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Planning for 2023 Part 6 - Let's talk cashflow budgets

Updated: Jun 5

What is a cash flow budget? Basically, it is a plan of what you are going to achieve over (usually) the next 12 months on a CASH basis - not profit or revenue.

Profit v Sales v Cash v Expenses - As you all realise Sales (revenue) is the value of the goods or services walking out the door, Cash is what you have when you get paid for them, and Profit is what is left over once you have accounted for all your Expenses, and net cash is what you have at the end of the day once the Expenses have been paid - the lifeblood of your business.

Phew, did you get all that?

It’s all in the timing, and your cashflow budget is how you map the flow of the lifeblood of your business

Why do one?

It is a critical part of your 12-month planning – can we afford to do what we want to do, predicting future shocks – forewarned is forearmed.

What is the minimum we need to do to keep the doors open? What if we do this in terms of marketing, hiring staff, or purchasing new equipment... You need to look at all these factors to map your path, and it is super important now in these exciting economic times.

How do you make one

It is an easy thing to do using Excel, Google Sheets, or Numbers. I have a template for this so email or DM me for a copy.

Start with known costs - it will help you find your breakeven point from a cash position. What are your margins - you must know this, and you get the added benefit of reviewing your pricing strategy as we go. What affects what - if you spend more on advertising what impact does that have on revenue? More staff equals more sales, but at what cost, how long before they pay their way? And what do we want to achieve? What resources do you need to get there?

𝗔𝘀 𝗮𝗹𝘄𝗮𝘆𝘀 - 𝗶𝗳 𝘆𝗼𝘂 𝘄𝗮𝗻𝘁 𝘁𝗼 𝗱𝗶𝘃𝗲 𝗶𝗻𝘁𝗼 𝘁𝗵𝗶𝘀 𝗶𝗻 𝗱𝗲𝘁𝗮𝗶𝗹, 𝘄𝗮𝗻𝘁 𝘀𝗼𝗺𝗲 𝗵𝗲𝗹𝗽, 𝘄𝗮𝗻𝘁 𝘁𝗼 𝗱𝗼𝗺𝗶𝗻𝗮𝘁𝗲 𝗶𝗻 𝟮𝟬𝟮𝟯, 𝗵𝗶𝘁 𝗺𝗲 𝘂𝗽 𝘃𝗶𝗮 𝗗𝗠 𝗼𝗿 𝗲𝗺𝗮𝗶𝗹 𝗮𝘁 𝗸𝗲𝗹𝗯𝘆@𝗮𝗱𝗮𝗽𝘁𝗶𝗾𝘂𝗲.𝗰𝗼𝗺.𝗮𝘂

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