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Cash Flow Forecasting: Predicting and Planning for the Future

July 25, 20238 min read


Are you a small business owner struggling to plan for the future? In this video, you'll discover how cashflow forecasting can help manage and predict your local business' success. Learn the basics of cashflow management, best practices for managing cash flow, and strategies for success! Stay tuned! As a small business owner, it can be difficult to predict and plan for the future of your local business.

Cash flow forecasting is an important tool that many small businesses don't know how to use effectively or even understand the basics of. Without proper cashflow management, you could face serious financial issues in the future. In this video, we will explore cashflow forecasting and how it can help you better manage and plan for your local business' success.

We'll cover topics such as understanding the basics of cashflow forecasting, setting realistic goals and expectations, best practices for managing cash flow, using historical data to make informed decisions, and strategies for success. So let's get started! The main goal of cashflow forecasting is to manage the cash in the business. Since cash is the lifeblood of the business, it's important to ensure that the forecast is as realistic as possible when it comes to cash flow forecasting.

Otherwise, you may find yourself in a dangerous situation. Planning for the future is essential for any small business owner, and cashflow forecasting is an important tool to help you do that. When combined with an accurate financial plan, it allows for setting goals and expectations to help you stay on track with your cashflow management. It's important to be aware of expected trends in revenue and expenses when setting these goals.

For example, if you know that sales will increase by 20% during the holiday season, plan accordingly to ensure you have sufficient stock or bandwidth to handle the increase. Cash flow Forecasting also requires understanding historical data to make informed decisions. Knowing how much money came in last month or last year can give insight into how much money may be coming in this month or this year.

This information can give clues as to what areas of your small business need improvement or what strategies could work best for increased success. I have found that most small business owners need to have a very hands-on cash flow forecast. So what do I mean by that? Well, since the idea of monitoring your cash flow closely is usually a new concept that I'm introducing, it's best if the business owner does this for themselves for a while first before they look to delegate it to someone else.

I know this basically goes against everything I say about delegating as much as you can, and I don't think this should not be delegated, just not in the beginning. As a local small business owner, your cashflow forecast will most likely need to be weekly. I know, I know, get your job up off the floor!

Trust me, in the last 16 years, I have only worked with very few businesses, out of hundreds, that didn't have to do a weekly cash flow forecast. Now I do have some good rules for you! Below this video is an invitation to join my 3 Dangerous Pitfalls web class. This free web class unveils the 3 Dangerous Pitfalls that all small business owners face that keep them overwhelmed, putting out fires and chain to their business.

One of the topics discussed in more detail in that web class is cashflow forecast, and at the end of the web class, you'll get the opportunity to work with me if you see value in that, to gain Mastery in all areas of your finances and more. Now back to you doing your Cashflow Forecast weekly. Basically, your weekly cashflow forecast is done on a spreadsheet.

No, I have not yet ever found software that can do the job. And as a software engineer, I thought about how to write one. With all the variability in how people run their businesses, I'm not sure that it's possible, maybe when AI gets a little smarter (like next week), it can take over the job, but for now, it's you! So what do you do, you record every transaction in and out of your bank each week.

You project out into the future. Each of those transactions, we usually try to keep it at least 6 months out. You add into the projections everything that you know will, or could (if it's a high probability), happen in the expenses and you project out all the income as well.

For a cash flow forecast, you assume that nothing will change unless you know with a high probability that it will. For example, if you have a monthly rent payment due on the first of each month, you put it into the week of the first of each month as the same amount unless you know that say, in August, it's going to go up by 10%, then you would put in that 10% increase starting in August.

For income, it depends on how your income comes in but keep that same idea. It will continue as it is unless you have a high probability that it will change. Keeping this up each week will have you very present to the cash flow of your business. Once you do delegate this, you still need to review it every week until you have at least 6 months of reserve cash.

This means that you have enough cash on hand that if something catastrophic, like your business being shut down for 6 months, happened, you would still be able to continue to pay all your overheads. Finally, it's important to have strategies in place from the beginning for success with cashflow forecasting and overall business success. Make sure you are aware of current market trends and competition so that you can make the right decisions based on up-to-date information about your industry.

Additionally, create systems like automated payment reminders, which could eliminate potential issues with late payments or missed invoices. These strategies will set you up for success in both the short and long term Also, utilizing online resources such as financial blogs and articles can help you stay up-to-date on the latest cashflow tactics. Staying up-to-date on the latest strategies and tactics is essential in order to make informed decisions about your finances.

Reading industry-specific blogs or articles can provide helpful information related to topics such as budgeting, setting realistic goals, best practices for managing cash flow, using historical data to make informed decisions, and more. Additionally, many of these resources provide examples of how other businesses have achieved success with their cash flow forecast and strategies.

By utilizing these online resources and staying knowledgeable about the current state of your industry, you'll be able to make more informed decisions that will ultimately lead to a successful future for your local business. With proper planning and realistic expectations, cashflow forecasting can help manage your local business' success and plan for a prosperous future. So there you have it, the basics of cashflow forecasting. If you want to prove to yourself that you can be a success, then cashflow forecasting is the key.

Remember to use historical data to make informed decisions, set realistic goals and expectations, and have a strategy for success. And remember to register for the 3 dangerous pitfalls web class now by clicking the link in the description below. It's important for small business owners to share their experiences with cash flow forecasting in order to help others.

If you have any good or bad experiences related to understanding the basics of cashflow forecasting, setting realistic goals and expectations, best practices for managing cash flow, and utilizing historical data to make informed decisions or strategies for success, please leave a comment below this video. Your stories can provide insights into what has worked well and what pitfalls to avoid when it comes to managing cashflow successfully. All of us can benefit from hearing your perspective, so don't be shy! Let's work together to help each other succeed by sharing our own stories and experiences related to cashflow forecasting.

Would you like to learn more about cashflow forecasting or other topics regarding business success?


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I'm Doug Barra.

I believe it takes great courage to own a local, small business.

For the last 16 years, I've ensured that business owners like yourself get the time, money, and freedom you deserve.

Remember, sign up for our FREE web class by clicking the link in the description.

Thanks for watching, and I'll see you in the web class!

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Doug Barra

With 14 years of experience in working with small and medium sized businesses to help them grow, Doug is committed to seeing business owners thrive. Business coaching is what drives Doug.

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