Originally written by Matthew Cushen on Small Business
As a start-up or small business, what are you funding choices? And the consequences of those choices?
Can you afford the time that it could take to grow the business organically – limiting the upfront cash and reinvesting revenue? Or do you need to develop the product/service quickly, chuck cash at marketing, get the brand in front of people, grow quickly and grab market share before others?
Do you have some personal cash to keep you going or are you going to need to pay yourself a salary before the business is generating enough cash to cover it? Are you going to recruit and pay others? Probably the most stressful aspect of building a team is ensuring you can meet payroll each month.
‘If you aren’t a natural spreadsheet warrior then find someone who is that can help’
How to create a cash flow forecast
To answer these questions you need a cash flow forecast, and ideally some comparisons across some different scenarios.
The high investment/fast growth scenario, the slow burn scenario, the optimistic scenario and the worst-case scenario where you don’t manage to generate any of the expected revenue and cash is flowing one way. A cash flow