If there's just one formal business skill every business owner should have, it's understanding and forecasting cash flow. It's not intuitive because it's not the same as profits; but it's vital. We spend cash, not profits. Here's my recommendation for a relatively simple way to lay out cash flow in a spreadsheet, so you can see it.

It doesn't take a CPA or an MBA to do it. Just knowing your own business. Do Your Numbers Making Your Estimates • In lines 3 and 4, you forecast the revenue from sales. Yours might be just cash sales, a single line. If you have sales on account, you know it.

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If you're not sure (maybe you're looking at a startup so you don't have the experience yet), assume you do have sales on account if you sell to other businesses; and probably not if you sell to consumers. Line 4 is your prediction for when the business customers will pay invoices. • The 'Start' column reflects the starting balances and starting funding for a startup. With an ongoing business, you might have that balance labeled 'Dec' for the ending month of the previous year. In this example, the startup owner borrows $55,000 and gets $25,000 as new investment. • Lines 5 and 6 are important because new money from loans and investments doesn't show up in your profits, but it's there.

• That whole block of rows 3-6 is a simplification. You know your business.

Where else does money come in? Torrent machine. Maybe you're selling assets too? Stay flexible.

Take this simple example as just that, an example. Make yours specific to your business.

• Rows 9-10 are also simplified. Use as many rows as you want to estimate operating expenses, focusing mainly on fixed costs, rent, utilities, and payroll. • Row 11 is there to make the point that cash flow counts what you spend for inventory and other direct costs of sales, when you spend it – not when it shows up in profit and loss. When a bookstore spends $10,000 in November to buy books to sell, those books might not show up in profits (as cost of goods sold) until December, January, or beyond. But that money leaves your bank in November. So you put it into your cash flow in November.

If you don't sell products, and don't deal with inventory, then you might have a row for direct costs such as hosting, or customer • Row 12 is there because most businesses pay a lot of expenses at the end of the month, or 30-45 days after received. For example, the ad you place might come through as an invoice that you'll pay later.