How to Build a Cash Flow Model when your Company is Pre-Revenue

One of the biggest risks early-stage companies face isn’t lack of funding, it’s a false sense of security created by an overly optimistic cash flow model. Without income, your only runway is your bank balance and the assumptions you make about how long that lasts had better be honest.

Here are some tips on how to build a realistic cash flow model for a pre-revenue startup:

🔥 𝐊𝐧𝐨𝐰 𝐲𝐨𝐮𝐫 𝐫𝐞𝐚𝐥 𝐦𝐨𝐧𝐭𝐡𝐥𝐲 𝐛𝐮𝐫𝐧.
Don’t project before you understand your historical outflows. Create a trailing 6-12 month cash flow from real data and build from there.

⌚️ 𝐓𝐢𝐦𝐞 𝐲𝐨𝐮𝐫 𝐨𝐮𝐭𝐟𝐥𝐨𝐰𝐬.
Some costs hit all at once (legal bills, insurance premiums, annual software renewals). Others recur. Get the 𝘵𝘪𝘮𝘪𝘯𝘨 right, not just the totals.

📈 𝐃𝐨𝐧’𝐭 𝐩𝐫𝐨𝐣𝐞𝐜𝐭 𝐫𝐞𝐯𝐞𝐧𝐮𝐞 𝐣𝐮𝐬𝐭 𝐭𝐨 𝐟𝐞𝐞𝐥 𝐠𝐨𝐨𝐝.
If you think you’ll close a customer in 3 months, model that as upside and not as your base case. It’s okay to show $0 top-line for a while. What matters most is honesty.

💪 𝐁𝐮𝐢𝐥𝐝 𝐚 𝐛𝐮𝐟𝐟𝐞𝐫.
If you think you have 9 months of runway, you probably have 6–7. Build in margin for hiring delays, failed experiments, and fundraising efforts that take longer than expected.

📅 𝐔𝐩𝐝𝐚𝐭𝐞 𝐦𝐨𝐧𝐭𝐡𝐥𝐲. 𝐀𝐥𝐰𝐚𝐲𝐬.
You’ll learn more each month. Use that info to tighten assumptions.

The goal isn’t to impress investors with a hockey stick. It’s to run your business with eyes wide open.

𝑵𝒆𝒆𝒅 𝒉𝒆𝒍𝒑 𝒃𝒖𝒊𝒍𝒅𝒊𝒏𝒈 𝒂 𝒍𝒆𝒂𝒏, 𝒉𝒐𝒏𝒆𝒔𝒕 𝒄𝒂𝒔𝒉 𝒇𝒍𝒐𝒘 𝒎𝒐𝒅𝒆𝒍? 𝑻𝒉𝒂𝒕’𝒔 𝒎𝒚 𝒔𝒘𝒆𝒆𝒕 𝒔𝒑𝒐𝒕. 𝑳𝒆𝒕’𝒔 𝒄𝒉𝒂𝒕.