Cash flow is the thing that quietly kills a lot of startups. Not lack of funding. Not a broken product. Just running out of money and not seeing it coming. And while everyone says “keep an eye on your cash”, few founders know how to actually build a forecast that holds up for more than a few weeks.
Here’s how to build one that is useful, flexible, and doesn’t fall apart the moment things change. Because things willchange.
Start with reality, not guesses
Most early-stage forecasts fall apart because they are based on what you hope will happen, not what actually is. Start with your current bank balance and actual fixed costs: salaries, rent, subscriptions, contractors. Those numbers don’t lie, and they create the baseline of your monthly burn.
Then layer in realistic expectations around revenue. Not your “best case” pipeline. Look at your past conversion rates, the length of your sales cycle, and actual close rates. If you haven’t made a sale yet, assume slow ramp-up. Optimism in the forecast doesn’t make money show up faster.
Keep it simple
A good cash flow forecast can (and often should) live in a spreadsheet. Don’t overcomplicate it. Structure it monthly. Break it down into three sections:
- Cash In (e.g. customer payments, funding)
- Cash Out (e.g. salaries, software, marketing spend)
- Net Cash Flow (what’s left or needed)
Then keep a running total of how much cash you’ll have in the bank at the end of each month. That line is the one that tells you how long you’ve got.
Build in scenarios
Don’t just build one forecast. Build three:
- Base case: What you expect to happen if things go as planned
- Downside case: If sales are slower, funding takes longer, or a major client churns
- Upside case: If revenue lands early or you raise more than expected
This isn’t about being pessimistic. It is about staying ahead of problems. If your downside case shows you running out of money in six months, that’s a gift. You’ve just bought yourself time to fix it.
Update it monthly (at least)
Cash flow forecasts are not “set and forget”. You should be updating your numbers monthly. Compare what actually happened with what you forecasted. Where were you off? What surprised you? Use that insight to get more accurate next time.
A forecast only becomes a real tool when you use it as a decision-making framework. When you say, “If we hire this person, what happens to our runway?” Or “If we delay this launch, can we still hit payroll in October?”
Bring in help if you need it
If you’re a founder juggling product, hiring, and fundraising, it’s totally normal to feel overwhelmed by financial modelling. But that doesn’t mean you can ignore it. This is where a fractional CFO comes in. They will not just build you a forecast that works. They will help you understand how to use it.
At EmergeOne, we’ve built cash flow forecasts for early-stage startups and high-growth scaleups alike. We keep them founder-friendly and investor-ready, so you are never flying blind.
Want help building a cash flow forecast that actually works?
Let’s talk. Book a free call and we’ll walk through where you are and what you need to get visibility, control, and peace of mind around your numbers.
