CashFlow Forecast Advice

[DreamEnviro]

Im currently trying to put together a cashflow forecast for my new business idea, However it is proving rather difficult. This is mainly because the area in which i am considering self employment provides a service as opposed to an actual product.
With this being the case i am unsure how to calculate my first 12 months sales as i am unsure how to research this in order to get the necessary calculations.

so my question to you all is:- How do you calculate how many jobs you will get in order to generate how much the income will be ?

 

[DreamEnviro]

Im currently trying to put together a cashflow forecast for my new business idea, However it is proving rather difficult. This is mainly because the area in which i am considering self employment provides a service as opposed to an actual product.
With this being the case i am unsure how to calculate my first 12 months sales as i am unsure how to research this in order to get the necessary calculations.

so my question to you all is:- How do you calculate how many jobs you will get in order to generate how much the income will be ?

 

[k100danny]

if it's not an area you've worked before and you don't actually have jobs ready to come in it's basically guess work, there is no way to accurately calculate this unfortunately or so many start ups wouldn't fold.

 

[Bob]

You probably need to be looking at your fixed costs and prepare a forecast showing the sales you would need to achieve to breakeven. Then think about what you actually hope to achieve and that will show you your potential income adjusted for any variable costs that you will incur. This is one of the areas where a spreadsheet is best as it lets yoiu play around with the figures

 

[DreamEnviro]

Thanx. For replys. Im finding all this confusing at this stage.my job will be giving a service eradicating pests. I know i will get the contracts over time but not sure how many at this stage. So i cant forecast my cashflow. Shall i just guess what i may achive over the coming months.

 

[DreamEnviro]

Each fixed price job on contract will only give me income 8 times a year no daily each contract a year would be in the region of £500. Hope this helps

 

[Bob]

Do you know how to use "Excel" ?
If you do, you can put in formulae that show what the likely cashflow is from say 1 contract a week and then see what happens when you change the number of contracts. Sorry it's difficult to explain but if you speak to an accountant, they should be able to help. We certainly used to help clients with their cashflow forecasts but had to bear in mind that it was THEIR forecast and not ours. WE had basic sheets that we used to give to clients for their use.

 

[David Griffiths]

You can't calcuate it - you have to make an estimate (aka guess) It's no different for a service business than for a goods based business - in that case you have to estimate sales

The first draft of the plan will include your first estimate of income and costs that would be incurred. That should tell you how the level of sales needed to break even, or to give you the income that you want. It's normal then to revise your estimates, fine tune if you like.

Of course it's easy to prepare a cashflow showing a good profit. The skill is in recognising if your sales forecasts are realistic, and looking at the effect on the business of falling 10% or 20% short - in other words how sensitive the plan is to such variations.

[Posted in response to the same question in the general forum. Subsequently merged the two threads]

 

[DreamEnviro]

Thankyou for you help i understand it now ..