Page 165 - Business Plans that Work A Guide for Small Business

154 • Business Plans that Work

For a new venture
and one undergoing rapid
growth, it is imperative to Exhibit 10.10 Detailed Five-Year Statement of Cash
show cash flow monthly for
the first two years. If the Flows (two years month to month)
company runs out of cash, it
is out of business. For new
venture projections, the
maximum negative cash flow
(preinvestment) often equals
the amount of capital, staged
by milestones and cash
needs, the venture will need Part A: Year 1
to raise.
July Aug Sept Oct Nov Dec Semester
Cash flows from operations ($78,489) ($68,332) $7,374 ($85,111) ($92,794) ($49,735) ($367,086)
Investing activities
Purchase of equipment ($244,400) $0 $0 $0 $0 $0 ($244,400)
Cash used by investing activities ($244,400) $0 $0 $0 $0 $0 ($244,400)
Financing activities
Borrowing $830,400 $0 $0 $0 $0 $0 $830,400
Principal payments ($4,390) ($4,423) ($4,456) ($4,489) ($4,523) ($4,557) ($26,838)
Cash used by financing activities $826,010 ($4,423) ($4,456) ($4,489) ($4,523) ($4,557) $803,562
Net increase (decrease) in cash $503,121 ($72,754) $2,918 ($89,601) ($97,317) ($54,292) $192,076
Cash at beginning of the period $65,800 $568,921 $496,166 $499,085 $409,484 $312,167 $65,800

Cash flows from operations Jan Feb Mar Apr May Jun Semester Year 1
Investing activities $123,130 ($81,538) ($104,466) ($100,951) $165,302 ($93,112) ($91,635) ($458,721)
Purchase of equipment
Cash used by investing activities $0 $0 $0 $0 $0 $0 $0 ($244,400)
Financing activities $0 $0 $0 $0 $0 $0 $0 ($244,400)
Borrowing
Principal payments $0 $0 $0 $0 $0 $0 $0 $830,400
Cash used by financing activities ($4,591) ($4,626) ($4,660) ($4,695) ($4,730) ($4,766) ($28,069) ($54,906)
Net Increase (decrease) in cash ($4,591) ($4,626) ($4,660) ($4,695) ($4,730) ($4,766) ($28,069) $775,494
Cash at beginning of the period $118,539 ($86,163) ($109,126) ($105,646) $160,572 ($97,878) ($119,703) $72,373
Cash at end of period $257,876 $376,414 $290,251 $181,125 $75,478 $236,050 $257,876 $65,800

Part B: Years 2–5
July Aug Sept Oct Nov Dec Semester
Cash flows from operations $57,942 ($10,403) $125,223 ($77,652) ($85,950) ($69,852) ($60,692)
Investing activities
Purchase of equipment $0 $0 $0 $0 $0 $0 $0
Cash used by investing activities $0 $0 $0 $0 $0 $0 $0
Financing activities
Borrowing $0
Principal payments ($4,802) ($4,838) ($4,874) ($4,910) ($4,947) ($4,984) ($29,356)
Cash used by financing activities ($4,802) ($4,838) ($4,874) ($4,910) ($4,947) ($4,984) ($29,356)
Net Increase (decrease) in cash $53,140 ($15,241) $120,349 ($82,562) ($90,897) ($74,837) ($90,048)
Cash at beginning of the period $138,173 $191,313 $176,072 $296,421 $213,859 $122,962 $138,173
Cash at end of period $191,313 $176,072 $296,421 $213,859 $122,962 $48,125 $48,125