Financial Forecast

The Indirect Cash Flow Method: How to Use It and Why It Matters

By now, you probably know that paying attention to your cash flow is vital to the health of your business. This article looks at an alternative cash flow method, often called the indirect cash flow method.


From Basic Numbers to Financial Projections

There are some good reasons that you might need formal financial projections. The best reason is planning cash flow better. I wrote about the cash flow traps in the previous chapter; being aware of them is better than not, but with standard financial projections, you can take your sales forecast, expense budgets, and starting position...


Facts About Financial Projections

Normal people hate financial projections because of their off-putting formats and buzzwords. Really, it’s just a matter of making good estimated guesses about what you’re going to be selling, what it’ll cost and what your expenses will be. Let’s go over a few simple points that generate a lot of unnecessary errors in business plans....


Projections: How Many Months? How Many Years?

For any normal planning purposes, for any normal company, you should have at least 12 months detailed month by month for business plan forecasts. That would be for sales forecast, cost of sales, your burn rate, and eventually the complete financial forecast, if you’re going to do it. Then have another two years beyond that,...


The Three Main Statements

I’ve taken you this far with just the basic business numbers. To be fair, that’sĀ far enough. It certainly gives you some numbers to get a hold on and to manage, review, correct, and revise. It’s likely that at some point you’ll want to go further, into the straight financial projections that are part of a...


Standard Tables and Charts

So those three main tables are just about essential for a complete business plan: you have to project income, balance, and cash flow. Cash flow is the single most important numerical analysis in a plan, and should never be missing. Most plans will also have a sales forecast, and profit and loss statements. I believe...


Fixed and Variable Costs and Burn Rate.

As you consider your projected income statement, I hope you see three of your spending budgets there — the cost of sales, the payroll, and the expenses. These also contain your fixed vs. variable costs, and your burn rate, which we went over in the Chapter 4. Those are good numbers to keep in mind....


Seven Simple Words You Should Know

You don’t have to be an accountant or an MBA to do a business plan, but you will be better off with a basic understanding of some essential financial terms. Otherwise, you’re doomed to either having somebody else develop and explain your numbers, or having your numbers be incorrect. This is a good point to...


1 2 3

Get the Bplans newsletter:

Expert business tips and advice delivered weekly.