Streamline your sales forecasting process with sales forecast automation for Nonprofit

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one of the absolute best things you can do for your small business when it comes to the finances is to create a cash flow forecast cash is the lifeblood of a small business and being able to look ahead and forecast what your cash is going to do in your business is an exercise that every single business owner should be doing and should be comfortable with I want to make this easy for you guys so I've actually created a great spreadsheet that is absolutely free I will link it down below I'm going to show it to you guys because building it you know then you don't have to worry about that you can just plug in your numbers and you can create this cash flow forecast for yourself so I want to show you guys this video is all about showing you things you need to think about when you're building cash flow forecast I'm going to show you how to do it using this spreadsheet and I'm going to be kind of giving you some tips along the way as well definitely stay tuned for the whole video because we've got tips kind of like dripped throughout everything and then it is going to be a little bit longer you can save it re-watch it as you're building your own cash flow forecast really though like this is probably what I would say is just the most critical task you could be doing in your business reviewing your financials is really high up there but reviewing your financials should be leading to okay now we update the cash flow forecast and your cash flow forecast should be something that you are looking at potentially weekly or at least on a monthly basis because you always need to be thinking about what is the cash doing in my business do I have enough do I need to be doing something to generate more cash okay so it is a wonderful decision making tool as well you could plug in different scenarios what if you purchased inventory in this month versus this month What If you hired an employee at this date versus this date all of that kind of stuff can go directly into your cash flow forecast and I'm going to show you some examples of that if that sounds good stay tuned I if you're not already subscribed to the channel I would love to have you here and without further Ado let's get into the screen screen share of our cash flow forecast worksheet first thing we're going to do here is I'm just going to give you a high level of this spreadsheet that you will be able to use for yourself so this is the template it has its structured to where it has income sources up here and then expenses out so these two sections are really basically your profit and loss right here okay your profit and loss statement if you're a cash basis business and most of us as small businesses are but cash in cash out this is a really basic the first parts that you're going to find so when we look back historically we'll be able to find these numbers on our profit and loss statement okay and then there's other things that also affect cash in and cash out and these are oftentimes things that we find on the balance sheet so the really beautiful thing about a cash flow forecast is it combines the activity that's happening on the profit and loss and the activity that's happening happening in the movement that's happening on the balance sheet so like for example if you pay off a loan you don't see that at all except for a little bit of interest expense on your p l well but are you profit and loss but you would see maybe it was a thousand dollars and you had you know fifty dollars of Interest the thousand dollars definitely affects your cash flow but it's not going to show up in your profit and loss so you can't just look at your net income and think that's how much cash I have because you could be doing things on the balance sheet that could also be eating up your cash especially if you are taking an owner's draw or you're buying inventory like there's lots of potential things here that could be playing into the cash in and cash out so just to give you some examples and I've given you some space to add other things that you might have but you know for example Cash Out could be credit card payments owner's draws we we talked about equity in a previous video loan repayments like I mentioned and just moving money like out to like different savings accounts so I recommend looking at the cash flow forecast based on like the the amount of cash that you have in like an operating account like something that you actually want to be able to use that cash so let say you have a tax savings account that's on the side and you know you can't touch that because that's going to pay taxes don't include that in your cash flow forecast if it's savings and you don't want to touch it and you don't want to use it for operations put it to the side okay and and don't include that total so I can kind of just show you how this works the way like just really functionally so you go to the cache at the beginning of the period and we're just going to start in January and I'm going to say we have ten thousand dollars if you are seeing this video which you will be seeing this video later you can just put the number in let's say if we're doing this in May you can just plug the number into the May forecast and it will read the formula just fine and then you can just hide the columns you do that by selecting your columns right clicking and just hide which would look like that and then if you want to unhide you select columns and you unhide and then you put your cash in so let's say You're Expecting you know five thousand dollars of a revenue stream one one and two thousand dollars of Revenue stream two and then you can go through and just fill out the expenses of what you put in here I'm just going to show you how the spreadsheet works so you'll see this is summing the things above this is something with things above and then same down here cash out and then cash received so you put everything in positives and the formulas are going to do the work for us so that you don't have to think okay Cash Out is negative or cash in is positive you just put everything in as its absolute value which is without the minus without the negatives and then the spreadsheet will take care of it for you just make sure you get things in the right place is it really cash out or is it cash in okay and then you can customize this if you need to add lines you can just right click and insert above and it will include it in the formula what you don't want to do is add a row right above the total