EXPLANATION OF TERMS - CASH IN
AS ILLUSTRATED ON ACCOMPANYING PROJECTED CASH FLOW STATEMENT

CATEGORIES 1 TO 6:
Identify the major services and/or products your business will offer and break them into separate, distinct groups. This information should be directly related to the products/services section of your business plan.

To estimate your sales by category, you may find it easier to first identify the number of units you plan to sell, then it is just a matter of multiplication to convert the units into dollars.

Once this has been done, you estimate the amount of money you will make in each of these categories and enter them under months 1 through 12.

COSTS OF GOODS & SERVICES: The cost of goods and services is where you will show the direct costs incurred in the making of your product/service. For example, let’s say a product you sold for $1,000.00 actually cost $400.00 to create. The total cost of goods and services would be $400.00.

The costs attributed to services are somewhat different, as they are very limited. The costs of the wages paid to the staff who did the service work are not included here as they will be shown in the expense section under wages, but there are support items for the service work that should be included, such as materials utilized.

CASH FROM SALES: Simply add categories 1 to 6 and subtract the cost of goods and services.

OPENING CASH: Total amount of cash you are contributing to the business.

LOAN MONIES: Total amount of any loan monies to be received from a bank or other lending institution.

SHAREHOLDERS LOAN: All the money put into the business by owner(s).

RUNNING CASH BALANCE: There will be no figure on this space for month one; however, for months 2 to 12, this figure is the net cash figure from the previous month.

TOTAL $ IN: Add 8 through 12 on the projected cash flow statement.

EXPLANATION OF TERMS - CASH OUT

MANAGEMENT DRAWINGS: Personal drawings from the business.

LABOUR AND BENEFITS: Labour expenses and benefits for all staff.

ADVERTISING: Includes all costs for advertising and promotion of the business. Costs can be minimized by identifying the business’s target market and developing a specific, targeted advertising campaign to capture that target market.

INSURANCE: Fire, theft, liability insurance for all aspects of the business such as equipment, building, vehicles, etc.

PROFESSIONAL FEES: Legal and accounting costs for the start-up and operation of your business.

OFFICE SUPPLIES: Includes items such as postage costs, envelopes, paper, pens/pencils, invoice forms, file folders, etc.

RENT: Building/facility rental or lease costs.

TAXES AND LICENSES: Business taxes and licensing for your business.

TELEPHONE: Estimated monthly bill; remember to allocate cash for deposits before hook-up and installation charges under this category.

UTILITIES: Estimated monthly expenses for heating, electricity, water, sewer, garbage, etc. Remember that many utility companies
require a deposit before hook-up.

REPAIRS AND MAINTENANCE: For building and all equipment (exception: vehicles- identified under vehicle expenses).

VEHICLE EXPENSES: Fuel, oil and repairs for all company vehicles.

TRAVEL & PROMOTION: Food, accommodation, entertainment, cost of trade shows and other promotional events.

BAD DEBTS: Always put in an allowance in the 12th month for bad debts. A figure of 2% to 4% of the total in your income categories would be approximate for a start-up business. Once you have an established business, this figure may drop.

LOAN PAYMENTS: Total monthly payment (principal and interest) on loan payments directly attributable to the business.

MISCELLANEOUS: Always allow a small cushion for error.

TOTAL EXPENSES: Total of cash out (expenses) as listed.

NET CASH POSITION: Total Cash In minus Total Expenses= Net Cash
This amount at the end of each month will be transferred up to become the Running Cash Balance for the next month.

NOTE: The “*”s in the month 12 Net Cash Position space and the End Total space (13th and 14th columns) indicate that these figures should be identical. If they do not agree, there has been an error in calculation in the body of the cash flow statement.