CASH FLOW FORECAST

Generating your first cash flow forecast in 20 minutes

Your First Cash Flow Forecast

I know you may be bored just to think about the cash flow forecast complexity and the several hours you’ll need to dedicate to get something useful…

But, I have a something for you: an extremely simple and objective free template that will automatically generate a 24-month flow for you:

In the following paragraphs, I’ll guide you through the steps of building your cash flow forecast using the spreadsheet.

STEP 1: FINDING THE FIELDS

To insert your startup’s information, the first thing you need to do is to open the hidden fields.

Just click on the “+” signs that are above and in the left of the spreadsheet.

Form Columns “B” to “G”, is where you’ll insert the information about your startup’s cash flow.

STEP 2: INSERTING THE INFO

Now, it’s time to input your startup’s information in the right fields.

You’ll find 4 big categories: “Fund Raising”, “Revenue”, “Costs & Expenses” and “Investments”.

Now, it’s when the magic starts to happen. The spreadsheet will automatically generate the flow, as soon as you’ve inserted the information.

FUNDING

In this first category, you’ll fill in the information regarding your fundraising sources. Here you have the following fields:

Source (blank cells): the source of your funding. E.g.: partners, family members, friends, angel investor, seed funds, loans, etc.
Amount ($): the amount of money the source provided to your startup.
M/Y (Month/Year): the month/year you expect funds to become available for your startup.

For example, if you and your partner will invest $30,000 each, in January, 2020, then you’ll have:

REVENUE

Now, it’s time to forecast the revenue flow you expect to receive from your customers. Fields:

Product/Service Name (blank cells): for each line insert the name of a product or a service your startup will sell;
Type: select among three types of revenue: “SaaS”, “Sales” and “Commission” (% of volume). The model will generate the flow based on the type you’ve selected.
Price/%: how much you’ll charge for 1 unit of your product or, in the case of “Commission”, the percentage you’ll charge as a fee (%).
Volume: the volume of items you expect to sell in the first month of revenue. For “Commission” type it is the volume on which the fee will be calculated.
Starts In: the first month you expect receiving revenue for each product.
Increase (%): the monthly increase you expect your revenue will grow (if you let it blank, no increase will be considered)

For example, if you are working with a SaaS revenue model and you intend to sell a $40 subscription, expect start selling 100 subscriptions in Apr-2020, with a monthly increase of 1%. Here is what you should inform:

COSTS & EXPENSES

For this category, you’ll find three different sections:

% OF REVENUE: You’ll use this section for any cost that is dependable on your revenue. E.g.: taxes, sales commission, COGS, etc.

For instance, if, in your country, any revenue is taxed in 15%, you should insert:

FLAT + ANUAL RAISE: You should include in this section any cost or expense that have a regular flow. This costs will happen whether you have revenue or not. E.g.: Salaries, rent, energy, services, subscriptions, etc.

For example, you contracted office rent for $1,500/month and expect a raise of 5% in oct-2020:

SPORADIC/CUSTOM: In this last section, you may include any cost or expense that the flow doesn’t fit properly to the above categories. E.g.: an expense with an irregular flow.

For instance, you have a 3-month service from jan-2020 to mar-2020, with a variable amount. In this case, you’ll need to insert the amounts directly in the cash flow area:

INVESTMENTS

Here, you’ll insert the investments you plan to do in the next 24 months. E.g.: marketing campaigns, new equipment, app development, etc.

For instance, if you have hired a third party to build your MVP, for $30,000, divided into 6 installments, starting in January-2020, you’ll inform:

STEP 3: GENERATING INSIGHTS

Okay, as soon as you include your startup’s information, the spreadsheet will generate the flow. That’s awesome, isn’t it?

But, you know what is even more awesome? The insights you’ll gain from the flow to better drive your decisions..

These insights are presented in two different types of metrics: NET METRICS and GROSS METRICS.

NET METRICS

The metrics you see here reflect the outcome of every item you’ve estimated in your forecast (Fund Raising, Revenue, Costs & Expenses, and Investments):

GROSS METRICS

These metrics don’t take into account the revenue nor the costs associated with it. In other words, if you fail generating revenue in the next two years, how bad would that be?

UNDERSTANDING THE METRICS

To better understand the meaning of the above metrics, go to these posts:

So, dear founder, I hope by now you have generated your first cash flow and have a better understanding about your business.

DISCLAIMER By using one or more of the spreadsheets provided by The Traction Stage, you understand and agree with the following: 1) Despite investing a lot of effort to ensure the spreadsheets are perfectly functioning, it is not possible to guarantee any spreadsheet to be 100% free from errors. 2) There will be some cases in which the spreadsheet will need to be adapted by the user to reflect the correct output. 3) The spreadsheet might not work properly depending on Excel version it is being run. 4) Some of the spreadsheets are unprotected, which means their cells, formulas and any other content may be modified by the user. Such modifications, may cause errors. 5) It is always entirely responsibility of the user to verify the accuracy and applicability of the spreadsheets. 6) The Traction Stage, its author and contributors will NOT be responsible for any special, incidental or consequential damages whatsoever arising from the use of these spreadsheets.