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Financial planning

To ensure your success in launching your business idea on the market, you need finance. Whether you are using your own money or third-party capital - good financial planning is crucial.

A close-up of two pairs of hands holding a clipboard with a diagram on it. One hand is pointing at the diagram with a pen.
© aksonsat – stock.adobe.com

„We are geographers, not salesmen, so we relied on advice from the experts. Fortunately, the STARTERCENTER Bochum helped us with all the formalities. And naturally, we didn’t have a huge amount of capital available at the start. Without the [EXIST] start-up grant, we would never been able to get our ideas off the ground.“


-  Marcel Delker and Sven Schulz, Geographers

Liquidity planning errors are one of most common reasons why businesses fail. Therefore, when it comes to planning your finances, seek advice from the STARTERCENTERS NRW at an early stage. They will provide you with information about public subsidy schemes, review your financial plan and give you some tips for your meeting with the bank.

Financial planning helps you to assess the profitability of your start-up. Compare your anticipated costs with your budgeted income and check whether costs exceed income or vice versa. This will make it easier for you to see when you are likely to move into profit and how solvent you will be in your start-up phase.

Key tools for your financial planning

Establish your capital requirement

Establishing your total capital requirement forms the basis of good start-up financing. The key thing here is to distinguish between short-term capital requirements (for all running costs - operating resources) and long-term capital requirements (for all tangible assets). You should also think about subsequent investments in the post-start-up period and any security that your bank may require if they are lending you money. Include additional costs, such as notary fees or property transfer tax. Ensure your plan is comprehensive and realistic because it is difficult to obtain subsequent supplementary financing. Always make sure you have allowed a sufficient financial contingency for unplanned investments.

The heart of your plan: sales and profit planning

Compare your sales with the operating costs and calculate the operating result for the year. With this plan, you are attempting to estimate the subsequent success of the business. It forms the basis of your decision about whether or not you should become self-employed. Your plan should cover the first three financial years. When it comes to your anticipated turnover and costs, consider any potential factors of influence, such as changes in your customer structure, competitors’ behaviour, costs of purchasing goods and delays in order volumes. It is important for your plan to be realistic, which means relying on conservative, rather than optimistic, figures. As well as planning for business development, you also need to plan for less favourable developments. By calculating your break-even point, you will determine what your minimum sales need to be to cover your fixed and variable costs. You also need to take particular account of personal costs (cost of living).

Tip: Planning support

The KfW Bankengruppe website provides planning support for your  business plan, liquidity plan, profitability forecast, etc.:

KfW Download Center

Your prime objective: stay solvent

Your sales and profit plan refers strictly to one financial year. During the year, entirely different flows of income and finance arise which affect your solvency. It is crucial to your business’s existence that you remain solvent at all times. Solvency issues restrict your activity opportunities and can result in competition. Your plan should take account of seasonal fluctuations and reasonable growth. Remember particular payment deadlines (e.g. tax payments). You can also use cash flow planning, in the same way as sales and profit planning, as a control tool to compare target with actual figures.

Tip: If your bank declines your application for finance

Find out the reasons for the decline and adapt your strategy! If security is inadequate: indemnities or public guarantees. If the rating is unsatisfactory: critical review of the business model. If equity is insufficient: capital from Business Angels or venture capital. It often also makes sense to negotiate with more than one financial institution.

STARTERCENTER NRW on site

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