A big part of the Business Plan Project's Final Submission is putting together a cash-flow budget for your business. And getting started sooner is better than later.
Doing this requires input from every team member. It will also put your business to the ultimate test: can it operate profitably? Are you ready to find out the answer?
This post appears in two categories: "Week 5" and the "Business Plan Project: Final Submission."
For openers, here are my lecture notes and PowerPoint slides.
- Download Budgets (Week Six)
Note: You'll actually prepare two budgets (twice as much fun): a capital budget (includes every cost from inception through grand opening) and an operating budget (includes everything after grand opening through stabilization and maturity).
You'll also need two more files. They're Excel files that contain a "suggested format" for your budgets. One is a "Sample" that is fully-outfitted so you can see how it all works. The other is a "Blank" for you to use. Here they are:
You'll notice the "suggested format" tracks the order of a "Statement of Cash Flows." That's on purpose. At this stage, it doesn't make sense to prepare an Income Statement or a Balance Sheet if your business doesn't have a positive cash flow.
Likewise, you've got to work out your capital structure: what are the sources and uses of funds that you'll be needing and using? What's the "mix" of funding that makes your business perform? The best answers to these questions come from analyzing your cash flows.
The best way to start is to "fool around" with the sample budget. Look at the formulas and relationships. See how they link together.
To start on your budget, plug a few numbers into the blank budget and watch what happens. Don't load in everything at once and expect it to work right the first time out of the box. Take your time and be patient.
Also, don't hesitate to change labels or expand or delete the budget to suit your business's needs. If you do, don't de-link some relationships or formulas.
Finally, there's a post also in the "Business Plan Project: Final Submission" category ("Don't Get the Budget Blues") that is mandatory reading for your team's CFO. It's got some trouble-shooting ideas that might be helpful. Enjoy!
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