Simple Startup Cashflow Projections
docs.sendwithses.com
Simple Startup Cashflow Projections
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Re: Simple Startup Cashflow Projections
#2Every founding team / management team should be doing this or something like this. Even early on. Pre-CFO. Angel stage, seed stage. Whatever.
When the "easy" money stops - which at some point it will - and raising "the next round" gets hard, cash flow is going to matter.
The concept that burn rate ticks down toward or "months until death" march to the next fundraise will not be an effective plan in that environment.
Re: Simple Startup Cashflow Projections
#3Cashflow is an unavoidable and often difficult lesson to learn. Not a bad idea at all to have a simple version like this going from basically the beginning.
Re: Simple Startup Cashflow Projections
#4Agreed!
I swear by this type of cash-flow-pro-forma. It becomes a model for the business that you can share with anyone involved in the business (or would like to be involved).
In some ways it becomes my simulation engine for the business. There are ways to alter the basic sheet for different purposes, but here are my basic add-ons or differences from the sendwithses.com version.
My sheet has:
* Metrics section at the top. This CAN be dollars or units, but it can also be non-accounting metrics that are key indicators of health or risk a project faces. Like foot traffic, downloads, hours of sleep...
* Assumptions at the BOTTOM of each month - that way you have room tell the story of the changes between months. If you plan to have radio / podcast interview in July on a particularly appropriate show with an audience that should LOVE your widget, then plan for it and note that in the assumptions for that month.
* Another column between months that expresses either formulaic or raw changes for that month. Meaning, 100 more widgets or 10% more widgets. If the change is exceptional, an explanation is written up in the assumption section at the bottom of the month - see above.
* A column for Month Actual. At a glance you know what is happening. You can go nuts and add a percentage difference or just a percentage difference and skip the Actual column.
* And a column for difference between Month Actual and Month Projected.
At first you'll want to hide the change (or delta) column and historical months, but depending which hat you are wearing when you use the sheet, you'll want to show and hide different things.
Everyone in the company / project should have their own, but there should be only one master sheet.
So glad atanpur shared this...in the thousands of clients I've had, this sheet had more impact than anything else. Whether they were kids or MBA smarty pants. Build one of these and you get to play out any scenario you like. You can share this with almost anyone - taking them on the tour for the first time is really fun.
Re: Simple Startup Cashflow Projections
#5There is a free (but polished) online app to do in-depth forecasting - https://startuprunway.io It's part of a suite of other related apps for financial planning of your next startup https://ltse.com/tools
Re: Simple Startup Cashflow Projections
#6A bit tangential, but please for all that is good in this world, stop depending on static AWS IAM User keys in an integration product. https://docs.sendwithses.com/how/how-to-generate-aws-keys-fo....
You should absolutely be using cross-account roles which, with role assumption, vends ephemeral credentials when you need them. https://docs.aws.amazon.com/IAM/latest/UserGuide/tutorial_cr...
A compromise of your vault (and hopefully not remote code execution) means the attacker at least can't blast a billion emails out at someone elses expense.
Re: Simple Startup Cashflow Projections
#7FYI, this spreadsheet does not use words like income, profit, loss, expenditure, etc. in the same way that businesses and accountants use the terms. Be very careful if you're communicating these numbers to other parties - they may not interpret the words in the same way you intend them.
Example: Cash flow is not the same as profits/losses. If you buy a $1M CNC machine for $1M in cash, your profit is $0 but your cashflow is -$1M.
Example two: Expenditures are different from expenses. The date you agree to buy (and are legally contracted to buy) a $1M CNC machine may be different than the date that those funds leave your bank account. (And those dates may be different than the dates over which the $1M CNC machine depreciates and eventually breaks down.)
Issues like these two can cause a business to run out of cash, even when then business is making a legitimate profit. This is why an income statement detailing your profits & losses is not enough - you also need a cashflow statement.
Re: Simple Startup Cashflow Projections
#8FYI, this spreadsheet does not use words like income, profit, loss, expenditure, etc. in the same way that businesses and accountants use the terms. Be very careful if you're communicating these numbers to other parties - they may not interpret the words in the same way you intend them. Example: Cash flow is not the same as profits/losses. If you buy a $1M CNC machine for $1M in cash, your profit is $0 but your cashf…
> FYI, this spreadsheet does not use words like income, profit, loss, expenditure, etc. in the same way that businesses and accountants use the terms.
That's a very polite and roundabout way to say the spreadsheet is wrong...
Re: Simple Startup Cashflow Projections
#9FYI, this spreadsheet does not use words like income, profit, loss, expenditure, etc. in the same way that businesses and accountants use the terms. Be very careful if you're communicating these numbers to other parties - they may not interpret the words in the same way you intend them. Example: Cash flow is not the same as profits/losses. If you buy a $1M CNC machine for $1M in cash, your profit is $0 but your cashf…
As they say, cash is king
Re: Simple Startup Cashflow Projections
#10FYI, this spreadsheet does not use words like income, profit, loss, expenditure, etc. in the same way that businesses and accountants use the terms. Be very careful if you're communicating these numbers to other parties - they may not interpret the words in the same way you intend them. Example: Cash flow is not the same as profits/losses. If you buy a $1M CNC machine for $1M in cash, your profit is $0 but your cashf…
> FYI, this spreadsheet does not use words like income, profit, loss, expenditure, etc. in the same way that businesses and accountants use the terms. That's a very polite and roundabout way to say the spreadsheet is wrong...
The spreadsheet is not wrong. It's just named incorrectly. It should be called "Income Statement Generator" because that's exactly what it is.