11.3.  Cash Flow Projections

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The Guide > 11.  Financial Projections > 11.3.  Cash Flow Projections

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.

For more guidance, check the online white papers on Making Cashflow Projections and Managing Working Capital.

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 was "pasted in" as a picture from Exl-Plan, PlanWare's
Excel-based financial planner - see Using Exl-Plan with Free-Plan.


This chart highlights the following cash movements:


Cash deficit will rise over the 12 months from $39,000 to $75,000. For most months, the underlying cash outflow is projected at about $5,000 per month.
Inflows in October and November are related to planned equity injections by existing shareholders as explained in 11.1 Key Assumptions.
The outflows in December and January are linked to refurbishment of premises (see 9.3 Capital Expenditure Projections).


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 items were "pasted in" as pictures from Exl-Plan, PlanWare's
Excel-based financial planner - see Using Exl-Plan with Free-Plan.


These indicate the following:

Any Company Inc. will be cash generative after the first year as indicated in the tabulated cash inflows from operations.
The investing activities reflect the refurbishment of premises (see 9.3 Capital Expenditure Projections) in 20XX and modest follow-on expenditures.
The financing activities reflect the shareholders' investment of $92,000 in 20XX and planned movements in loan balances during subsequent years.
Overall, Any Company Inc. projects a net cash balance of $207,000 by 20XX having started with a cash deficit of $24,000 five years earlier.


More detailed projections can be placed in an appendix for Finance. For help with financial projections, see Financial Projections with Exl-Plan.

For latest information, see the Financial Projections section in the Business Plan Guide at http://www.planware.org/gfinancials.htm


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