Hardware Reference
In-Depth Information
meals $1,893.89
parking $103.00
Travel $5,113.77
Total Travel & Ent $19,834.02
utilities
Alarm $3,238.53 gas and Electric $4,872.69 Internet $2,288.90 Trash $583.78 TV service
$1,525.09 Water $138.00 Total utilities $12,646.99
ToTAL ExpENsE $1,817,139.68
Net ordinary Income $69,065.01
Net Income $69,065.01
Think of “cash flow” as money “flowing” in and out of your checking account. If more
money is flowing into your checking account, you're in a “positive cash flow” position and
you can pay all of your bills. If more cash is flowing out of your account and you become
close to overdrawing your account, this puts you into a “negative cash flow” position. This
is why you invest in your business with start-up capital, or cash. Most businesses don't in-
stantaneously start producing positive cash flow from day one. You, as the owner and sole
investor, provide the up-front cash to give the business the positive cash flow it needs to
operate from day one.
If you don't have enough cash to cover the negative position, then you can ask for investors
or consult your banker. Not having enough cash to start a business is why new businesses
typically ask for a loan or a line of credit from their bank. It's to cover shortages in their
cash flow.
A typical cash-flow projection will list the carried cash from the previous month, add in
projected sales for the month, and then list all of the actual expenses anticipated for the
month. This will in the end deliver a balance that is carried over to the month thereafter.
I like the cash-flow projection because it gives you a snapshot, month after month, of the
positive or negative position your business may be in and allows you to see into the future
and make adjustments. For a bank loan officer, the cash-flow projection offers evidence
that your business is a good credit risk and that there will be enough cash on hand to make
your business a good candidate for a line of credit or short-term loan.
Balance Sheet
Your balance sheet is the last of the three financial statements that you need to complete
your financial plan. It will provide a snapshot of your business's net worth at a particular
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