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How do I estimate my startup costs and cash flow?

January 10th, 2014 by Gwen Green

Financial projections are estimates of the financial future of your business. Creating financial projections is an important step in determining the feasibility of your business. To ensure sufficient cash is available for operations, you must be aware of your business’s current and future financial position.

Additionally, financial projections are a critical part of your business plan and/or loan proposal. Although the numbers are based on estimates, do not consider such projections as “a guess.” Research plays an important role in accurately determining future sales and costs.

The projections serve as a basis for planning and are likely to change as more information becomes available. Creating financial projections may seem intimidating. It is important to remain conservative as you develop them. In other words, understate revenues and overstate costs.