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Managing Cash Flow - Coggle Diagram
Managing Cash Flow
6.1 Financial Planning Throughout the Venture's Life Cycle
Stages of ventures
Development Stage
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Idea -> Business Opportunity
Things to do:
Screen Business Ideas, Prepare Business Model/ Plan, Obtain Seed Financing
Startup Stage
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Venture is already organized, developed, revenue model is put in place
Things to do:
Choose Organizational Form, Prepare Initial Financial Statement, Obtain Startup Financing
Survival Stage
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revenues start to grow and help pay some of the expenses
Things to do:
revenues start to grow and help pay some, but typically not all, of the expenses
Rapid Growth
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rapid revenue and cash flow rapid growth
Things to do:
rapid revenue and cash flow growth
Early Maturity Stage
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growth of revenue and cash flow continues but at a much slower rate
Things to do:
Manage on going operation, maintain and add value, obtain seasoned financing
Type of Financing
Short run
Usability:
In a survival stage, when operation is not yet turning profit and having cash burn. Rapid Growth rate, to derive from the lack of profit to fund investments and fixed asset necessaries.
Thing to do:
Projecting monthly financial statements
Long Run
Usability:
When a venture does not survive the short run
Thing to do:
Construct 1-2 years forecast of cash requirements
6.2 Surviving in the short run
How to avoid bankruptcy:
Cash Supply = Cash Demand
A venture without sufficient cash = Die
Financing Provider
Venture Capitalist
(individuals who join in formal, organized firms to raise and distribute venture capital to new and fast-growing ventures)
Venture Capitalist
(individuals who join in formal, organized firms to raise and distribute venture capital to new and fast-growing ventures)
Business Angels
(wealthy individuals operating as informal or private investors)
Seed Financing
(Family, Friends, Acquaintance)
Venture Capitalist
(individuals who join in formal, organized firms to raise and distribute venture capital to new and fast-growing ventures)
6.3 Short-term Cash Planning tools
Operating Schedules and Cash Budgets
Data from balance sheet
Purchase Schedule
Wages and Commission Schedules
Sales Schedules
Cash Budgets
Function:
to help projecting monthly financial statements from short-term cash planning
6.4 Projected Monthly Financial Statements
Function:
way to express the venture’s anticipated cash needs
Projected Balance Sheet
Projected Statement of Cash Flows
Projected Income Statement
6.5 Cash Planning From a Projected Monthly Balance Sheet
Balance Sheet for determining cash flow
