Email Chris Email
Financial
May 3, 2023

Cash Flow – What Gets Measured, Gets Managed…

Sponsored Content provided by Chris Capone - CPA; Owner and Fractional CFO, Capone & Associates

The difference between companies that grow - and those that scale profitably - is an emphasis on measurement, continuous improvement and data-driven decisions. 
 
Whether you’re running a $500k or a $100M business – we all experience the same issues, just bigger numbers and typically more stakeholders (and critics) as you grow…
 
I am going to break down a simple cash flow model that can be used for the most basic business models, but also scaled to large and complex organizations.  Please note this is just the starting point; the real work comes in as you continue to monitor, update and align with your business plan as you operate.
 
1. Define the time period for which you want to plan, and at which frequency.  I suggest starting with a 1-year period and forecasting by month.  This is going to give you immediate insights and indicators of short-term financial health.  

***Note I have been in situations where we have forecasted cash on a daily basis due to extreme circumstances – if you feel you are in that situation – then a monthly forecast is not going to be much help. Follow these same steps, but use a daily or weekly view***
 
2. Define your revenue streams.  Let’s assume we are a business that sells tangible goods and also offers a service.  Your revenue streams will be Merchandise and Services.  The reason you should separate your revenue streams is to monitor the contribution of cash to your business from each, and may provide some information you didn’t realize. Also, it’s pretty simple to do. 

3. Identify your primary business expenses and the timing of such expenses.  Here is an example of a few most businesses need to account for. If you have clean books, then you are golden, and you can download your historical data and use your P&L as the basis. 

a. Payroll and Payroll Taxes – weekly? bi-weekly? 2x / month?
b. Rent – Monthly
c. Vehicle and Equipment Payments (Monthly)
d. Insurance (Monthly? Quarterly? Annually?
e. Phone & Internet (monthly)
f. Marketing & Advertising (likely a mix of recurring and ad-hoc through-out the year) 
g. Large expenditures that may not have happened in the past 

4. Build a simple spreadsheet or even handwrite somewhere – here’s what mine would look like. 

Update this on a regular basis, compare your forecasts to actual results regularly to drive continuous improvement and understanding of your business model and where you need to focus. 
 
Remember that measurement, continuous improvement and data-driven decisions will increase your ability to scale profitably.  
 

Ico insights

INSIGHTS

SPONSORS' CONTENT
Cfss headshots parker robert webversion 21422121214

Duke Energy Will Pay You Up to $9,000 to Go Solar with a Battery

Robert Parker - Cape Fear Solar Systems
Jane

It’s Child’s Play

Jane Morrow - Smart Start of New Hanover County
Dave sweyer 300 x 300

Insights into the 2023 Leasing Market in Wilmington, NC: What You Need to Know

Dave Sweyer - Sweyer Property Management

Trending News

Area's Film Industry Inspires Set-jetting

Cece Nunn - Jul 19, 2024

Artist Navigates Evolving Business

Samantha Kupiainen - Jul 19, 2024

State Of The Art

Emory Rakestraw - Jul 19, 2024

City Leaders Vote Down $16M Bid, Declare Parking Deck Surplus

Emma Dill - Jul 17, 2024

CFCC Making Progress On Health, Human Services Center

Beth A. Klahre - Jul 18, 2024

In The Current Issue

State Of The Art

Local arts community officials describe the anticipated five-year growth of arts and business throughout the region as significant....


Area's Film Industry Inspires Set-jetting

Traveling to visit film and TV locations is a trend the CVB has observed in Wilmington since the early days of Dawson’s Creek....


Info Junkie: Isabelle Shepherd

The interim executive director of Historic Wilmington Foundation, Isabelle Shepherd, shares her top info and tech picks....

Book On Business

The 2024 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2024 Power Breakfast: The Next Season