In your investment budget, you list all investments in business assets. You keep this overview next to your financial budget. You now know what total amount to include in your financial budget. The financial budget is part of your financial plan.
Make your financial budget in 3 steps
Calculate the amount of your equity. Equity is money that you personally contribute to your business, such as savings. Or business assets that you had already purchased, such as a company car or a computer. When applying for financing, the subordinated loans also count as equity. A subordinated loan is, for example, a loan from family or friends.
Note: are you starting a general partnership with multiple entrepreneurs? Then you add up the contributions of each partner. In a private limited company (bv), the contribution of all shareholders is the equity.
2. Outside financing or debt
Determine the amount of the outside financing. Outside financing is money that you borrow from business partners, such as suppliers or banks. You lend outside financing which makes it a debt. There is short-term debt and long-term debt. The boundary between long and short-term is 1 year.
Examples of short-term debt are supplier credit, overdraft, and taxes payable. Long-term debt can be for example, a long-term loan for inventory or a mortgage.
Calculate your solvency. Solvency is the ratio of your equity to the total required capital. So, how much equity do you have and how much do you need in total? This indicates your company's ability to pay your debts in the long term. A financier requires that a starting entrepreneur contributes equity, usually at least 30%. In certain sectors, such as the hospitality industry, this can be as high as 50%. With a well-thought-out plan, a financier can sometimes make an exception and waive the need for contributing equity.
Example financial budget
|Subordinated loan from family|| 7,000|
|Contribution own car||10,000|
|Overdraft || 5,000|
|Supplier credit|| 2,000|
Call in help
Do you want help preparing your financial budget? You can engage a bookkeeper or accountant via the Dutch Association of Accountants and Tax Experts NOAB (in Dutch) or the Royal Netherlands Institute of Chartered Accountants NBA.