Cash flow forecasts Student worksheet

ACTIVITY 1.

PUTTING THEORY INTO PRACTICE

You are a business adviser and you have been approached by a former All Black looking to start up
an inner-city gym. He has given you his financial figures (below) and needs a financial forecast for
the first six months of operation.
1.

Fill in the template to provide your client with a cash flow forecast.

FORMER ALL BLACKS FINANCIALS

Initial investment

$150,000

Gym sales price

$99

Monthly membership fee

$86

Estimated sales
January

Joining Fee
Estimated costs

100 x

Launch event

$50,000

February

75 x

Equipment

March

50 x

Rent

$100,000
$5,000

April

75 x

Staf

$140,000

May

60 x

Utilities

$3,000

a month

June

60 x

Other expenses

$2,000

a month

a month
per annum

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1. CASH FLOW FORECAST

JAN

FEB

MAR

APR

MAY

JUN

OPENING BALANCE
CASH IN
Gym fees
Media fees
TOTAL

CASH OUT
Launch
Asset spend
Rent
Wages
Power, etc.
General expenses
TOTAL
NET CASHFLOW

(+/-)

(+/-)

(+/-)

(+/-)

(+/-)

(+/-)

CLOSING BALANCE

(+/-)

(+/-)

(+/-)

(+/-)

(+/-)

(+/-)

1.

Will the former All Black lose money in the first month?

2.

If he signs up an average of 40 new clients each month between July and December, will he
see a return on his investment by Christmas?

3.

He has the option to rent his gym equipment for $6,000 a month. On that basis:
a)

When will his $100,000 equipment investment break even?

b)

If he was planning to sell of the business as a going concern after two years, is buying or renting
the equipment the better option?

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Activity 1 - Answers
1. CASH FLOW FORECAST
JAN

FEB

MAR

OPENING BALANCE 150,000

CASH IN

-3,167

-2,359

Gym fees

18,500

22,475

50,000
100,000
5,000
11,667
3,000
2,000

APR

MAY

JUN

274

11,832

27,065

24,300

33,225

36,900

42,060

5,000
11,667
3,000
2,000

5,000
11,667
3,000
2,000

5,000
11,667
3,000
2,000

5,000
11,667
3,000
2,000

5,000
11,667
3,000
2,000

171,667

21,667

21,667

21,667

21,667

21,667

NET CASHFLOW
-153,167
CLOSING BALANCE
-3,167

+808
-2,359

+2663
+274

+11,558
+11,832

+15,223
+27,065

+20,393
+47,458

CASH OUT
Launch
Asset spend
Rent
Wages
Power etc.
Gen. expenses
TOTAL

2.

Will the former All Black lose money in the first month?
YES

3.

If he signs up an average of 40 new clients each month between July and December, will he
see a return on his initial investment by Christmas?
YES, OCTOBER

4.

He has the option to rent his gym equipment for $6,000 a month. On that basis:
c)

When will his $100,000 equipment investment break even?

d)

If he was planning to sell of the business as a going concern after two years, is buying or renting
the equipment the better option?

a) 17 MONTHS FROM NOW

b) BUYING
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Next steps:

Cash flow forecasting

Introduction to raising capital

Can you aford to start a business

Finding sources of capital

SWOT analysis

Assess if you are ready to start up

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