Here is the next iteration of Brad Feld’s Finance Friday’s. This post covers cash forecasts and financial projections. As Brad points out, most startups start with a cash forecast to track expenses because it takes a bit of time to figure out how to best project revenues (the top line of the financial projections).
As one of my mentors has said over and over “it’s all about burn rate and fume date!!!” Carefully tracking expenses gives you both the burn rate (how much net cash you spend each month) and fume date (the date you will likely run out of cash). Even for a recovering lawyer (me), it is common sense.
Have a great weekend.