look at your stock records. Do you have enough stock? Too much? Think about the right time to place your next order. You want to be able to meet demand but not become overstocked.


What are your people costs?

These include things like wages, national insurance, pension contributions, holiday and sick pay.


Know your assets

These can be things like your premises and tools. You can use them to gain funding. So make sure to keep a note of them in your records.


Write a cashflow statement

It’s a good idea to note down what cash goes into and out of your business. This is your cashflow statement. It shows how much cash you have at the end of the week or month. You can use this to help answer questions like:


  • Can I afford to pay my bills or invoices this month?
  • Do I have the cash to fix the equipment that broke today?
  • Can I buy these stock items that are on sale this week?



How to write a cashflow statement

Decide the time period

Do you want it to cover a week, a month or longer?

List the money coming in

The sales and other income during that time

List the money going out

Any bills and other expenses you paid

Work out the difference

Take away the outgoings from your income

Keep business and personal finances separate

It can be confusing when personal and business finances merge. You should have a separate, business bank account and have different credit cards. This helps you follow tax rules and manage your accounts.

Accounting tips

Do you handle your own accounts? Or maybe you’d like to learn more from your records. Let’s start with the basics.


Pick the right accounting method

Which one do you use – cash-basis or accrual? With cash-basis, you record income and expenses when the money goes into or out of your account. The accrual method notes when the sale takes place. Make sure you pick the one that is right for your business.


Use accounting software

This can help you manage your bookkeeping and tax returns. There is so much out there, to help with different parts of your finances. See our chapter 4 for some examples of these.


Be aware of your cash flow

Look at your recent cash flow statements. Also think about promised cash flow. There may be money you owe or that someone owes you. You need to plan for this.


Write a profit and loss (P&L) statement

This helps you see if you’re making a profit. Looking for funding? An investor might want to see this too. While your cashflow statement can tell you if there’s money to pay your bills this month, your P&L statement shows if the business is profitable.

For instance, say you buy extra stock from your suppliers to keep up with customer demand. So you’ve spent more than usual that month. You’ve also sold more products, but you’re still waiting for your customers to pay. So your cashflow may be low that month but you can see that your profits are high.


To create a profit and loss statement, you’ll need to list:

  • Your gross income – That’s all the money you make from sales
  • The cost of sales – For example, delivery and stock costs
  • Overheads – Your operating expenses, like rent, marketing and wages
  • Tax you need to pay


Once you have these details, take your costs, overheads and tax away from your gross income. This will give you your net profit or loss.


Set aside time each month

Spend a regular chunk of time with your finances. First, check your records are up to date. This will help keep everything under control. Then check key ratios – like gross profit margin and return on investment. It can help you track performance and identify areas for improvement.


Need more help? You can:

  • Buy in external help – Like an accountancy service
  • Hire in-house expertise – This can be a team or an individual expert
  • Take on further learning – FutureLearn has free courses to start, while AAT offers well-known qualifications

Help with tax

Corporate tax law can be complex. To understand your tax liabilities, you might like to work with an accountant.

You can find out more on the UK government website.

Chapter 3

Financial planning

Read time:

3 mins

The importance of financial planning

Financial planning is key to any growth plan. It helps you predict future investment needs.


A detailed financial plan can:

  • Give potential investors a clear idea of your financial needs and growth potential
  • Show you’ve thought about potential risks and challenges
  • Support your bid for long-term funding and investment


You need to know which areas are your most profitable. You also should include how much investment you need to stay in profit. Say one product brings in most of your income. You might want to invest in improving that product to grow the business. Focus resources in areas where they’ll have the greatest impact.


Three things to include in your financial plan:

  1. Growth projections
  2. Equipment needs
  3. Team needs


Team and equipment needs are often easier to see.

There are tools to help you predict growth – we’ll show you these in chapter 4. There are some basics that can help you too. Let’s look at these now.


Understand your profits

This also means you can see where you are losing money. With a clear idea of where your business is and isn’t making money, you can spot growth opportunities. This also helps you spot possible challenges ahead.


Peaks and troughs

Some businesses have fairly consistent demand, and some go through peaks and troughs. This means they have periods of being very busy, followed by quiet times.

This can affect your long-term performance. So, include your demand pattern in your plan. You can then adjust your cash-flow projections. This helps to make sure you avoid a shortage.

Working out your peaks and troughs will help you to build strategies that use this information. So you can take advantage of peak demand. And see where to reduce the impact of low demand.


Unplanned financial decisions

It’s easy to plan for what you know is ahead. But what about those unexpected costs? Say you had to outsource some work to meet an increase in demand. Would you have all the information you need?

