In this exclusive webinar with Robbie Bhathal, Founder & CEO of Brightflow AI, you'll learn how to track the right data, forecast your cash inflows and outflows, and use strategic cash management to build a thriving business!
6. Most small businesses do not fail because they run out of cash...
SUCCESSFUL BUSINESSES
⚠ Long-term reports from the Bureau of Labor Statistics confirm that in the private
sector, 50% of businesses have failed by year 5 and 65% of businesses have failed by year
10.
7. …Businesses fail due to not fully understanding the timing of cash
SUCCESSFUL BUSINESSES
Source: Study by Jessie Hagan, U.S. Bank,
as reported by The Hartford.
8. The cash cycle causes real problems for businesses trying to grow
SUCCESSFUL BUSINESSES
Even if they have data, when they get an opportunity to grow, businesses often aren’t aware of the time it will
take to make their money back.
30 days
before sale
120 days
before sale
60 days
before sale
Sale
made!
15 days
after sale
Early
expenses
-Down
payment
-R&D costs
-Marketing
budget
30% of PO
order due
70% due to
supplier
Marketing costs
and fixed costs
Receive cash
from customer
CASH OUTFLOW CASH INFLOW
CASH CYCLE
10. ● Inventory: Forecast sales, then work backwards, using product lead times to
determine inventory purchase. Maintain a safety stock.
● Budget important expenses like advertising for a baseline to prevent overspending.
● Transfer marketing spend to times of higher ROAS
● Use cards like Plum the let you pay in 60 days to extend A/P days
● Get paid on time
● Make your payments as late as possible
● Build relationships with vendors and discuss buying options, payment terms or
discounts
● Grow slower
Cash management strategies driven by data
CASH MANAGEMENT
12. ● Business forecasting consists of tools and techniques used to predict changes in
business, such as sales, expenditures, profits and losses.
● Time-series forecasting is a subset of machine learning dealing with dates that are
temporal and sequential.
Components of a time-series?
What is forecasting?
FORECASTING
13. Forecasting helps:
● Set goals and a plan
● Set inventory purchasing schedules
● Set budgets like marketing spend
● Anticipate changes within the market
● Set a data collection strategy
Why is forecasting important?
FORECASTING
14. ● Directional view of the future used for:
○ Better cash flow decision making
○ Better inventory planning
○ Better access to capital
○ Better business agility through scenario planning
○ Less volatility, thus less cash needed to fund same operations
Why forecasting gives you a competitive edge
FORECASTING
16. ✅ Use a tool
that takes into
account
trends and
seasonality.
Trendline
Trend change points
Use demand forecasting software
HOW TO FORECAST
17. Spring product line and promotion Holiday season
Takeaway: Without knowing your seasonal profile an investor could see declining recent
sales and lose interest.
Discover your seasonal revenue story
HOW TO FORECAST
18. ● Chart your monthly sales in Excel
● Draw a regression line through your sales
● Calculate the monthly proportion over or under that regression line
○ For example below:
■ If Jun ‘23 was 1.5x the regression line, then Jun ‘24 will be the same.
1.5x the regression value
Regression line
Forecasting without software
HOW TO FORECAST
19. ● Know what levels of each
product you need going into
the next season. Run them as
individual time-series.
● Understand how you’re going
to move product you still have,
and how to get new product
● Plan early, evaluate, and
adjust–even if it’s the middle of
your busy season
Setting yourself up for success: Product-specific demand
HOW TO FORECAST
21. 30 days
before sale
120 days
before sale
60 days
before sale
Sale
made!
15 days
after sale
Early
expenses
-Down
payment
-R&D costs
-Marketing
budget
30% of PO
order due
70% due to
supplier
Marketing costs
and fixed costs
Receive cash
from customer
CASH OUTFLOW CASH INFLOW
CASH CYCLE
CASH
OUTFLOWS
COGS
RECORDED
Cash is different from accrual accounting.
Why forecasting cash flow is important
HOW TO FORECAST
23. Group line items by how they behave relative to sales
How to forecast line items
● Revenue: Forecast separately
● Advertising: % of sales
● Inventory: % of sales
● Variable Costs: % of sales
● Fixed Cost: Fixed or flat over time
Forecasting cash flow -simplified
HOW TO FORECAST
24. Apply a cash timing delay/acceleration for line items on the P&L to get to cash flow
● Revenue: Take ~1 week to collect if Shopify, 22 days for Amazon
● Advertising: Potentially paid up front, so belongs in month prior
● Inventory: This COGS was already incurred when you purchase the inventory. Add up
multiple periods of inventory expense pull them backward in lumps depending on your
inventory purchase behavior
● Variable Costs: Costs that more lock step with revenue, typically paid on credit card so you
can delay 30 days
● Fixed Costs: Typically paid straight from bank account so no timing adjustment i.e. payroll
Forecasting cash flow -working off a Profit & Loss statement
HOW TO FORECAST
26. ● Cash Flow
● Account Receivables
● Inventory
● Purchase Orders
What can you finance?
UNLOCKING FINANCING OPPORTUNITIES
27. ● Current Ratio
● Debt / Asset Ratio
● Cash Flow Runway
● Revenue Growth
● Gross / Operating Margin
● Return on Ad Spend (ROAS)
● LTV / CaC
The key elements of your future financial story
UNLOCKING FINANCING OPPORTUNITIES
28. ● Match your message to the audience
○ Equity investors want profitable growth.
They are interested in multiplying their
investment
○ Lenders want safety. Generally they are
looking to get their money back plus
interest. Too much growth, too fast is a
risk factor.
● Speak in their language
○ Focus on understanding the key metrics
that investors/lenders use to evaluate
business performance.
