Creating a Financial Plan: Structure, Components & Example

What Is a Financial Plan?

A financial plan is the numbers part of the business plan. It translates your project into euros and shows how much capital you need, where it comes from, and whether the business is viable. It consists of several interlocking sub-plans: capital requirements, investment, liquidity, and profitability plans.

Banks, KfW, and the Employment Agency (Agentur für Arbeit) read the financial plan above all. It determines whether a project is considered viable and financeable.

What Parts Does a Financial Plan Consist Of?

A complete financial plan comprises five sub-plans: the capital requirements plan, investment plan, financing plan, liquidity plan, and profitability forecast (revenue and profitability planning). The imputed entrepreneur’s salary belongs in it as an addition.

The sub-plans build on one another: financing follows from the investment and capital requirements; profitability from revenue and cost planning; and liquidity from the two together.

How Do I Calculate Capital Requirements?

Capital requirements are the sum of all funds you need until you reach the break-even point: investments plus working capital plus a liquidity reserve plus your private living costs during the start-up phase.

Calculation example: investments €25,000 + working capital (goods, rent, marketing for 6 months) €18,000 + private living costs 6 × €2,500 = €15,000 + reserve €7,000 comes to a capital requirement of about €65,000.

You can quickly estimate your capital requirements yourself with our capital requirements calculator.

What Belongs in the Investment Plan?

The investment plan lists all one-time purchases at the start: machines, equipment, vehicles, initial equipment, renovation, deposit, and start-up and consulting costs. It is the basis for capital requirements.

Separate absolutely necessary investments from “nice to have.” A lean initial setup lowers capital requirements and, with them, the financing risk.

What Is the Liquidity Plan For?

The liquidity plan sets all incoming payments against outgoing payments, month by month. It shows whether your account is covered at all times. A start-up rarely fails for lack of profit but for lack of liquidity.

Plan at least the first 12 to 36 months. Pay attention to payment terms: revenue is not yet money in your account if customers only pay in 30 days.

What Is the Profitability Forecast?

The profitability forecast (profitability plan) shows whether your business makes a profit: planned revenue minus costs gives the operating result. Planning over three years is usual.

Calculation example: annual revenue €120,000 − cost of goods €36,000 − running costs (rent, insurance, marketing) €30,000 − imputed entrepreneur’s salary €42,000 comes to about €12,000 profit before taxes.

What Is the Imputed Entrepreneur’s Salary?

The imputed entrepreneur’s salary (kalkulatorischer Unternehmerlohn) is the amount you have to draw from the business for your own living expenses. It belongs in every serious profitability plan because your working time is not free.

Calculation example: private living costs €2,500 + health insurance and retirement provision €700 comes to about €3,200 per month, or roughly €38,400 per year, which the business must additionally earn.

Which Mistakes Are Most Common in a Financial Plan?

The three most common: overly optimistic revenue, forgotten cost items (taxes, retirement provision, imputed entrepreneur’s salary), and a missing liquidity buffer. A realistic, conservative plan convinces the bank and KfW far more.

Calculate revenue rather cautiously and costs rather generously. Otherwise, if you fall short of plan in the first year, you quickly end up in a liquidity gap.