11.3. Cash Flow Projections
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It is usual to give monthly cash flow projections for the first year, or longer, depending on the importance of cashflow and the time needed for the business to become cashflow positive. Use text and bullets to highlight and explain any key values or summarize the trends shown in tables or charts.
Many readers of your plan – bankers, venture capitalists and other investors – will pay far more attention to your cashflow projections than to the income statements. They will seek to establish that the business will not run out of cash before it reaches profitability – more businesses fail for lack of cash than for want of profit.
A chart is ideal for illustrating monthly cash flows and balances. For example:
The following chart shows cash flows for Any Company Inc. for the initial 12 months covered by this plan:
This chart highlights the following cash movements:
Less detailed projections (quarterly or annual) may suffice for subsequent years as per the next example:
The following table and chart summarizes cashflows and balances for Any Company Inc. for the 5 years commencing 20XX:
These indicate the following:
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