It's important to prepare so you can work out the costs and revenue linked to every decision. This will help you make choices that support your business and its growth over time.


Think about maintenance costs

Wear and tear happens. Your financial plan should include the cost of repairs and replacement. Compare prices to make sure you never overpay on tools-related costs.


What is your product-price mix and why is it important?

Setting prices can be complex. You need to bear in mind your overall vision, mission and goals. There are many different pricing strategies.



  • cost-based pricing
  • value-based pricing
  • price skimming
  • penetration pricing
  • competitive pricing

More info

If you want to find out more about these, check out this guide from Startups.

Help with debt management

You need to manage any existing debt appropriately. This could mean keeping up with any monthly payments and not exceeding limits on credit cards or overdrafts. This is especially important where you have existing formal funding. If you’re not managing your debt, this could impact your chances of gaining further funding.

​​​If you need support to manage your existing debt, we recommend speaking with your financial services provider(s).

Chapter 4

Tools to help

Read time:

1 min

What tools can help my business?

Tools that can help you
There are many useful tools out there to help you get on top of your finances. And software can help in almost every area of your business.


Select each tool to find out more

Chapter 5

Sources of funding

Read time:

2 mins

Formal finance options

There are many finance sources around. Some are more formal than others. These can take more effort to get.


Let’s start by looking at a few formal options:

  • Business assets – Use your premises, tools or vehicles as security for lending
  • Bank loans – These may need collateral and a good credit score
  • Investors – Find the right people to invest in your business in return for equity
  • Venture capital – These schemes see investors look at high-growth businesses they believe have strong potential for returns


It’s important to manage any existing debt your business has before you apply for funding.

Other options

There are many other ways to raise funds for your business.


These are:

  • Personal savings – Use your own assets to fund your business
  • Friends and family – They might offer a loan or investment
  • Grants – Apply for government-funded grants
  • Crowdfunding – These online platforms can raise significant investment through many small contributions
  • Angel investors – These often help to fund startups and support businesses through early or costly stages of their growth
  • Other lenders – Such as peer-to-peer lending platforms, invoice financing companies and merchant cash advance providers
  • Initial Public Offering (IPO) – Later, you might want to take your business public by issuing shares and listing it on a stock exchange
  • Corporate partnerships – Going into partnership with a larger company can lead to funding and other resources


Where to start?

So there are many options. But how do you pick the one that’s right for you?


Here are our top tips to get started:

  • Understand your funding needs – Work out how much you need to raise and what you need it for
  • Prepare your business plan – This should include your mission, opportunities, projections and growth strategy
  • Focus on traction and metrics – Know key metrics such as customer acquisition, revenue and profitability
  • Network and build relationships – Go to networking events and speak with other business leaders
  • Be transparent and honest – Be upfront about any risks or challenges you know about
  • Prepare for due diligence – Potential investors might want to see detailed financial and legal information
  • Focus on execution – Once you’ve secured funding, deliver what you’ve promised

Chapter 6

Pitching for investment

Read time:

1 min

Getting started

Do you know where to look?
It can be hard to know exactly what investors are looking for and how to prepare.


Here are the steps you’ll need to take:

  1. Prepare your business plan
  2. Know who you’re pitching to – Research their investment criteria, track record and what they expect
  3. Craft a compelling pitch – This should highlight strengths, address challenges, and show your potential for growth
  4. Present your pitch – Keep it clear and confident
  5. Negotiate the terms of the offer – This includes the amount, valuation, equity stake and any other conditions
  6. Agree the deal – Agree the terms of investment and sign to secure your funding

Chapter 7

Key takeaways

Read time:

1 min

What we’ve covered

In this lesson, we’ve shared ideas and tips on:

  • The benefits of planning and managing your finances
  • Keeping records and managing accounting
  • Creating a financial plan
  • Tools to help you
  • Funding options
  • How to pitch for funding


Next steps

At this point, it’s good to note what you’ve got – and plan what you need to do next.


Take time to:

  • Look at your business plan – Do you need to add investment needs, projections or potential risks?
  • Prepare for funding – By getting your finances in good order
  • Create a financial plan – One that is both strong and flexible to meet your needs
  • Review finance tools – Are there any that will help you?


Lloyds Bank Academy is committed to providing information in a way that is accessible and useful for our users. This information, however, is not in any way intended to amount to authority or advice on which reliance should be placed. You should seek professional advice as appropriate and required. Any sites, products or services named in this module are just examples of what's available. Lloyds Bank does not endorse the services they provide. The information in this module was last updated on 21st April 2023.