Building a Simple Cash Flow Forecast to Guide Every Major Decision
Building a Simple Cash Flow Forecast to Guide Every Major Decision
Cash flow is one of the most misunderstood parts of running a business. Many owners rely solely on their bank balance—when in reality, the bank balance only shows where you are, not where you're headed.
A cash flow forecast fills that gap.
It lets you:
predict slow or tight months
time investments wisely
schedule hiring or contractor support
plan for taxes and large bills
avoid emergency cash shortages
see the financial impact of decisions before you make them
You don’t need a complex model.
You just need a simple, repeatable system.
Here’s how to build one.
1. Start With Your Opening Cash Balance
This is the total cash you have available right now in all business accounts.
Examples:
checking account
savings
tax holding account (optional)
This becomes the starting point for your forecast.
2. List Your Expected Income for the Next 90 Days
Break it down monthly for clarity.
Include:
recurring client payments
expected invoices
contracted projects
upcoming product sales
memberships or retainers
predictable seasonal revenue
Be conservative.
Forecasting isn’t about wishful thinking—it’s about planning with real data.
3. List Your Expected Expenses
This includes:
Fixed Monthly Expenses
software
rent
payroll
utilities
insurance
subscriptions
Variable Expenses
contractors
materials
advertising
shipping
events
travel
Non-Monthly (Occasional) Expenses
quarterly taxes
annual renewals
large purchases
equipment
business licenses
dues or certifications
This last category is where owners get into trouble—forgetting about non-monthly expenses creates sudden cash dips.
4. Spread Income and Expenses Across a Simple Calendar
It can be:
a spreadsheet
a Google Sheet template
a bookkeeping add-on
a simple monthly table
For each week or month, plug in:
beginning balance
incoming cash
outgoing cash
ending projected balance
This creates your rolling forecast.
5. Identify Cash Gaps Before They Happen
This is the real value of forecasting.
Look for months where:
income is lighter
expenses spike
annual renewals hit
quarterly taxes are due
you have payroll-heavy periods
you’re investing in growth
If your projected ending cash is too low, you now have time to:
delay expenses
increase sales effort
adjust pricing
change timing
revisit hiring decisions
renegotiate costs
pause discretionary spending
Cash flow crises happen when you react.
Forecasting gives you room to plan.
6. Add “What If” Scenarios
Scenario planning turns your forecast into a decision-making tool.
Try scenarios like:
What if revenue drops 20%?
How long can the business sustain itself?
What if you hire a contractor?
What does that do to your margin and cash runway?
What if you raise prices 15%?
Does that close your cash gaps faster?
What if you pay for equipment this year vs next?
Which timing gives the best financial outcome?
Scenarios help you make decisions based on data—not emotion.
7. Update Your Forecast Monthly (or Weekly During Busy Seasons)
This keeps it accurate and relevant.
Every update should include:
actual income
actual expenses
anything unexpected
adjusted projections
Over time, your forecast becomes extremely reliable.
Final Thoughts
A simple cash flow forecast is one of the most powerful CFO-level tools you can use. It keeps you ahead of challenges, helps you time decisions, and gives you clarity on how your business will behave financially in the weeks and months ahead.
If you want help building a clear, customized cash flow forecast for your business, let’s schedule a call and create one that supports your goals and growth plans.
The Money-Smart Business Blog provides educational content designed to help small business owners make informed decisions. This content is not tax, legal, or financial advice and should not be used as a substitute for personalized guidance. Always consult with a licensed professional before taking action based on this information.
