Creating Financial Planning in 7 Steps - Including Financial Plan Template

The financial planning is the centerpiece of your business plan. Therefore, it is not enough to juggle a few euro amounts to immortalize them on a piece of paper. Financial planning includes in-depth analysis of your project to set up a business. The entire content of a financial plan is not only relevant to you in order to have a red thread for the next three years, but also for external institutions and persons.

And because the topic of "creating a financial plan" is a huge thing, we have appropriately written a huge article about it. We have kept it short and snappy, but a shorter article would have only told you half the truth. This includes answers to questions such as "What belongs in a financial plan?" or "How detailed should a financial plan be?". In addition, our essay includes a detailed step-by-step guide on how to create a financial plan. Because that would not have told everything, we finally show you some tools that provide you with the best support for your financial planning - all to find on OMR Reviews.

What does financial planning mean?

The definition of a financial plan describes the document as part of the business plan. This is essential if you want to have a loan or convince investors. But do not fall victim to the fallacy that business and financial planning are only intended for others. On the contrary: both plans are a good opportunity for you to have numbers, data and facts to determine whether your undertaking is hand and foot. In addition, both plans accompany you at least in the first years and function as a red thread along which you can set up your business.

In detail, financial planning consists of several sub-plans as well as forecasts and analyzes. The basic financial plan is created before the foundation of your company. This financial planning is created for the first three years, with the first year being seen per month. However, after the foundation it is important to keep your financial planning always in sight and to adapt to changes - positive as negative.

Very important is our following tip: Do not take your financial planning lightly. It must contain solid data and plausible explanations.

What all belongs to the preparation of a financial plan?

We hinted at the beginning that a financial plan has little to do with an income-expenditure calculation. Much more, financial planning for founders consists of several sub-plans.

• Revenue plan
• Cost plan
• Investment plan
• Profitability plan
• Capital requirement and financing plan
• Liquidity plan

In the same order, your financial plan also builds up. Accordingly, the individual steps in our financial planning guide and the free financial plan template are structured. However, do not see the individual sub-plans as individual components, but as a bundle, which in total gives your financial planning. The sub-plans only make sense to third parties together.

Revenue plan

Everything starts with the revenue plan. From it emerges which prices you charge for your products and which quantities you forecast to implement. The revenue plan is your foundation. If it crumbles, you will likely have problems in the other sub-plans.

Cost plan

In the cost plan you keep your expenses, which regularly occur. Accordingly, this sub-plan has an impact on the investments, the profitability of your company and the capital requirements.

Investment plan

Basically, a company is most expensive at the beginning. Logical. After all, all purchases have to be invested, for example. You store these and other investments in the investment plan.

Profitability plan

The planned revenues are combined in the profitability plan with your costs and investments. The result is when your company is expected to bear fruit.

Capital requirement and financing plan

Now you are so smart that you know what the fun will cost. Time to determine your capital needs. In the capital requirements and financing plan, you break down from which sources your capital for your company foundation comes and how you foresee the financing of the capital. For example, you must exactly discuss how, from where and under what conditions foreign capital comes.

Liquidity plan

The liquidity planning is by far the most unstable area in financial planning. You must constantly monitor your liquidity. Otherwise, the consequence would be bankruptcy, due to insolvency. If your liquidity changes, you need to adjust in all areas of the originally created financial planning.

Why is financial planning important?

Financial planning also encounters us in private. Anyone who does not run a household book - no matter how detailed - quickly realizes that at the end of the month there is hardly any or no money left. In private financial planning, it is also about which costs, which capital and which liquidity you have.

The financial planning of an emerging company, on the other hand, is a significantly larger house number, which needs to be planned exactly and encounters as few unforeseeable scenarios as possible. It can go quite wrong if you take this part of your foundation lightly and in the end have too high costs and too little capital. In addition, financial planning is also important to convince financiers of your heart project.

What requirements must a financial plan fulfill?

In the entrepreneur scene, the phrase "Who survives the first three years has a chance to build a steady company". According to Statista, there are almost as many trade deregistrations every year as registrations or in other words, 80 % of founders fail in the first three years. Now we could claim that the failure of a foundation often has to do with a bad financial plan. But it is not that simple, even if a solid financial planning can certainly be decisive. But the question of the requirements of a financial plan to answer, these three years are a significant feature.

