Where should you start when you do not know your finances?

A dashboard with two numbers and a single line graph tracked monthly is enough to get started.

You should know your net profit every month.

This is all your revenue minus all your expenses.

<aside> <img src="/icons/light-bulb_yellow.svg" alt="/icons/light-bulb_yellow.svg" width="40px" /> Net Profit = Revenue - Expenses

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You should also know how much cash is still left in your bank accounts at the end of the month—your total cash.

Create a line graph with these numbers.

Project your total cash for the next 12 months and adjust it by the expected monthly net profit.

<aside> <img src="/icons/light-bulb_yellow.svg" alt="/icons/light-bulb_yellow.svg" width="40px" /> This line graph is your runway. Your company’s health bar. If this line dips below zero, you lose.

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Now, play with your projection.

Develop assumptions of how net profit changes in the coming months according to your actions.

Every month, you replace your assumptions with the actual numbers you saw this month.

How much were your assumptions off? And why?

Find a way to keep the net profit in the green and your health bar above zero!

I linked a simplified financial model below for you to get started with.

<aside> <img src="/icons/arrow-down-line_green.svg" alt="/icons/arrow-down-line_green.svg" width="40px" /> Make a copy of this Google Sheet to get started.

https://docs.google.com/spreadsheets/d/1jnj_4o7DkYpKft2LRa0MiuY1xJe8kV7G7lwXtHxP0LY/edit?usp=sharing

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