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Business Planning Cash Flow Analysis
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Performing a cash flow analysis is important in your business planning process since it gives you a picture of your cash on hand over time. Preparing your cash flow statement is really quite straightforward. All you really need to do is subtract the cash you pay out (expenses) from the cash you make from your washing and detailing jobs (revenue). Add (or subtract) the result to your bank balance and you've got yourself a cash flow statement.
As an example, we've prepared a three year cash flow statement for a fictitious mobile car wash and detailing business. Due to space constraints on this page, we are only able to show you the cash flow by year. Most cash flow statements break out the first year by month.
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We've made a couple assumptions to help us prepare this cash flow example. These assumptions are as follows:
- You started with $20,000 and spent $13,250 on your detail trailer, initial supplies, office equipment and other startup expenses. You now have $6,750 in the bank.
- You already have your own truck but still make payments on it
Please keep in mind that this is an example only. You will obviously need to modify the sales figures as well as your cash disbursement values. Nonetheless, this example should give you a pretty good idea of how to create a cash flow.
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Current |
Year 1 |
Year 2 |
Year 3 |
| Car Wash Price |
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$50 |
$50 |
$50 |
| Car Detail Price |
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$150 |
$150 |
$150 |
| Car Washes Sold |
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576 |
720 |
864 |
| Car Details Sold |
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288 |
360 |
432 |
| Net Sales |
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$72,000 |
$90,000 |
$108,000 |
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| Cash Disbursements |
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| - Administrative |
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$500 |
$750 |
$750 |
| - Advertising |
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$2,500 |
$3,000 |
$3,000 |
| - Automobile |
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$5,000 |
$5,500 |
$6,000 |
| - Benefits |
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$1,000 |
$1,000 |
$1,000 |
| - Consulting |
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$500 |
$500 |
$500 |
| - Insurance |
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$500 |
$500 |
$500 |
| - Licenses and Fees |
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$1,000 |
$500 |
$500 |
| - Office Supplies |
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$500 |
$500 |
$500 |
| - Professional Fees |
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$2,500 |
$2,000 |
$2,000 |
| - Rent |
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$1,500 |
$1,500 |
$1,500 |
| - Supplies |
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$20,000 |
$25,000 |
$30,000 |
| - Travel |
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$1,000 |
$500 |
$500 |
| - Wages |
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$30,500 |
$43,750 |
$56,250 |
| Total Disbursements |
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$67,000 |
$85,000 |
$103,000 |
| Depreciation |
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$1,000 |
$1,000 |
$1,000 |
| Pre-Tax Income |
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$4,000 |
$4,000 |
$4,000 |
| Tax Expenses |
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$500 |
$500 |
$500 |
| Net Income |
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$3,500 |
$3,500 |
$3,500 |
| Add back depreciation |
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$1,000 |
$1,000 |
$1,000 |
| Net Cash Flow |
$6,750 |
$11,250 |
$15,750 |
$20,250 |
Essentially what this cash flow statement tells us is that we plan to have $11,250 in the bank at the end of year 1, $15,750 at the end of year 2 and $20.250 at the end of year 3. These cash balances are after we have covered all of our expenses, including our own salary.
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