First, however, it is important to know who has requirements for a financial plan. Of course, yourself. But also all those who you present your financial planning. We do not mean your parents or friends - unless they become investors. And with that we are already on the topic: Requirements have especially banks and investors from whom you want money and expertise, as well as various governmental institutions. All have one thing in common: they want to know how you plan your business in the first three years. Requirement number 1 is therefore: Create your financial planning for the first three years, whereby you show the planning in the first year for each month individually. For year two and three, the outlook at the annual level is sufficient.

Besides the temporal requirement you must still fulfill some more.

These include the following financial plan requirements:

• Create a SWOT analysis - This is an analysis of the strengths, weaknesses, opportunities and threats of your company. The result of the SWOT analysis is therefore the interrelationship of the four areas.
• Add further analyzes to the financial planning - We mean the results of extensive market and competition analyzes.
• The financial plan must be reliable and traceable - Accordingly, the entire content of your financial plan should be well researched, proven and filled with realistic estimates. In addition, the content must be understandable to third parties.
• Check your financial planning for consistency - All sub-plans of your financial plan must not contradict or raise questions. If that should happen, you'd better have satisfactory answers on the spot.
• All calculations must be correct - To achieve that, you must mostly work with estimates, but you can prove this by prices and sales of other companies from your area. For example, you can obtain offers from these companies. Estimates only have to be explained and corroborated by research results.
• Follow the realism, not the dream - When founding a company is associated with visions and aspirations, applies in financial planning pure realism. So do not build your financial plan according to your wishes, but stick to the requirements that third parties have, and realistic numbers, data, facts.

The more detailed the financial planning, the better the financial plan

How detailed your financial planning should depend on how big your company should be or how many products you will offer as well. Basically, the more detailed, the better. But that only means useful information, not those that make your financial plan unnecessarily lengthened and look after many details. What is important is a clear presentation of all sub-plans as well as detailed calculations that are traceable. What does detail mean in terms of financial planning, you will find in our step-by-step guide and the financial plan examples.

What makes a good financial plan

To be able to create a good and meaningful financial planning, you have to invest a lot of time. Apart from that, whether your financial plan will be good, depends on all necessary information being contained that third parties need. Thus, your financial planning has to be able to demonstrate numbers on revenues, costs, profitability, investments, capital requirements as well as liquidity. Your analyzes and research confirm all numbers. In addition, detailed explanations are necessary to prevent possible questions.

Actually, banks, investors or authorities will still ask you questions. But if you have dealt extensively with your financial planning and your business plan, you will always have a satisfactory answer. Some questions from third parties are only intended to find out if you know what you are doing.

Promotions for your financial planning

To be on the safe side, you can bring in external help. Professionals who show you what is important when creating a financial planning and what your business plan should look like. In addition, they can give you one or the other tip, which can bring you advantages. When choosing a founder coach, make sure that he:she is technically sound and especially familiar with your industry

The big bonus to the story, however, is: You can get different promotions, with which you can pay the competent financial plan advice. To what extent you meet the promotion requirements, you need to check yourself. Fact is, there are some offers:

• IHK initial consultation - every IHK office offers you free seminars, where you can learn the basics of financial planning.
• Funding for founding from unemployment - If you are founding out of unemployment, you can apply for corresponding funding at the employment agency. The costs for a founder coaching will be completely taken over in this case. However, you must be unemployed for at least 6 weeks and receive unemployment benefit I.
• Federal country dependent promotion for founder coaching - every federal state has its own promotion program for founder coaching in addition. Depending on the federal state, up to 80 percent of the costs are covered.
• Startup seminars - Apart from the IHK there are other providers of free founding seminars. Inform yourself on the net about who offers such seminars in your area.
• BAFA subsidy after launching- If you need a business plan and a financial plan after the founding, you can apply for coaching promotions at the Federal Office of Economics and Export Control.

Keep up to date with what promotions are about. Federal, state and the EU are constantly working to strengthen opportunities for founders and start-ups.

How to create your financial planning in 7 steps (with examples)

So you do not stay on the theory dry, we now show you step by step, how to create your financial planning professionally.

For each step:

1. All amounts are to be seen net - except in the case of the capital requirement determination.
2. The first year is planned monthly.
3. Year two and three can be considered cumulatively.

Step 1: Revenue Plan - What, how much and how to plan your turn?

The financial planning you create by starting with the expected revenues. How many products are you expected to turnover in the first 12 months and the founding years two and three and how much money will it bring you?

