# cash-flow-planning

Cash Flow Planning

Overview
Cash flow planning is the skill of making sure your business can survive and operate smoothly even when revenue timing is uneven. One-person companies often look profitable on paper while still feeling financially unstable because cash arrives late, expenses cluster, and personal draw decisions are inconsistent. Cash flow planning turns that uncertainty into a manageable operating rhythm.
When to Use This Skill
Use this when income is lumpy, when you are moving from freelance work to a real company, when expenses are increasing, or when you want to know how much risk you can safely take on hiring, tooling, or marketing.
What This Skill Does
This skill helps you map inflows and outflows, set minimum cash reserves, separate operating cash from personal pay, and plan for slow months before they happen. The goal is not a perfect forecast. The goal is to reduce surprises.
How to Use
Step 1: List fixed monthly expenses, variable business expenses, tax obligations, and your desired owner pay.
Step 2: Map expected cash inflows by timing, not just by booked revenue. Payment timing matters more than invoice totals.
Step 3: Set a minimum operating reserve. For many solo businesses, this means keeping two to four months of core business costs visible and protected.
Step 4: Identify risk points: client concentration, seasonal dips, large one-time subscriptions, taxes, or delayed receivables.
Step 5: Build a simple 13-week cash view so you can see near-term pressure early.
Step 6: Create decision rules. Example: no large tool purchases below reserve threshold, no owner draw increase until three strong months, no contractor spend without clear payback.
Output
The output should include:
Monthly expense map
Revenue timing map
Reserve target
13-week cash view
Decision rules for spending and owner draw
Common Mistakes
Do not confuse booked revenue with available cash.
Do not ignore taxes in the forecast.
Do not keep raising personal withdrawals whenever one good month lands.
Do not wait for a cash squeeze before understanding your numbers.