How to create a cash flow forecast (and WTF it is)

In our industry, our income or cash flow is not always consistent. One month you may bring in $10,000, and the next month it could be $1,000. Do you know where your money is coming in and out of your business? More importantly, do you have a way to know WHEN you’ll have low-income months so you can prepare?

Prior to starting a business, our brains are trained to think of money from a consumer perspective, not a business-minded perspective. This is great when you’re trying to be frugal from a personal standpoint, but it doesn’t necessarily work when you’re growing your biz. An entirely different skill is needed when it comes to planning your business cash flow, and the first step is establishing a weekly or monthly forecast.

So.. what the fuck is a Cash Flow Forecast?

Don’t panic. You don’t need to download or pay for software for this, because it’s as simple as developing a spreadsheet.

Your cash flow forecast should highlight the following

  1. A breakdown of expenses you have to pay
  2. How much is coming in every week/month
  3. Where it’s going

By looking at your cash flow, you should be able to determine how much money is coming in, how much is going out, and if you’re using your revenue wisely. At the end of each month (or week if you choose), your bank account balance should match up exactly with your cash flow. If it doesn’t, it’s time to revamp your system! That’s a very good indicator that your expenses are higher than you think, or you simply aren’t making as much as you think.

But Halley… my bank account is at $0/-$250/I can’t even look

First off, ignoring your bank account doesn’t make your financial problems go away. Handle it like the fucking champ you are right now.

Secondly, it’s totally normal to have $0 in your business account at the end of the month! You’re running a business, and that takes a lot of money. As much as we all hate it, the saying is true – you need money to make money. Running a business on the cheap is only going to provide you with the same outcome – a cheap business. That’s not what you started your biz baby for.

It doesn’t necessarily mean you’re SOL and should shut down right now if you have nothing to spend. It just means you need to have a plan in place, and sometimes that means finding funding. Debt is not always a bad thing, and if used wisely, it can help you in the future. Scheduling an appointment with a professional accountant is the best way to determine your next steps.

Usually what follows is alerting everyone you’re scheduled to pay that they might be receiving their money late (don’t leave them in the dark!). Give the same respect you would want if you were expecting cash to come in.

Get comfortable with your money and plan ahead.

You’re going to be short on cash when you’re starting a business. That’s just the way it is. There’s a certain amount of money you need to spend in order to have money coming in. Making sure you saw your broke month coming is essential! Get a plan set in place now so it doesn’t bite you in the ass later.


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