because then it will not include the sum so that's just a little Excel trick that you need to be aware of or if you're Excel Savvy you could fix it but I highly recommend not messing with that piece if you need to add formulas just add it in between and that sum will be included because if you see here all of this is included even though I added a row okay well let's see I'm going to actually go in and show you that I have built a cash flow forecast and I will walk you through this so what I did is I actually pulled from the sample company in QuickBooks Online I pulled a profit and loss statement because what I wanted to do is I wanted to say okay let's validate my thinking on the cash flow like what are the things I need to be thinking about and so the profit and loss because it's a cash basis company and gives us a lot of good information it shows us the income it shows us all the expenses and then I can go and look at the balance sheet and see if there's any movement in the balance sheet maybe there's a loan to be repaid or maybe there's a regular owner's draw I need to think of and what I can do is I can validate that my cash flow I'm I'm including all the things that I should be thinking about in my cash flow you know all the revenue line items that I should be thinking about all the cash out items I should be thinking about whether or not there's any credit card payments or loan payments if I look at my actual data I can see okay what's moving in and out and then what you do and you know you can validate that so you can say cash at the beginning of the period was 4179 and then you can look and say okay after I enter in everything that I know moved during the month now how where's my cash and then you can go and look at the balance sheet at the end of the month and see how close were you did you like were you able to read everything and get everything into the cash flow forecast if so then you're good to go if not you need to go and maybe look at the statement of cash flows maybe look and see what you might be missing or do a comparison balance sheet between the previous month and this month that we're looking at and see if there's any movement between those accounts I like to get like not super super granular here so when I actually did this I the p l had lots of different accounts so you can use the feature to collapse to kind of give high level categories rather than you know putting if you have you know potentially 50 line items on your piano now you don't want to have to put each one of those line items on your on your cash flow that'll get really tedious and it's really hard to manage so you kind of want to give like summaries here and the other thing with the cash flow is it's not going to be perfect you're not going to estimate your exact amount of dollars you know six months into the future what you want to get here is you want to get good estimates you want to get like directionally like pretty close so that you know if you're off on your Revenue by ten thousand dollars you can adjust and you know like what else you need to be doing to like lower your other costs in your business if your Revenue isn't as high as it needs to it's going to affect your cash flow so what you want to do here is you want to put in estimates okay and most of you hopefully have a budget actually I know a lot of you don't have a budget that's okay you can use this as a way to well it's not okay I want to take that back I want you to have a budget but you can use this to kind of build a budget for yourself so you can say okay in the month of May I know that we made four thousand dollars all right well maybe this is our high season so I know that in June it's actually going to be um it's actually going to be you know almost double that and then maybe June July August are all going to be really good um and then maybe it starts to go back down and then it gets really tough let's say during October November and December okay and so you can see like if only we were making money we weren't spending money we would be just accumulating cash you can see the cash at the beginning of the period up here is almost 35 000 but we all know that that's not how business works you have to spend money to make money so then we can go down here and start to build out like cost of goods sold and other other line items here so we're going to say let's say insurance is like a one-time thing you don't have to pay that every month and let's say rent is the same amount every single month let's say utilities is actually pretty much the same every single month let's give ourselves a budget of twenty dollars every month for meals since we only spent 10 last month office expenses we like to give ourselves twenty five dollars this is just based on like what you think will happen in the business you need to put regular estimated like estimated expenses here let's give cost of goods sold is actually like a percentage let's make that a percentage of sales appear maybe a little bit closer to oops let's make it a something this is not very big but I'm just going to make that a percentage of sale so that way if our forecast changes and we think sales are going to be higher because we're going to keep updating this forecast so if you build in percentages then if you change the forecast in the future it will also change the other numbers that are dependent on that cell like we said insurance is like one time thing during the year professional fees let's say this is like the bookkeeper or something that's going to be the same throughout the year job expenses we're going to say we average like 750 dollars might be a little low maybe we realize we need to save some money let's just make this super easy and drag a lot of these expenses across okay so this will show you you know let's say on average they're spending you know besides this one-time annual insurance payment they're spending about thirty three hundred dollars a month now we know that probably labor costs would go up if your revenue is going up and things like that but I'm trying to not get too complicated on this for you but you're just going to want to think through every single line item and project out what you think it could be and then this is is really helpful if you say okay maybe this is just an individual right now he's completely running the business on his own this is actually information coming in from a landscaping company so let's say that this person's name is Craig let's say that he has never had employees before but he's like yeah it's getting busy during the summer I need to hire some