How to Make a Cash Flow Forecast for 2026 That You'll Actually Use

Welcome to the Creative Mind Smart Money Podcast where we turn financial confusion into creative confidence. I'm Samantha Ek, the keeper and fractional CFO for creative entrepreneurs. Each week I'm sharing my financial expertise and actionable strategies to help you build a thriving creative business. Plus, you'll hear from industry experts who bring fresh perspectives on growing your business beyond the numbers. As building a successful creative business starts with strong financial foundations, your next chapter starts now. Your listening creative minds smart money podcasts. And today we're continuing our series of wrapping up 2025 and getting you set up for 2026. Now that we've looked at all of our numbers, we've seen our patterns, we're going to flip the page and analyze what we want 2026 to look like. So this isn't about predicting the future perfectly. We just want to have some sort of guide going into 2026 to see what could actually be possible and give us a realistic perspective. So this is going to be usable. We want to make this usable because a lot of people will create forecasts or plans that just collect dust because they're too complicated or unrealistic. So by the end of this episode, you're going to know how to build a simple, flexible, cashful forecast that you'll actually look at and trust. And again, you were going to have to build this. I'm just going to give you the information that you need to make it happen. Okay. So first of all, we want to start with our baseline of 2025 numbers. We've already looked at our 2025 data. We understand our data. We know it's there. We want to build with the real data that we have. So we want to pull all of our 2025 monthly averages. So our average monthly revenue, our average cost of goods and services, our average operating expenses and our owners pay in taxes. This is going to give us a starting point. This is our normal or our new normal. And from here, we can build in goals and growth without leaving what we know is realistic behind because too many times I've seen people like over a shoot their goal and I want to make it very realistic so that we can really get to what we need to do. We want to start by mapping out our known income. So what's predictable? What do we have for retainers? What do we have for ongoing clients? What do we have for memberships or recurring revenue and contracts? Are there any launches or projects that are already booked for next year that we know of that we have that's coming up that is confirmed revenue? Maybe we're already getting paid for it. So there's a difference between expected and potential income, right? We only want to plug in what's actually expected. We only want to income our things like maybe we have a contract out for someone that could be a project. Unless you know it's actually coming in as of this moment, we don't want to plug it into this forecast because we want to only account for what is actually known. We want to use a conservative baseline and let growth be like a bonus. You know what I mean? So if we're seeing that we are expecting $20,000 in January and we're saying, okay, I want to add 5% to that. We can kind of calculate that and work that into there, but you don't want to go out of control with that. Okay. Optimism is great, but we don't want to try and predict that we're going to have $5,000 extra in January and we know that's not really a possibility, right? The next step we want to do is add in our fixed expenses. So the non-negotiables that we have are rent, our software insurance, payroll subscriptions, things that we know are going to occur that are a set monthly amount. They're the backbone of the forecast because they're bills that will happen no matter what's going on. We want to categorize them by frequency, whether they're monthly quarterly or annual renewals just to understand our subscriptions. So we have our known income and then our fixed expenses. And again, having some sort of renewal notes so that we know when our annual renewals are coming up, that way we don't have some sort of surprise or something unexpected that is coming out of the bloom. We're like, what the frick is happening? Then we want to layer in our variable expenses. These are costs that like rise and fall with our business activity. So you want to think of things like contractor payments, marketing spend, travel or continuing education, inventory or supplies. So again, forecasting is not meaning perfection. Use your 2025 numbers as a baseline. If you usually spend 10% of revenue on contractors, plug that in an adjust later. So that's where I'm saying when you're looking at your numbers and you understand, okay, this is the average of last year. And then you pull that up and you look at your percentages and you're saying, okay, I spent about 10% on contractors last year. You can kind of use that data to create a predictable cash flow forecast, okay? Then we want to plan for our taxes and owners pay. So we want to include consistent owners pays a line item. So if you want to pay yourself $5,000, making sure that that's in there for your cash flow forecast. And you might be like, well, why are we including this in a cash flow forecast? Because paying