this calculation for your business. Youll use this figure later, when you write your plan summary and spell out your need for funds to start or expand your business.     Example 1: For the M & M Copy Shop, the maximum negative cash flow of $4,500 was reached in the third month (assuming that future individual monthly cash flow figures continued to be positive figures). That is the amount of working capital that M & M Copy Shop needs to begin operation. Mickey and Michele add together the amount listed in their Capital Spending Plan to $4,500 to derive the amount of cash they need to open their business.     Example 2: Antoinettes Cash Flow Forecast shows a positive cash flow from the beginning because her sales revenue starts out high. That means her total cash investment will be limited to the amount from her Capital Spending Plan or $162,500. She chooses not to reduce that amount by subtracting any of her first years cash flow from the total so she can have a salary for herself. E. Check for Trouble     You have completed most of the foundations on which your business will be built. The Cash Flow Forecast ties together all the previous work and allows you, or your backers, to see exactly how your business will function. I hope that you have gained an understanding of the relationship between sales, expenses, cost of sales, profits and cash flow by completing your Cash Flow Forecast. If so, that understanding will help you a great deal in the future.     If you still arent clear about those relationships, it is worth a little time to review your forecasts. Its important that you understand where the money comes from and where it goes. If necessary, take your forecasts to a business advisor or a friend who understands cash flow analysis and ask her to explain them to you.     Dont be surprised if the answers you develop arent the ones you expected. It may mean that the business wont work or that you need to polish your plans a little. It could just mean that you have made a mistake in arithmetic. Its best to let the Cash Flow Forecast rest for a day or two before looking for the problem.     No forecasting technique can ensure that your business will succeed. In addition to the problems outside your business that the future may bring (discussed in Chapter 3), you may have built into your plan some money problems that are lurking there, waiting to sabotage your efforts. Your only protection against problems like these is to know your business thoroughly. Sad to say, what you dont know can hurt you.     1. Antoinettes Inventory Problem     Antoinette estimated her first years sales at $450,000 and her cost of sales at 60%. She also figured her opening inventory at $30,000. Unfortunately, this means she has to turn her inventory 9.0 times per year ($450,000 x 0.60 divided by $30,000), just to meet her plan. This is not very likely.     NoteCalculate inventory turnover by dividing annual cost of sales by inventory at cost. If annual sales revenue is $450,000 and cost of sales is 60%, then annual cost of sales is $270,000 ($450,000 x 0.60 = $270,000). Inventory of $30,000 at cost divided into 270,000 equals 9.0 inventory turns per year.