Importance of cash flow• Tests – Assumptions – Team understanding• Brings reality of project to life• Creates understanding about financial implications• Vocabulary to make a business case for translation of your project
Cash is King • Cash – IN • Minus Cash – OUT • BalanceThe next slide is a simplified demonstration of cash in and cash out.Much more sophistication is and can be added to the task when using a computerAnd/or with the help of a mentor.For those who have never worked out the financial implications of commercialising a projectthis is provided as a tool to create conversations.
Jan Feb Mar Apr Etc.,In: e.g.GrantsSavingsLoansCustomersSub-totalOut: e.g.ResearchPrototypeStaffMarketingTravelCapitalexpenditureDirect costsFixed costs
Take your team of people….Form 3 groups - each group do the same task….Group 1 – Take an optimistic position – of a high growth projectGroup 2 – Take a middle way approachGroup 3 – Take a cautious approach – with low risk mentality1. Work out the costs, timing of actions you propose2. Work out the possibility of cash in….3. Work out the balances at the end of each month4. Compare notes and see how the assumptions will influence the viability