labor then you can go in here and say okay well how much labor can we afford maybe it's two thousand dollars maybe it's two thousand dollars but we're only going to have those people through the summer months and then we're going to typically make payroll taxes about 10 percent of payroll just to make it easy here but let's just say we hired some labor for the you know season of the summer and then that was just a seasonal worker so we won't have that payroll for the rest of the year okay so you can see that our operating expenses are going up and then this is where you can look and say okay what other kind of things do we have maybe there's this loan that needs to happen every single month for two hundred dollars and let's just put in a 500 owner's draw to see what that does we don't have any other we're not taking in any other loans in this base scenario but let's look at what we've got here so may is not looking so good that changes in cash is actually out almost eighteen hundred dollars they're making a little bit of cash like a little bit of cash like staying in the business for three months during their busy season and then once that that employee is gone a little bit more staying in the business but that's good because then October November and December are looking in the red so we kind of build up a little cache in September but then we're kind of starting to eat through it by the end of the year okay and I have this they have this item down here that says don't let Cash go below a certain number and this is a Formula so these numbers down here at the bottom will turn red if the number is below whatever number you type in here so if I put 2000 in for this business you know basically if two thousand dollars is his comfort level and his bank account he's fine because he actually never goes under two thousand dollars in this cash flow forecast now think it remember too that like there this is looking at the month as a whole so you might run into timing issues if you haven't been paid by your customers but then you have payroll and then you have you know rent due and then you have your credit card payment all hitting at the same time so this is not going to help you if you're if you're really really tight on cash and I mean it will help you but like it it you have to look at the month as a whole so you might want to leave this like cash you might so you don't run into situations that you know having all three of those things happen at one time puts you in a bad place you might want to think about making this like cash minimum higher so that you can cover and Float some of those those times when you've got lots of things draining on your cash at the same time now you can also turn this into a weekly which really all you would need to do is just you know put in a week here up at the top instead of months and then just run out the whole week so you could definitely do that that that's kind of if you really need to manage cash really really tightly you do a weekly but if you have ample cash and you just know that the month needs to work then you can use the monthly forecast and I I like this for businesses like when we have a good ample cash you know balance just kind of buffer there we know we're not gonna like one payroll is not going to throw us off in any kind of way so this business is kind of in a little bit of a different situation so you know in in this case you know this business might need to towards the end of the year maybe we can't do like an owner's draw for example at the end of the year which is not what we would want but maybe we'd look at how do we cut job supplies or how do we cut something out so that we can you know afford to pay the owner so what this will do is it will help us understand what do we expect cash will be at some period of time in the future when we plug all these numbers in it's going to help us see how are we doing what decisions can we make do we need to borrow like maybe this is a business that needs an infusion of cash and if so then maybe we borrow let's say in August maybe it's a ten thousand dollar loan and maybe we borrow money so that we can invest in marketing or maybe we can invest in more people because we have more work to do we just don't have enough people to do it so you could potentially like put in some of these scenarios and say okay what if this what if that if I borrow ten thousand dollars could I then go up here and actually extend my labor you know extend my labor all the way until November and what that might do is it actually might help me sorry you guys my mouse is not working so I'm doing everything on my computer so it might help us make more money by doing that so you can put in these scenarios and then you can say okay what did it look like before and actually maybe maybe borrowing money is the absolute right thing to do and then when you're ready to start repaying it maybe you start repaying it you know potentially at the end of the year so you know all of these things can be put into the scenario when you just think through okay when would that number actually hit the financials or when would that cash actually leave the business and you just put it into the spreadsheet and then the spreadsheet tells you what's going on that's why I love cash flow forecasting it is a great tool to help you make better decisions in your business and also help you avoid those cash crunch times because if you know three months ahead of time that you're going to have a cash problem you can do something about it now rather than getting to the point where you're like how did I get here I don't have any money and then you're trying to panic and go and get a loan that might be at a really high interest rate or something like that so I love this for all small business owners so definitely grab my download I will put the URL right in the description box and I'll try to put it here on the screen as well so you can grab that my free gift to you check it out and then in this template too you'll also be able to I've got some notes for using it and also the video instructions I have another video that I did a long time ago and then this is kind of the update to that all right well everyone thank you for being here if you have any questions about cash flow forecasting please do let me know in the comment section below I would be happy to try to answer those for you and if we need to do some more videos on casual forecasting I'm happy to do it obviously I'm passionate about it and I think it's a great exercise but I've already said that all right bye everybody thank you foreign