How does one go about establishing a financial plan in the business-creation phase? Are there any free Excel tools or support? Where can you find help?
Establishing a financial plan is a key step when creating a business: it’s when you compare your idea to the reality of the figures, based on realistic assumptions in terms of business activity, investment, profitability, and organization. Normally, the financial plan is drawn up on the basis of the results of a market study.
It’s about making sure your business model is stable and viable. The business forecast is also intended to convince your investors: it must reassure them about your ability to be realistic, and even cautious.
A financial forecast usually contains:
- A financing plan (presenting the investments and sources of financing)
- A 3-year income statement (distinguishing between variable and fixed expenses)
- A forecast balance sheet
- Intermediate balance of management
- Cash flow and net self-financing
- the calculation of the break-even point
- the details of depreciation
- the details of wages and social charges
- the calculation of the working capital requirement
- the estimated cash budget, over one year or over 3 years
How to make a financial forecast
First, making a financial forecast implies you will have validated certain hypotheses and have enough quantified data. For this, you’ll need to know:
- the conditions of the business activity, including the necessary investments and their cost (commercial space? Vehicle? Tools? Machines? Furniture?)
- the level of stock to be expected when starting up
- the price and margin of the products or services offered
- the possible turnover and seasonality of sales
- the cost of communication
- recurrent expenses (fixed charges) and their amounts
- any payment discrepancies (customers, suppliers, etc.)
- For everything it will be necessary to request and obtain quotes: investment quotes, quotes from suppliers and service providers (insurers, accountants, notary …), etc.
Once all the figures are collected, it is possible to establish a financial plan. The following is generally done in the following order:
- Draft the financial plan: list the investments to be planned and the financial resources to be mobilized accordingly.
- Establish the results from both profit and loss and the break-even point according to realistic turnover.
- Draw up the estimated cash budget.
- Finalize the other schedules (forecast balance sheet, intermediate management balances, etc.).
Use a free Excel tool to develop your own financial forecast.
WikiCrea offers you its free Excel tool to develop a financial plan easily. Click here to access the tool and read the procedure to follow: free excel business plan template