○ Focus on your future financial story as well
as your product story
● Know that they are human beings with limited
time and resources
○ Make your financial story as easy as
possible to follow.
What to remember about investors
UNLOCKING FINANCING OPPORTUNITIES
29. Less volatility = Less working capital buffer needed, and less chance of bankruptcy
CONCEPTS IN ACTION
bankruptcy bankruptcy
31. ● They don’t fully think through their systems for
returns and exchanges
○ A return or exchange doesn’t have to be a
negative thing–it can be an opportunity to
build loyalty.
○ Consider extending holiday return
windows and setting up customer-focused
return-and-exchange policies.
● They don’t focus on customer retention–just
new customers
○ Look at your metrics to see who your
returning customers are, and aim to
increase retention and lifetime value (LTV).
○ Offer specials or discounts to loyal
customers, or those who have a high
average order value (AOV).
Top mistakes online sellers make when planning for busy season
YOUR BUSY SEASON
36. Show a cash flow example, maybe dronehive. Example
of cash flow planning. This will show many of the
metrics mentioned in the previous slide.
37. Example: A/R factoring
Don’t just give the bank your a/r aging, but show the collection history for those specific
customer. It’s an easier sell when you can say, “customer has paid over 1mm dollars over
the pasts 6 months, so they are high-likelihood payer.
39. Forecast your
seasonal sales using
your own historical
data
1. Look back
2. Identify trends
3. Adjust for outliers
4. Forecast ahead
5. Use data to set goals
40. What if there’s no historical data?
● Select a revenue-based
target (a dollar amount, an
order size, or a metric)
● Set a time frame (a day,
month, or span of time)
● Aim high: Make the goal
attainable, but perhaps
just out of reach
41.
42. In today's volatile financial environment, how confident are you in your
company’s financial forecasting? To get the most accurate cash
predictions that will lead to long-term financial survival, real-time data is
critical. Innovative cash management strategies can lead to better
credit opportunities, more sustainable growth, and long-term financial
prosperity. In this exclusive webinar, you'll learn to track the right data,
forecast your cash inflows and outflows, and use strategic cash
management to build a business that not only survives, but thrives!
Key takeaways:
Why every successful business relies on financial forecasting
🔑
Cash management strategies you need to get a competitive
edge 💰
How financial forecasting unlocks financing opportunities and
long-term success 📈
74. ICON LIBRARY: BUSINESS ESSENTIALS
Strategy Business
Idea
Profits Business
Management
Market
Economy
Mail Fiscal
Policies
Partnership
Start Up Phone
Unemployment Inflation Growing
Company
Vision Political-Legal
Environment
Market
Mission Address
Book
Documents Shortage Labor Support Global Business Presentation
Business
Cycle
Entrepreneur
Goals Capital Business
75. ICON LIBRARY: BUSINESS ESSENTIALS
Strategy Business
Idea
Profits Business
Management
Market
Economy
Mail Fiscal
Policies
Partnership
Start Up Phone
Unemployment Inflation Growing
Company
Vision Political-Legal
Environment
Market
Mission Address
Book
Documents Shortage Labor Support Global Business Presentation
Business
Cycle
Entrepreneur
Goals Capital Business
76. ICON LIBRARY: BUSINESS ESSENTIALS
Strategy Business
Idea
Profits Business
Management
Market
Economy
Mail Fiscal
Policies
Partnership
Start Up Phone
Unemployment Inflation Growing
Company
Vision Political-Legal
Environment
Market
Mission Address
Book
Documents Shortage Labor Support Global Business Presentation
Business
Cycle
Entrepreneur
Goals Capital Business
77. ICON LIBRARY: BUSINESS ESSENTIALS
Strategy Business
Idea
Profits Business
Management
Market
Economy
Mail Fiscal
Policies
Partnership
Start Up Phone
Unemployment Inflation Growing
Company
Vision Political-Legal
Environment
Market
Mission Address
Book
Documents Shortage Labor Support Global Business Presentation
Business
Cycle
Entrepreneur
Goals Capital Business
84. ICON LIBRARY: FINANCE
Bank Check
Payment
Investment
Strategy
Report Financial Control Financial Advisor Capital ATM Hedge Fund
Salary Piggy Bank
Justice Accounting Making Money Bank Budget Money Market
Card
Payment
Expenses
Investment Insurance Money Tree Mobile
Payment
Find Funds Premium
Service
Revenue Money
Management
Money Flow Exchange Payment
85. ICON LIBRARY: FINANCE
Bank Check
Payment
Investment
Strategy
Report Financial Control Financial Advisor Capital ATM Hedge Fund
Salary Piggy Bank
Justice Accounting Making Money Bank Budget Money Market
Card
Payment
Expenses
Investment Insurance Money Tree Mobile
Payment
Find Funds Premium
Service
Revenue Money
Management
Money Flow Exchange Payment
86. ICON LIBRARY: FINANCE
Bank Check
Payment
Investment
Strategy
Report Financial Control Financial Advisor Capital ATM Hedge Fund
Salary Piggy Bank
Justice Accounting Making Money Bank Budget Money Market
Card
Payment
Expenses
Investment Insurance Money Tree Mobile
Payment
Find Funds Premium
Service
Revenue Money
Management
Money Flow Exchange Payment
87. ICON LIBRARY: FINANCE
Bank Check
Payment
Investment
Strategy
Report Financial Control Financial Advisor Capital ATM Hedge Fund
Salary Piggy Bank
Justice Accounting Making Money Bank Budget Money Market
Card
Payment
Expenses
Investment Insurance Money Tree Mobile
Payment
Find Funds Premium
Service
Revenue Money
Management
Money Flow Exchange Payment