Estimate Cash Flow for Your Business

In this extension, you will complete a cash flow projection for your first year in business.

A “cash flow projection” predicts when, how, and how much money will come in and out of your business.

Predicting when your business has cash on hand helps you plan how to run your business.

If you have positive cash flow, you can hire more employees or invest in additional assets.

If you have negative cash flow, you’ll need to strategize a way to solve the problem.

To make your projection, you will: Estimate cash coming into your business, Estimate cash paid out of your business, And determine your cash flow for a year.

To begin, make a copy of the “12-Month Cash Flow Spreadsheet” and rename it.

Then, read the “notes on preparation.”

Next, add your business name and the date when you want to begin your forecast.

Add the pre-startup cash that your business has on hand before opening.

Listing this information begins a running total of how much cash your business has before paying expenses.

Next, in the “cash receipts” table, add each potential source of cash flow, such as cash sales, collections from credit accounts, and loans and other cash injections.

Then add expected cash coming in to your business for your first month.

Specify for each source.

Total cash available and total cash receipts are automatically calculated.

Select, hold, and drag the value that you added for each category across the row to copy it for each month.

This gives you numbers to start working with.

You can update them later.

Monthly “cash on hand” and “cash receipts” are automatically calculated and added together to find “total cash available before cash out.”

This is how much cash your business has before paying expenses.

Total item estimates for the year are calculated at the end of the table.

Next, repeat the previous steps to list cash paid out by your business.

Begin with your pre-startup costs.

Find these in the “Startup Expenses and Capital Worksheet” that you completed in the main lesson.

The spreadsheet automatically calculates your subtotal.

List estimated expenses for your first month... ...and drag each amount across the table to estimate each additional month.

Then go back and update any one-time monthly expenses.

The spreadsheet automatically calculates subtotal and total cash paid out.

Total cash paid out is then automatically added to your total cash available to calculate your cash on hand.

If you’d like, fill out the non-cash flow information, known as “essential operating data” below.

Then, add a link to your worksheet in your business plan.

Great work, you now have a rough first-year cash flow statement.

Use it to make changes to your business strategy, such as applying for additional loans or planning to scale back your hiring at moments of low cash flow.

Now, it’s your turn: Make a copy of the “cash flow projection spreadsheet” and rename it, Estimate cash coming in to your business, Estimate cash paid out of your business, Review your cash flow totals, And link to your spreadsheet in your business plan.