So to the grossest question in step 1. In revenue planning, it's about realistic assessments of your revenue. That you can not predict these values exactly, is clear; nobody demands that from you. Because there are too many factors at play over the next three years. But your revenue estimates decide on the value and the credibility of your project and thus also your financial plans. All insights you gain for this part of the plan must be justified to make them understandable.

Before you start to maltreat the calculator, comprehensive analyzes of the market, your competition and the SWOT are pending. This results in how good the chances are for you, your company and especially your products. Suppose you have a product that does not yet exist on the market. In this case, it can be difficult to present realistic numbers. If, on the other hand, you were to go into an existing market, the challenge would be to make it clear to third parties how you intend to keep your head above water in the face of existing competition.

As you can easily recognize in the two scenarios: Each requirement in which you are planning a company has its challenges in the financial plan. At this point, the already mentioned degree of detail comes into play: Depending on the scenario, you have to enter more or less into the analysis results and numbers.

In the revenue plan, you record your revenue forecasts, as well as unit prices and sales quantities of your products.

Step 2: Cost Plan - What Does the World or Your Start-up Cost?

As the name of this part of the plan already reveals: Here you have to list all costs. These are the costs for materials, staff, operating expenses as well as interest expenses. But beware: that does not include one-time investments. These get their own sub-plan in step 3.

• Material cost - Here you note all the costs that you need for the necessary material of your products. This includes, for example, packaging as well. Depending on your planned revenues, materials costs vary depending on more or less production. Accordingly, the costs of this division are likely to grow as you expect your customer numbers to grow exponentially or at least proportionally.
• Personnel cost - For the staff that you want to hire at the beginning, especially the wages are to be noted. However, all social contributions and voluntary pension scheme contributions must be added separately. Also consider commuting, Christmas money or holiday entitlements.
• Operating expenditure - This is usually the most comprehensive part of the cost plan. All costs that even remotely have to do with your company come in here. These include, for example, the rent for office space, licenses, office supplies, marketing costs, electricity and the like.
• Depreciation - The depreciations of assets and fixed assets can be recorded in the investment plan as a depreciation plan. What that is, you'll learn in step three.
• Interest expense - With all interest that you have to pay regularly, you record the conclusion of your cost plan, before you break the total below.

In the cost plan, you record all expenses - including your entrepreneur's wage.

Step 3: Investment Plan - What do you have to acquire once and is intended for the company in the long term?

The cost plan is supplemented by the plan of your investments. That is, everything that contributes to the increase in the value of the company, one-time procurement equipment and other purchases that are intended for the company in the long term. This is, for example, office equipment, patents, machinery, land or various financial investments. Expenses that are only intended for your company in the short term, do not count.

Many investments have to be made at the beginning; these you write in the investment plan.

That was the easy part of the investment plan. Complicated it becomes, when you have to check to what extent you may immediately write off the investments or record as running costs. In addition, tax issues are involved with regard to low-value economic goods. To provide clarity in both issues, the AfA table of the Federal Ministry of Finance helps you as well as a good tax advisor. AfA stands for depreciation for wear.

Step 4: Profitability Plan - When does your company make a profit for the first time?

Now in the financial plan, you are so far to determine when your company is likely to make profit. In the best case this should happen at the latest in the third year of foundation. You go about this as follows:

Your profit = revenues - costs - taxes

That's easy, right! But as with the investment plan, the profitability plan does not stay simple. Depending on the type of business, you have to pay and therefore deduct different taxes to determine your actual profit.

• All traders are liable for trade tax (not however for freelancers)
• Capital companies are also subject to corporation tax
• As a sole proprietorship or partnership, instead, the "only" income tax is due.

In the profitability plan you determine when your company contributes.

In addition, you deal with your payment as an entrepreneur in the profitability forecast. How high that is, depends on your profit or your partnership agreement. This sets your salary as CEO, if your company is a corporation. Then the personnel costs have to be supplemented by your salary. Is it a sole proprietorship or a partnership, you deduct your wage from the profit. How much you need, you calculate based on your private expenses.

Calculate exactly what you need privately as an entrepreneur.

Step 5: Capital Requirement Plan - What do you need for money?

If you do not have the required start-up capital in your pocket, foreign sources must be tapped. That can be your bank or investors. Your own money plus that of the investors is your equity. If you take up loans or loans, that is debt.

Now it's up to you to determine how much capital you need. For this you can add together your investments, your costs, your entrepreneur salary from the profitability plan as well as up to 10 percent reserve capital. Remember that you have to calculate with the gross numbers, as you have to co-finance the sales tax at first. The result is your capital requirement. These are only the start-up financing. If you need more money in the three years and you know it already, you also have to keep it in the capital requirements plan.

