Making budgets

When you start your business, you make budgets so that you have a good overview of your finances. Your business finances are not separate from your existing private income and expenses. You make a business budget and a private budget. Then you have the basics for your financial affairs in order.

As an entrepreneur, you have to deal with a varying income. A large part of your expenses is already determined. Make an overview of these in your private budget. Use your current expenses as a starting point. Then you will know what amount you need to continue your current living standard as you start a business.

What does a business financial plan include?

The business budget, or business financial plan, consists of 4 sub-budgets:

  • The investment budget – Here you list which investments are needed to start your company or to keep it running. The investment budget, together with the financial budget, forms the balance sheet of your company.
  • The financial budget – Here you determine how you are going to pay for investments from the investment budget.
  • The operating budget – Here you calculate whether your company is profitable. You estimate your turnover. Then you look at the costs needed to keep your business running. This is how you calculate whether you will make a profit or loss. The operating budget is also known as a profit and loss account.
  • The liquidity budget – This lists the expected income and expenses. With this budget you follow the money. You budget how much money is in your business bank account so that you always know whether there is enough money to pay your bills.

Why is a financial plan useful?

The 4 business budgets together with your private budget form your financial plan. In your financial plan, you list the minimum finances you need to start your business. In other words: which investments you will make and how you will finance them. You estimate if your company can be profitable, what turnover you expect, and whether your company will make a profit or loss. You also check every month whether there is enough money in the bank. A well-founded financial plan helps to run your business successfully. You can also use your plan to convince potential financiers.

Make your personal financial plan

Running a business offers a mix of opportunities and risks. Use the Geldplan ZZP (in Dutch), to increases your chances of success and to limit your risks. Simply answer a number of questions anonymously and find out more about your personal financial outlook.

Learn more about finances and your business. Open the Netherlands Chamber of Commerce KVK Book of Finance.