Can I Use A Flow To Update An Excel Sheet Business Plan For a Beauty Salon – Cash Flow Decisions

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Business Plan For a Beauty Salon – Cash Flow Decisions

Creating a business plan for your beauty salon is a great opportunity to create a working cash flow statement (sometimes called a cash flow statement). This will allow you to make key decisions about future cash flow.

Creating a statement of cash flows

It is highly recommended that you start with an Excel template or some sort of example financial model for your salon’s cash flow statement. The template does not have to be specifically tailored for a beauty salon, but should be for a similar business (ie one that generates revenue by selling services and products, paying rent for a location, etc.) so that minimal customization is required. Starting with a template can save a lot of time creating your statement.

Three parts of the statement of cash flows

This will describe cash inflows and outflows in three areas: operating, investing and financing.

Operating activities include cash brought in from customers in the form of sales and cash paid out for business expenses. This will generally represent the highest inflows and outflows in the cash flow statement and should result in a positive number each month for a profitable business.

Investing activities do not mean purchases of stocks or bonds by the company (although such rare activity would be included here). In general, there are activities where the salon invests in itself. Whenever a capital purchase of an asset (equipment, salon improvements, furniture, etc.) is made, the payments made will represent a cash outflow. If this asset is ever sold off, the money brought in will be a cash inflow here. In general, an operating company will have a negative cash flow in the area of ​​investments.

Financing activities are related to the financing of the company by investors and lenders. When financiers invest money in a company in the form of equity or debt capital, this represents a cash inflow here. When dividends are paid, shares are repurchased from equity investors, or loan principal is repaid to lenders, financing shows cash outflows. Note that the payment of interest on loans constitutes an operating activity in the United States.

Cash reserves

By seeing how low the ending cash balance falls each quarter, month, or week, you can determine how much cash reserves the company will need. Make sure cash reserves cover any negative balances and at least several thousand dollars as a buffer to prepare for cost overruns or revenue shortfalls.

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