What Is A Cash Flow Statement & How To Write A Cash Flow Statement

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The cash flow statement is a very important part of a business plan, and your business. This tutorial explains what is a cash flow statement, and how to write a cash flow statement.

Definition of Cash Flow Statement

A cash flow statement is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet.

That sounds complex, right? Let’s simplify that definition. What a cash flow statement really is for a new business is a glorified itemized list of ways cash is coming in and out of your business. For new businesses, I recommend creating two such statements. The first cash flow statement will be for the time period before you open your business, and the second statement will have to do with cash flows after you open the business. Let’s take a look at a small example.

Let’s say that you are opening a restaurant in United States. First let’s focus on the cash flow before the business is open.

Some (not all) of the cash flows out of the business are:

– Renting of the space

– Legal fees

– Salaries of some early employees

– Remodeling of the space

And the cash flows into the business will be from funding sources like investments, loans, grants, donations etc.

Now let’s focus on the cash flow statement after the business has started. Some (not all) of the cash flows out are:

– Monthly rent

– Employee salaries

– Utilities

– Liability insurance

– Ingredients for the food

– Marketing costs

And the cash flows in are the different revenue streams the business may have like catering, and the revenue from people who eat at the restaurant.

The reason that putting this document together is so important is that it gives you a clear sense of the financial picture for your business, and enable you to make financial projections. That enables you to understand how much money will be needed to start and run this business successfully. So when you pitch your business to investors, you know how much money to ask for. Depending on the type of business you have, you should give yourself 9-18 months of financial runway after the business has started.

Further Business Resources

I created mobile apps which can help you make your business ideas better, and improve your business ideas with some fundamentals. Here is my iOS (iPad or iPhone) fundraising app. And here is my Android fundraising app.

For more business-starting resources, please take a look at our business planning mobile apps. Here is the iOS business plan app and here is the Android business plan app.  Additionally, here is the iOS marketing app. And here is the Android marketing app. And here are our business apps on the Kindle. And here is an article where I give the argument that our Android apps are the best business apps on Android.

And please check out and subscribe to my YouTube channel where we cover many marketing topics.

Author: Alex Genadinik

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