Finance my project

The financial plan: assessing your business's sustainability and financing needs

The financial plan is an essential element in assessing the viability of your future business and determining your financing needs. It consists of three complementary parts: the investment budget, the forecast income statement and the cash flow budget.

1. The investment budget and the financing plan

The investment budget covers everything you need to acquire to start your business: equipment, machinery, renovation work, etc. Drawing up a financing plan will then determine how these investments will be financed.

2. The 3-year forecast profit and loss account

The profit and loss account (or income statement) shows the monthly development of your turnover (revenue), direct costs, fixed costs (salaries, rent, marketing, IT, other expenses), financial charges and taxes.

It is essential to draw up the income statement month by month — for at least 12 months from the start of the business — because all businesses are seasonal in one way or another.

3. The cash flow budget over at least 12 months

The cash flow budget lets you forecast, month by month, how the company's liquid assets will develop, with incoming money (invoices paid) and outgoings (payments to be made). It is often cash flow, not profitability, that gets young companies into difficulty.

Stay realistic!

You need to be realistic in your sales forecasts — bearing in mind that sales often grow more slowly than expected — and allow a safety margin for unforeseen costs.

How to proceed

  1. Choose from the 3 Excel templates provided by Fri Up: the first is designed for a “consulting” business as an LLC (Sàrl), the second for a “consumer goods” business with direct costs for an LLC, and the third for a “consumer goods” business with direct costs for the self-employed.
  2. Adapt the template to the specifics of your business and make sure the formulas are consistent.
  3. Create several versions based on your assumptions: a pessimistic scenario, a median scenario and an optimistic scenario.

Good to know: creating a profit and loss account may seem a daunting exercise, but with the right recipe it can be (almost) as easy as baking a delicious chocolate cake!