Step 1 in Creating Your Business Profit Plan


To find out if you can afford to start your own business (or, in fact, if the business can afford you) you first need to calculate your own survival income.

This figure is the amount of money you need to be able to pay all your personal bills – do not include any business expenses here, then deduct any money you have coming from sources other than your business or any employment benefit or income support during the next twelve months.

Much of the information will come from what you spent last year. You should be able to extract the figures from your bank statements. You can use monthly figures and multiply them by 12 but don’t forget annual items like insurance that might don’t show up on the month you are looking at.


-       Be honest with yourself, don’t underestimate any of your bills

-       Don’t forget those luxuries e.g. coffee dates etc.!

-       You may have to live on a very low income during the first few months- can you?

-       You may be eligible for government benefits. They will probably need to see your cash flow forecast to be able to decide how much you could be awarded in benefit. Any award is considered as income and should be placed in the bottom part of the attached worksheet.

The overall figure will act as a guide when planning how much money to take out of the business for yourself in the first twelve months- this figure is called your DRAWINGS if you are a sole trader or partner. It is called your SALARY if you are have a Limited Company. As each are taxed differently, you will need to recognise the difference.


Print two worksheets, cross out ‘Survival’ on the second copy and write in big letters above it ‘IDEAL”

Now do the above exercise, one for ‘Survival’ lifestyle and one for your ‘ideal’ lifestyle. How much personal income would you need for your ideal lifestyle?



Personal Survival Income for the Next Twelve Months



Mortgage & Endowment/Rent £

Water Rates & Council Tax £

Gas/Electricity/Oil £

All personal & Property Insurance £

Food/Clothing & General Housekeeping Expenses £

Telephone (personal use only) £

Hire charges & HP repayments £

Entertainment (Meals/Drinks etc.) £

Car Tax & Insurance £

Car running expenses (petrol, service etc. – personal use only) £

Presents & Children’s expenditure £

Saving plans/Pensions £

Booked Holidays £

Other (please state) ………………………………………..£

Expenditure Sub Total (a)  £

OTHER INCOME (Annual Figures) (Other than what you expect to earn from your business)

Income from husband/wife/partner £

Possible Benefits (eg family credit, state) £

Other Income (please state)…………………………….. £

Income Sub Total (b) £ 

TOTAL SURVIVAL INCOME (a) minus (b)          £                                

To estimate your Gross income before Tax and National Insurance are deducted divide your total survival income by 0.8

e.g. If your total survival income is 25,000 your Gross salary would be £31,250 

£25,000 / 0.8 = £31, 250