Financial projections that show when the cash runs out

What a useful model contains

A useful model is built around cash, because cash is what closes small businesses.

• An assumptions tab. Price, volume, cost of goods, wages, rent, marketing spend and the ramp-up rate, each with a source or a note saying it's a guess.
• Monthly cash flow for year one, then quarterly for years two and three. The first year is where most cash crunches happen, so it gets the detail.
• Break-even. The sales volume per month at which revenue covers all costs, and the month you're likely to reach it.
• Cash runway. The lowest point your bank balance reaches, and when.
• Three scenarios. Expected, slow (sales 30% below plan) and fast, so you can see the downside before it happens.

A worked break-even example

Here is the arithmetic we walk through with owners, using made-up round numbers you can swap for your own.

A new service business charges $150 per job. Materials and direct labour cost $60 per job, leaving a contribution of $90. Fixed monthly costs, meaning rent, insurance, software, a base wage and marketing, come to $13,500.

Break-even volume = $13,500 ÷ $90 = 150 jobs per month, or about 35 a week.

Now the question becomes concrete. Is 35 jobs a week realistic in month three? Month nine? If your validation test produced 20 enquiries a week and half became jobs, you're at 10 a week, and the model shows exactly how long the gap lasts and how much cash it burns. That is the conversation that decides whether to proceed, and it takes ten minutes once the model exists.

Our guide to break-even and cash runway works through a longer example step by step.

Who it's for

• Owners whose idea is sound but who don't know how much money they need.
• Founders who have a plan written but no model behind the numbers.
• Established businesses testing a price change, a new location or a hire.
• Anyone whose business plan needs a financial section that matches the text.

What's included

1. A kick-off call to list every revenue stream and cost.
2. A first draft of the model, with assumptions tab and sources.
3. A review call where we test the inputs together and adjust.
4. The final model, plus a two-page note on the deciding assumptions and what to track monthly once you're open.

We don't provide tax advice. The model includes GST/HST as a simple line so cash flow is realistic, and your CPA should confirm treatment for your situation.

Timeline

A new-venture model typically takes two to three weeks, depending on how quickly cost quotes arrive. Modelling a change to an existing business can be quicker when your bookkeeping is up to date. The schedule is confirmed in writing in your proposal.

How we measure a good model

A good model passes three checks: every input is visible and labelled; changing one input flows correctly through every tab; and the slow scenario is genuinely uncomfortable rather than a gentle trim. If the slow case still looks rosy, the model isn't doing its job.

Mistakes to avoid

• Ramping too fast. New businesses usually take longer to reach steady volume than owners expect. Model a slow first quarter.
• Forgetting owner pay. If the model only works when you take nothing home, it doesn't work.
• Ignoring payment timing. Customers paying on 30-day terms while suppliers want cash upfront can sink a profitable business.
• Leaving out seasonality. In much of Canada, winter and summer demand differ sharply. Our province pages note the seasonal patterns that matter.
• Treating the model as finished. Update it monthly with actuals once you open.

Models are priced as projects or by the hour; see pricing. Call, text or email with your rough start-up budget and we'll tell you what a model would cover.