How to make a financial plan

The financial plan is the financial part of your business plan. It is a tool you use to determine whether your business plan is financially feasible. You can also use it to submit your financing application to one or more financiers. With a good financial plan, you convince them to invest money in your business. Here is how you make your 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?

You can also see:

• 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 shows the expected revenues and costs over a certain period (usually 3 years).
• Liquidity budget
  Here you can see whether you have enough money at any moment to meet your payment obligations.

Depending on your form of business and your situation, you will also make a personal budget. Much of your private expenditure is fixed. List them in your private budget. Take your current expenses as a starting point. Then it will become clear what amount you need to earn as an entrepreneur to continue living on the same footing. 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 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?

Make your business plan

A financier can see from the business plan whether investing in your company is worthwhile. In any case, you should include:

• clear explanation of the numbers
• which trends, developments, and risks there are in your industry
• What exactly are you going to spend the money on?
• Do you have insight into the costs of your company (for example, rent of a building or personnel costs)?
• What do you have to earn to meet all financial obligations (business and private)?
• Do you have insight into your target group and the market?
• 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).