Using Your Cash Flow Projections To Determine Exactly When To Launch

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Before we even dive into this topic, we first have to understand what cash flow means! Get ready to go DEEP into the details with us on this one!

In this week’s blog, we cover:

• Understanding the foundational aspect of cash flow and what it really means

• The importance of having healthy cash flow for your seven-figure business

• Implementing systems to track and project your cash flow accurately

• Considerations to account for in cash flow planning

• How to determine exactly when to launch based on your cash flow

Cash Flow Goes Way Beyond A Number

Understanding your cash flow goes way beyond looking at your bank accounts and seeing what is in there. We hate to break it to ya, but simply knowing what you have in your bank accounts does not equate to knowing how much cash you have. It’s just not that simple!

Take this scenario for example…

You might check your account and see that there is $50,000 there, but you might have to run payroll next week for $15,000 then maybe you have big software costs coming out soon, and during this time you will also be bringing in more income, so that money that you see in your bank account isn’t all yours because there are all of these other things that are going on that you need to take into consideration.

On top of that, you can see why just checking your bank account and seeing what number is there is not going to give you the right information. In fact, this could even be deceiving because of allll those other things to take into account.

What Is Cash Flow?

Let’s come back to the basics for a moment. Understanding your cash flow is a foundational aspect of managing your finances. Cash flow is looking at when is money coming in and when is money going out of the business. Beyond that, it’s understanding your projections for what amount of money you want for yourself as the CEO, what amount of money is for what expenses, and what amount of money comes from interest income, products, or services.

Cash flow is the moving of money throughout the business. You have to have a healthy and robust cash flow consistently to keep your business alive.

You Can’t Project Your Cash Flow Without The Right System In Place

When we’re looking at cash flow in terms of when is the best time to launch, you must have some sort of system in place. And if you know me, you know how much I love a good system!

This could be a software, a good ‘ole spreadsheet, or anything that is going to tell you what your predicted income will be. From there, you’ll be taking the real expenses that you have, looking at those subscription costs over time, and also your frequency of trends.

For example, say that you have payroll that you run every week. We use and recommend Gusto for payroll! Gusto is great because it has a really easy way for you to be able to see how much money it costs you as the business owner to run payroll bi-weekly or weekly, or at whatever cadence works for your business.

This is information that you're going to help you predict your cash flow and predict where your expenses are going and where money is coming from.

There’s More To Be Taken Into Consideration

Many times entrepreneurs are not taking into account things like needing to pay quarterly estimated taxes depending on your entity type and how things are set up, or maybe you have to pay one big tax bill annually, and not accounting for these things is why it can be really easy for people to end up with big cash flow issues.

Not thinking about the future is costing you.

Most people are only thinking about what is in their bank account, what is right in from of them, and what is happening right now. That’s it. If you're not thinking about the future you are headed down a slippery slope toward major cash flow issues and that is one place you want to avoid at all costs!

If you really want to level up your business you need to understand the cash flow and really what is coming in based on your trending data, based on the payment plans that you have in place for programs, and based on a lot of different factors for what is really going to give you that clarity.

Cash Flow When It Comes To Launching

As far as cash flow and the launching side of things, we are typically looking at someone who is an online course creator, or someone who needs to identify when they need to launch in order to keep their cash flow positive.

This can have a massive impact on your business and for some businesses, knowing the most effective time to launch could literally keep your business alive.

If you are an online course creator or someone who launches and needs to know when the right time is, What we recommend is taking all of the income that is being brought in and putting it on some sort of resource such as a spreadsheet or software. This would be putting it in your system that we mentioned earlier!

For our clients, we do this on a customized spreadsheet and put in all of the different amounts that they are collecting. We also enter the actual bank balance. We then set up automations in the background that look at any time someone signs up for a payment plan, we want to pull that data to say how many more payments they have in place for every purchase.

Doing it this way allows us to see long-term over the length of the program for as many months as you are running the program. For this example, let's just say the program is six months, and the client has one payment that they made for five hundred dollars, but then they have a payment for five hundred dollars for every month for the next five months.

We accumulate that data and information into this lovely customized spreadsheet for our client and then we take all their costs over the next six months, and even more depending on the client and their unique situation. (We do our projections for up to three years out!) We are then able to calculate when they actually need to launch based on when they will see a dip in their revenue.

You Need To Know Your Minimum Comfort Zone

We look at all of the trending data to see when things are starting to dip. You have to know what is your happy number that you are not willing to go under in your bank account. For example, say that you said you were not willing to go below $20,000 in your account, we would be able to see on your customized spreadsheet when your income is going to dip and when you need to launch to keep your cash flow above that $20,000. This gives you a massive leg up as a seven-figure CEO because you get to be proactive.

This is also super advantageous because not only are you able to see when you need to launch, but you can see when maybe it makes more sense to just run a promotion or an email campaign and see how that impacts your cash flow to keep it above your desired amount.

This is why is it so crucial to understand your cash flow and have accurate information because having access to this level of proactivity is truly priceless.

Account For The Worst-Case Scenario

When it comes to understanding your comfort zone with your cash flow and being clear on the number you are not willing to go below, I always recommend that in your cash flow projections always always always when thinking of the future, always think of the worst-case scenario than the most positive scenario. You’re probably thinking why the heck would I think of the negative instead of the positive?

The reason for this is that launches don’t always go as planned, and you might already know this from a flopped launch or two. It’s okay! It happens to the best of us, but if you can be prepared and plan for this, then you know you will be okay no matter what!

Say for example you are thinking, “I just want to have a 100k launch!” You might always have 100k launches and think there's no way you're NOT gonna have a 100k launch! Just in case, even when you're doing your cash flow projections and just determining when you need to launch, I always recommend that you go lower. For this example maybe just put 70k, that way, worst-case scenario it doesn't go the way you want it to, you can plan ahead and be proactive to keep your cash flow above your comfort zone.

The Key Is In The Complexities

A key component of being able to truly understand and predict your cash flow is to recognize the complexities involved. This is why we cannot stress enough the importance of working with someone who is experienced and knowledgeable in your industry.

When we do cash flow projections for our clients we build them a system with a customized spreadsheet because there are a lot of complexities in the way that we do this. We also meet with our clients and go through their projections and discuss this every month and then we send a weekly email to our clients so that they know how much is coming in and how much is coming out. We'll even flag them when we're concerned about things because we're always looking at the long term to see when they're dipping and when we need to add any strategies.

With all of this being said, it’s really not even about the money. What it’s really about is feeling empowered to make data-driven decisions as the CEO of your empire. Having the information that we provide our clients in their cash flow projections is more empowering than any amount of money. It’s about feeling at peace and feeling confident that every decision you make is securing the future of your business.

Are you ready to feel empowered by understanding the complexities of your cash flow? Grab a free consultation with us here!

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