If there is one thing that all business experts agree on, it is that cash is vital for your business. Cash facilitates the operation of business; without it things slowly grind to a halt. With cash you can grow your business, fund the marketing campaigns, pay the employees and without it you can do none of these things.
Since cash is so vital, why is it that most small business owners have no idea if they are going to run out of it or not?
The reason is simply that there is no forecast in place and the reason for this is because forecasting is, seemingly, too hard or too time consuming. Even if it wasn’t difficult many businesses owners just don’t know where to start.
To make the whole process easier I have designed a spreadsheet that will help. The spreadsheet takes your current bank balance and forecasts your incoming and outgoing cash, so that you can get a view on your closing bank balance over the upcoming weeks.
The sheet contains full instructions and an example of what it should look like when it’s done. And it’s yours for free. It should be run each Friday to forecast your cash position for the following week.
Once you have completed the sheet you should get a view on your future cash position that will help you make more informed decisions. For example, should you buy that piece of equipment or should you pay that supplier invoice?
The sheet also allows you to flex your forecast into several scenarios so you can see what would happen if, for example, someone doesn’t pay on time.
By being forewarned of impending cash shortages you are forearmed and can take action. Ignorance is not bliss when it comes to your future cash position.