How to make a financial plan

What is in a financial plan?

In the financial plan, you answer the following questions:

• What do I need to get my business off to a good start?
• What are the expected turnover, purchases, and other costs?
• How much profit do I expect to make in the coming years?
• How will I finance my company and under what conditions?

Also look at:

• If the financial plan and your business plan are financially feasible. So make sure that your calculations are clear.
• What happens to my business bank account every month? How will I balance income and expenses?

The importance of a financial plan

With a financial plan, you prepare yourself for financing your business plans. A good financial plan increases your chance of getting financing. Watch this video for more explanation (English subtitles available via Settings).

Business budgets

The financial plan always consists of 4 sub-budgets:

• Investment budget
  Here you list the investments needed to start or grow your business. Together with the financing budget, the investment budget forms the balance sheet of your business.
• Financial budget
  Here you work out how you will pay for the investments from the investment budget.
• Operating budget
  This is where you calculate whether your business is profitable. You estimate your turnover. Then you look at what the costs are to keep your business running. This is how you calculate whether you will make a profit or a loss. The operating budget is also known as the profit and loss account.
• Liquidity budget
  This lists the expected income and expenditure. You use this budget to keep track of money. You estimate how much money is always in your business bank account. That way you know you have enough money to pay invoices.

It is also useful to make a personal budget. This is an overview of your fixed costs and expenses. Then it becomes clear what amount you need to earn as an entrepreneur to live on. If you know this, you can also determine or adjust your hourly rate.

Pitching to a financier

Financiers look at who you are as an entrepreneur when you apply for financing. And they look at your business and the substantiation of your plans. So, make sure you have a clear presentation and a strong pitch. Also, show that you speak the same language as the financier.

The financier wants to know the following:

• Do you show confidence in your company?
• Are you well-prepared?
• What are your entrepreneurial qualities and experience?
• Do you have relevant contacts and a good network?

Supporting your plan

A financier must be able to see from your plan if investing in your company is worthwhile. In any case, you should include:

• a clear explanation of the numbers
• which trends, developments, and risks there are in your industry
• what exactly you are going to spend the money on
• insight into the costs of your company (for example, rent of a building or personnel costs)
• what you have to earn to meet all financial obligations (business and private)
• insight into your target group and the market
• show that you have financial reserves, so that the lender can get their money back if things go wrong. Think savings or excess value on your house

Use tools for your situation

The Netherlands Chamber of Commerce KVK developed the Location Scan (in Dutch) together with Statistics Netherlands (CBS). The Location Scan provides information about the business and population development in your region. After going through a few simple steps, you will receive a custom fact sheet and excel file by email. With this data, you substantiate your financial plan, choice of location, and business plan.

Are you curious about the number of competitors in your region? Use the KVK Company Counter. This allows you to quickly and easily check how many companies there are in your industry in a certain area.

Example of a financial plan

You will find an example of a financial plan on the Qredits website (in Dutch).