Again, in your start up cash flow projection, you’ll need to predict what you expect to spend each month on expenses. In my article, Free Business Budget Templates, you’ll find tips on how to predict start up expenses.
Some expenses are easy to determine such as rent or mortgage, owner and employee salaries, and business liability insurance expenses. Other expenses such as office supplies, utilities, and professional fees you may have to research a little. For utilities, you can call the utility companies and ask for the average utility amounts spent for a certain period of time at your location. Other expenses you may have to guesstimate or seek the help of free government agencies such as SCORE who can help you accurately predict expenses for your start up cash flow projections.
Finally, don’t be too worried if your first few months show a negative bank balance—that’s often expected and if you show an abnormally large bank balance, to the lender or investor, it means you either over-predicted sales revenues or under-predicted expenses.
By your third or fourth month, if you’ve judged your business accurately, you should begin to see a positive cash balance in your bank that will carry over to the next month.
Image Credit (Morgue File)