In this step our Excel template has already summed up your total costs and shows your total capital requirement.

Step 6: Financing plan - Where does the money come from, what do you need?

The add-on of the capital requirements plan deals with the financing of the needed money. Determine the need for foreign capital by subtracting your equity from the result of the capital requirement planning. What remains, you have to get through loans. Research realistic credit conditions to roughly know how high the repayment rates and interest rates are.

What you can not pay out of your pocket, must be financed.

Our good-intentioned tip:If possible, go to your house bank, where you have been a private customer for the best part. There you usually get better conditions than at other banks, which only see that you want to start - which is always a risk per se. In addition, you can also benefit from special offers for entrepreneurs. For information, see the KfW or regional investment and development banks.

Step 7: Liquidity Plan - How do you stay solvent?

Step 7 of our guide to creating a financial plan reveals the entire art of entrepreneurship. It's easy to create and fill the financial plan in Excel. The challenge is to fill the financial plan in such a way that you are able to pay every month at the end - realistic numbers are therefore existential. To show you at least on paper liquid, you record in the liquidity plan all deposits and disbursements.

Deposits = Sales, credits, pre-tax reimbursements and other deposits

Disbursements = investments, costs (excluding depreciations), sales tax, interest expense, redemptions and other disbursements

The conclusion of your financial plan is the liquidity preview.

What brings the reality then, depends on many factors. Some of them you can not possibly foresee - for example, if you have founded before a pandemic and subsequently face the challenges to master this. In such cases, you need to react and organize liquid funds beyond the reserves. For that, even the world's best liquidity plan can not prepare you. But for most scenarios, you are optimally armed after step 7. In addition, there are still liquidity planning software and a few other tools on OMR Reviews, which accompany you throughout your financial planning from the start.

Tip to complete the instruction:Once you have created your financial plan in raw form, let relatives and friends who have a relation to finances banking or business administration look over. Especially if you are founding alone, it can be very helpful to have one or more pairs of eyes look over your financial plan. Often, one is so focused that he overlooks certain points. Outsiders can give relevant hints.

Our financial plan template for you, so you can start creating your financial planning right away

As you can see from the title of the article, you not only get clever advice from us, but also a financial plan template for Excel:

Download template for a financial plan for free now.

With the financial plan template, you can start filling right away. Follow the seven steps and the financial plan examples to know at every point what information is needed for your financial plan. We've prepared the Excel template so that relevant amounts from sub plans are reused and the yellow highlighted cells automatically calculate for you!

How can tools help in creating a financial plan?

In addition to an Excel template, there are some tools that make your life a lot easier before and after founding. Here we are talking about cash flow management software. This kind of tool helps you to create your financial planning as well as to keep an eye on your financial plan. Many financial planning tools focus on your liquidity. In some cases, it makes sense to use more than just one financial planning software as each one focuses on different features.

We have picked out the 10 best financial planning software on OMR Reviews - our software comparison platform. For all tools, you can get the opinion of other users and the ratings of the individual tools on OMR Reviews to determine which software is right for you.

These are the 10 best financial planning software on OMR reviews:

• COMMITLY - Monitor cash flows and liquidity.
• Agicap - Liquidity planning for small and medium enterprises.
• Board - Decision-making platform with budgeting, financial planning and simulation functions.
• FinanzGeek- "Digital Swiss Army Knife of Finance" for founders and young companies.
• flowpilot - Liquid management software that lets you see your cash flow and your payment capability and analyze your accounting.
• LucaNet - Supports you as a financial performance management software in financial planning and provides you with relevant reportings.
• Helu- With this financial planning software you save up to 40% by easy setup of reportings and DATEV access.
• Tidely - Creates AI-based cash flow forecasts for you.
• Adam - Supports conversations with the bank and provides a comprehensive control of your finances.

COMMITLY is a great support in your financial planning.

Conclusion to the financial planning: Creating a financial plan is the most important part in the founding phase

How to create a financial planning should be clarified now. Block you a lot of time to create your financial plan well thought out. Our template and tool tips will certainly be a big help, but the content still has to come from your pen. Follow the step-by-step guide, make comprehensive calculations, research and analyze thoroughly, then nothing can go wrong.

We also recommend you to get professional support in the form of founder coaching. This will put you on the safe side and benefit from financial promotions. After all, the financial plan is the most important and demanding part of your business plan and should receive the best possible care.