All About That Cash: Will Your Business Start-Up Make Money?

So you think you are ready to take the plunge…


You have finally worked up enough courage and now you are in the planning and scheming stage. You want to dive into the deep end of business ownership! You want to say no to the chains of 9 to 5 and yes to the freedom to invest your talents and time into your passions.


Maybe you have come up with a brilliant idea to serve a need that isn’t currently being met. Or maybe you have a creative way to focus in on a specific niche that will set you apart.


That is AMAZING! Congrats! Now it is time to come up with your business plan. Let’s talk cold hard cash. I am sure you have thought about this somewhere along the way but you may be more focused on the juicier bits of your business plan. All of the things that keep you daydreaming at work and fuel your conversations out in the marketplace.


Your brilliant ideas are the backbone of your business plan. But at the bottom of this plan, you need to have a few solid financial statements.


Today, we are going to talk about your cash flow projection.  


This allows bankers and investors to see evidence of the viability of your business plan. In other words, are you going to be making money each month? Will you be able to make payments on loans and keep your business financially afloat each month?


Don’t forget: profit DOES NOT equal cash in hand! Companies high in sales can be low in cash if their expenses and debt drain their cash each month.


To help you answer this question for your business, let’s think through 3 steps together. These questions will help prepare you to gather and have the information on hand you will need to write your own cash flow projection.


Step 1: Money Coming In


First off, is your business a service or a product-based business? You need to come up with a solid list of services or products and then do some homework! Research to make sure that your prices are competitive for similar businesses in your marketplace. Then dig into what typical sales patterns for those businesses are. Are there months that are typically slower? What are the best months? Think through your specific location and region. Are you planning on marketing your services or product? Google is your best friend.


There are lots of methods to calculate this but the most important thing is basing it on facts. This is where you have to do your due diligence. While it may just FEEL like a big guessing game, when you are detailed in your research and confident in your product, you can build an educated plan based on tried methods.


Use a cash flow projection template and with the research you have done, fill in what the sales should look like for each month of the quarter.


Step 2: Money Going Out


Since you are just starting out in business, this category needs to be thought through on two levels: operating costs and start up costs.


{{TIP: You should always use cash flow projections for proper business planning but in the future, you can base your projections on your own data. While you won’t have start up costs, make sure to plan for things like repairs or new equipment, new hires or bigger inventory. Remember, it takes invested money to GROW your sales.}}


Start-Up Costs

Think of this category as one-time expenses. Don’t add in monthly utilities to this category BUT do add deposits to utility companies. Each business will have their own unique set of start-up costs but here is a list of ideas to get you started:


  • Legal — Business registrations, taxes and licenses – (Make sure you research all the requirements for your city and state.)
  • Location — Rent deposits and repairs at new office or storefront. Utilities deposits.
  • What you see — Branding, signs, decor and marketing.
  • What you get — New equipment, tools or inventory.


This should get you started. Dive in and be thorough. Comb your business plan so that you can avoid surprise expenses as much as possible.


Operating Costs

These are the things you need each month to keep your business up and running. You may divide things into fixed and variable expenses later on your profit and loss but for now, just think through a complete list of all the items you may incur on a routine basis in your industry. Again, they will be unique for your business but here are some pretty common ones:


  • Phone, Internet, Utilities
  • Rent
  • Loan Payments
  • Professional Fees (Lawyers, Bookkeepers, CPAs, Etc.)
  • Software: Sales, Invoicing, Bookkeeping, Tracking, Etc.
  • Salaries and Wages
  • Inventory Restock
  • Raw Materials and Production Costs
  • Office Supplies


Once you have this figured up, add the figures to your spreadsheet, including any start-up costs on the months that you expect to need to pay them. Set aside the list of start-up costs that you will incur before you open for business. We will need this in the next step.


Step 3: What’s Left?


Now you add it up for each month. Are you starting with an investment, whether it is from your own savings or an outside source? Take that list of start-up costs that and subtract it from any cash you plan to begin with. This is your opening balance for the first month.


Cash projection is now as simple as this:


  • Cash Flow = Projected Sales – Projected Monthly Operating Expenses
  • Opening Balance + Projected Sales – Projected Monthly Operating Expenses = Closing Balance


As you fill out your template, the closing balance for one month will be your opening balance for the next. Work through a year so that you can figure in high and low sales seasons, if necessary, as well as costs that may be quarterly.




Take a deep breath. If you have made it this far, you have done some great work investing into the success of your business. It feels plenty tedious BUT this is the kind of thing that is going to set you apart from the world of risk-takers (they are a whole lot more common than you may think…).


Many people have the guts to start a business but not the smarts to STAY in business. It is a tough grind and this chart that you just labored to create will definitely not serve as a guarantee. BUT it will help you navigate the bumps, plan for the future and steer your business towards success.


As you review your projection, think through your business idea and allow yourself space to change and alter your plan to increase the profitability of your idea. What can help you get a jump in those predicted sales dips? What can you add in to the rotation to avoid slumps of seasonal demand?


We know you are not dreaming about the financial planning of starting your business BUT the financial planning can actually fuel your dreams to be better and smarter! Good luck on your endeavor!





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