Quick and Dirty Cash Flow - Vegetable Farms
Quick and Dirty Cash Flow Projections
There are two reasons to create a statement of cash flow:
- A prospective lender or investor has asked for one.
- For planning your upcoming year; whether it’s ensuring you have enough cash to carry you through a slow period, or figuring out when you can afford to make a big purchase.
If you need cash flow projections for a loan application or investor presentation, we recommend that you use the standard format. For internal planning purposes, the “quick and dirty” method is just fine. For both methods, we recommend that you project cash flow for each month. While in the entirety of a year, you can end with a positive cash balance, there may be slow months for your business that could send you into a negative cash situation. By looking at your projections month by month, you can make sure you don’t run into trouble.
For the quick and dirty method, write down your beginning cash balance (the total of what you have in your savings and checking accounts). Then, for each month, list out your projected revenues (cash inflows) and cash outlays for expenses, debt repayment or capital purchases. At the end of each month, calculate the net cash flow. Add (or subtract) that number from your previous month’s cash balance.
Now what?
For each month, make sure you balance is never negative. If it is, you need to figure out a way to increase cash inflow (by increase revenue or borrowing money) or decreasing cash outflows (by decreasing expenses or delaying big purchases).
Need more help? We offer phone consultations with screen-share to coach you through the use of this template.
Chart of Accounts for QuickBooks - Vegetable Farms (PC Only)
QuickBooks is the industry standard accounting software. The Chart of Accounts lays out the structure of how you will input data, and more importantly, how your Profit and Loss Statement and Balance Sheet will look.
We recommend that you organize your accounts into meaningful categories. The most common expense categories are:
- Cost of Goods Sold
- Direct Operating
- Payroll
- Repairs and Maintenance
- Occupancy
- General and Administrative
- Advertising and Promotion
Once you have your main categories you can create sub-accounts for things like cleaning supplies (under direct operating) or rent (under occupancy).
Need more help? We offer phone consultations with screen-share to coach you through the use of this template.
Executive Summary Template
The first thing most investors will want to see from you is a one-page executive summary.
This document serves two purposes: it needs to entice the investor to learn more about you, and have enough info to give them a good understanding of what you're trying to accomplish with your new venture in a concise, visually appealing snapshot.
Important sections include a description of the company concept and what makes you the best person to operate it; what products or services you intend to offer; and a summary of your business strategy and financial projections, including any key graphs or charts. As you can see, the executive summary is essentially the business plan distilled down to one page and presented in a well-designed snapshot.
For more information, see our example of an executive summary for a sustainable butcher shop. This example is not based on a real business, but it should give you an idea of the format and the content that should be included.
Importing a Chart of Accounts into QuickBooks (PC Only)
One of the first things to do when setting up a QuickBooks file is to create a Chart of Accounts (COA). A COA is a complete listing of each account in your business. An account is a unique category that defines every financial transaction and is used to organize your finances.
You can create your COA manually, or you can import a list created in Excel. Here are the instructions for importing an Excel file to QuickBooks on a PC.
Need more help? We offer phone consultations with screen-share to coach you through the use of this template.
Chart of Accounts for QuickBooks - Restaurants (PC Only)
QuickBooks is the industry standard accounting software. The Chart of Accounts lays out the structure of how you will input data; and more importantly how your Profit and Loss Statement and Balance Sheet will look.
We recommend that you organize your accounts into meaningful categories. The most common are:
- Cost of Goods Sold
- Direct Operating
- Payroll
- Repairs and Maintenance
- Occupancy
- General and Administrative
- Advertising and Promotion
Once you have your main categories you can create sub-accounts for things like cleaning supplies (under direct operating) or rent (under occupancy).
Our Chart of Accounts has all the the accounts that a restaurant will need, organized into major categories.
Need more help? We offer phone consultations with screen-share to coach you through the use of this template.
Labor Costs Template
Why Labor Costs Matter
Labor is one of the biggest expenses to consider as you’re starting up a new venture. As such, it’s important to form an accurate assessment ahead of time. When figuring out labor costs, the easiest way to do it is to start with a sample schedule. What will it take to staff your new operation? Who's going to work the farmstore, harvest, clean, sell, and so on? How much will you pay each of those people? You don't need to identify the exact people right from the start, but having a sample schedule in place will give you a good idea of what your staffing needs will look like.
How to Calculate Labor Costs
Once you have the sample schedule, assign hourly wages to each position and calculate the total labor cost. As you think about your growing business, your labor will increase. An easy way to think about it for future growth is to take your first year's labor expenses and your projected first year's revenue, and calculate labor as a percentage of revenue. In subsequent years you can assign labor costs just as a percentage. Or you can use our handy template.
Need more help? We offer phone consultations with screen-share to coach you through the use of this template.
Job Description Template
This template includes a thorough overview of components an employer might want to include in describing an open position and posting hiring requirements. The information we’ve included is geared toward a large corporation in order to include as many options as possible, but adjust it to the scale of your business. Filling out this template will also be useful for determining what qualities and experience you are looking for in an employee. Making your requirements, priorities and expectations clear from the start will help narrow down the field of qualified, committed applicants.
Accounting for Depreciation and Capital Improvements
Why Depreciation Matters
As you put together your financial projections for your entrepreneurial venture, you will need to calculate the depreciation for your start-up expenses as well capital purchases. Depreciation is important for two reasons: first, it's a way to spread out the expense of an equipment purchase over several years and understand the true cost of running your business.
Second, it can be used as a budgeting tool. If you get into the habit of depreciating your equipment purchases, it's a reminder to start saving for its replacement, because at some point you will need to replace your equipment. If you're depreciating it and showing its value on the income statement as an expense, than you can tell what you need to be putting aside every year in a savings account to replace it.
Finally, adding a line-item for depreciation on your income statement lets you see the impact of the purchase as an operating expense over time.
How to Calculate Depreciation
Straight-line depreciation is a really straightforward calculation: just take the value of the equipment and other assets you intend to depreciate and divide it by the number of years you plan to use it. What gets tricky is when you're making purchases over the course of your business. How do you depreciate multiple purchases over multiple years? For that, you can use our handy tool.
Need more help? We offer phone consultation with screen-share to coach you through the use of this template.