What is the ONE Thing

Your Business Needs in 2018?

I know, it’s an overwhelming question. I would fully expect you to say “I need so many things for my start-up, how can I narrow it down to just one thing?” Don’t worry…I have an idea, which you can build on and take from there.

A REAL Cash Flow Forecast for 2018

Cash flow forecasting is done incorrectly in about 112% of the cases, I’m convinced. I have built them incorrectly my entire career, so I think I can say that without error or fear of being ridiculed.

Here is how I’d recommend you build a cash flow forecast for your start-up or newly-formed small business:

  1. For a new business, start at the very bottom with the amount you want to pay yourself, and the taxes associated with that amount of profit.
  2. Next, fill in the predictable overhead items, such as cell phone, insurance, software subscriptions, dues, and things like that.
  3. Thirdly, fill in (to the best of your ability) the unpredictable items, such as costs associated with revenue production. Keep in mind that some of those costs don’t exist unless you’re bringing in revenue, so be careful. These are the hardest expenses to fill in.
  4. Lastly, let the revenue number be the plug that makes the rest of the calculation work. The revenue number you input should allow you to pay all your expenses and “net out” what you want to pay yourself in Step 1.

I have built so many cash flow forecasts that were outdated the minute we prepared them. They were always built from the top-down, starting with revenue projections. When I started building them from the bottom-up, things looked completely different. These forecasts are almost alive in a way since the revenue is a direct function of what you hope to pay yourself and what the business has to pay on a monthly basis to survive.

Anything over and above that amount of revenue is gravy and more profit that you can reinvest in the business! A sign of success, I would say. You can see in a split second if you’re doing better than you need to, or worse than you need to, and you can make adjustments from there. We talk about this constantly in Godwin Start-Up School.

So, that’s my answer for you. But you may have other things in mind for your start-up in 2018. Let me know what your small business or start-up needs, and then let’s see if we can help you.

Happy New Year, Entrepreneurs!

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