How it works
Each month the forecast adds revenue and subtracts fixed costs and variable costs (a percentage of revenue). If you enter growth, revenue grows by that percentage every month.
Example
With $20,000 in the bank, $50,000 of monthly revenue, $30,000 of fixed costs and variable costs of 45%, the business loses $2,500 a month. Cash runs out in month 9, and after 12 months the balance is −$10,000.
To stop losing money it needs about $54,545 of revenue a month: fixed costs ÷ (1 − variable %).
Tips
- Use cash in and out, not invoices: what matters is when money arrives and leaves.
- Plan for months with lower sales and for one-off bills (taxes, insurance, bonuses).
- Keep a cushion of at least 2 to 3 months of fixed costs.
Frequently asked questions
What is the difference between profit and cash flow?
Profit is revenue minus costs on paper. Cash flow is the money that actually comes in and goes out. A profitable business can still run out of cash if customers pay late.
Can I model a decline?
Yes. Enter a negative growth rate, for example −2%.
How far ahead should I forecast?
12 months is common. For a new business or a tight month, also look week by week.
See also
Results are estimates for information only and are not financial, legal or medical advice. Rates, taxes and fees vary — confirm with a professional or your lender.