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Cash Flow Management

Can you help me with cash flow projections?

Absolutely. If you’re worried about your cash position or wondering whether you’re going to be able to pay your bills later this year, then it’s time to do a cash flow and profit plan projection. Creating a projection will help you develop a profit plan and cash budget forecast that will help you make sure you keep enough cash on hand to pay bills, meet payroll, and plan for one-time expenses such as equipment purchases or tax payments in coming months. Ultimately, it will help you sleep better at night. If you haven’t already, make an appointment to work with an SBDC advisor on these crucial steps.

How do I estimate my startup costs and cash flow?

Financial projections are estimates of the financial future of your business. Creating financial projections is an important step in determining the feasibility of your business. To ensure sufficient cash is available for operations, you must be aware of your business’s current and future financial position. Additionally, financial projections are a critical part of your business plan and/or loan proposal. Although the numbers are based on estimates, do not consider such projections as “a guess.” Research plays an important role in accurately determining future sales and costs. The projections serve as a basis for planning and are likely to change as more information becomes available. Creating financial projections may seem intimidating. It is important to remain conservative as you develop them. In other words, understate revenues and overstate costs.

How do I make predictions about future sales and expenses in order to create a cash flow projection?

Research your industry, look for trends you may be able to take advantage of, look at the past, figure out what you might do differently going forward, look at details, test the market, look at your social media presence. Be the most informed person possible on the subject of your business. Your SBDC consultant can help with the process. Keep your notes because if you apply for funding your banker may want to know how you came up with specific numbers.

How can I figure out my break even point?

That critical break even point is a must to know. There are several factors involved in getting an accurate number. First, figure out and list your costs and expenses.  Determine which ones are fixed expenses, like rent or mortgage payment, and which ones may vary from month to month.  Then list your income from all sources. Your break even point is the place where your income equals your expenses. Any additional income above that point is profit. Here at the SBDC we can help you figure it out if you would like assistance.

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