yourself affects cash flow, right? If you make $10,000 and you take out $5,000, that's going to affect your cash flow. If you only maybe broaden, like after expenses, you only brought in $3,000, $2,000 of that is going to be like a negative cash flow, right? So we want to understand them. We want to set it decided in the line item. Of course, as always, as I've always talked about, we want to set it aside 25 to 30% for taxes of our self-employed. And forecasting is going to help us prevent any sort of panic that comes in April. You can use your vouchers that you get from your CPA for your estimated taxes, but because our taxes fluctuate or our income and expenses fluctuate here at the year, we want to make sure that we're paying that kind of more accurately. So then our next step is identifying our cash flow gaps. Once our forecast is built, we want to understand how we read it, which months might dip negatives. Like do we need to make sure that we're having more income in those months? Where does cash get tight? When do the expenses kind of rise? When do they spike? Because we want to plan for the gaps now, either by increasing marketing for slow seasons, setting aside enough of a cash cushion to account for those negative months, or just really like figuring out how we can add more income to those months that might be negative. This is what makes this forecast so powerful because it shows you problems early enough to know how to fix them and when they're going to come up so that you can fix them. Now that you have something that is predictable and that you've used data to back it up, you want to layer in what's going to be new for 2016. So any new offers, if you have pricing changes coming up, if you have some sort of hiring plans, equipment purchases or any big projects that you have coming up. And that's how you're going to plug in that projected revenue and then the matching expenses that come with it. So again, once we kind of know that we have these new things coming up, we're going to add that to our revenue. And then again, if you're having that 10% of a contract or a cost, you can just kind of add that into match it. So growth costs money, obviously. So we want to plan for that. So it doesn't blindside us when it gets that point. Assigning months to these moves is going to be really good ideas as well so that they feel kind of real. So if you're saying, okay, I'm going to have new offers coming out in February. Pricing changes roll out in March. We're going to hire in August, whatever it is just to understand so that they feel very real and very raw to you. Okay. And then I want you to make it some sort of living tool because this is where people really fall short. They will build it and never touch it again. So I want you to look at it monthly, update it with what you actually brought in, you know, adjust upcoming months. So if you're like, okay, well, now I have this much recurring revenue, adjust those upcoming months and then note any patterns or surprises. So if suddenly you had an unexpected cost noting that so that you can prepare for that in the future is going to be very powerful. The power isn't in what you build. It's in the maintenance of it because the more that you shift and like maintain what you've already built, it's going to just be so much more of an impact for you. We're having a conversation with future you, but the only way that it's going to be more powerful is if you keep showing up and keep trying to maintain it. Okay. We want to keep it simple and visual. So I encourage you using something as simple as a spreadsheet like a Google sheet so that it's not intimidating. If you are not someone who's very tech savvy, having like a cash flow tool is just going to be really complex for you. So I want something that's going to be super easy for you to utilize. Okay. Obviously you focus on your three cores, your inflow, your outflow and your ending bounds because when you have all those little pieces, so your inflow is money that's coming in, your outflow is money going out, including what you pay yourself. Okay. Having that clarity is going to be anything that's super complex or something you really are building on that's complex. Okay. So again, a forecasting isn't about predicting what's perfect. It's about planning for what's possible. So knowing what you have coming in and what could be possible is going to be very, very helpful. Okay. So then having, adding this to your money to at the start of every month is going to be very powerful so that you can view your actual versus your forecast because again, when you know what's coming, you can move from a reaction to intention and that's when your numbers are going to start working for you instead of against you. Okay. As always, if you enjoyed this episode, please leave a comment, like, subscribe, share it on social media so other people can find it. And as we wrap up 2025, we know you weren't here in 2016, so we can find a head for that. Otherwise, as always, you guys, I wish you the best week ever, and as we head into the holidays, I just wish you a very Merry Christmas and a Happy New Year. And that you are ready for next year, and it was so excited for it. I wish you all the best, and we'll see you next week, a very well-known traveler.