HOW TO MAKE A SUCCESSFUL FINANCIAL BUSINESS PLAN FOR A STARTUP?

The financial forecast is the ideal tool to know if a startup project can become profitable. Therefore, this is the first study that should be done, at the start, before launching.

Also, a financial business plan allows having a complete analysis of your project.

Building a financial forecast also allows you to estimate the projected turnover of your startup by trying several hypotheses (such as the selling price of your product or service, the number of customers you expect to acquire each quarter, etc.).

The forecast is an essential element of your startup's business plan through all the information it provides.

However, constructing a financial forecast seems out of reach for many project leaders. Predicting the future is always a complicated task, and it is even more difficult to estimate a business project's future income and expenses.

What if we told you that nothing obliges you to build an entire financial forecast, from A to Z, from a blank sheet? Here is the method for a successful financial forecast for your startup.

THE ELEMENTS THAT MUST BE FOUND IN A GOOD STARTUP FINANCIAL FORECAST

REALISTIC ESTIMATES OF THE TURNOVER YOU WILL GENERATE

First, you must be clear about the business model and how you will generate money. For example, how much will you earn from a transaction on average? This is the first question to be answered. You will then need to multiply it by the number of potential customers you expect to convert.

Adopt a conservative approach for the first few months. However, this number will increase in the following months (thanks, in particular, to your efforts in marketing and communication).

For a startup's second and third years, you can expect a pretty aggressive growth rate: that's usually what startups are about.

Find the right balance between stable and overambitious growth and justify it with your marketing plan.

NO ERRORS IN THE ESTABLISHMENT OF ACCOUNTING RULES AND FORMULAS

Your banker will look for "red flags" in your financial projections for startup forecast. For example, your cash flow should not stay negative "too long."

Also, correctly transcribe your cash shifts between the forecast income statement and the cash budget. Do not set up a forecast turnover that triples yearly without investing the slightest euro in marketing and communication for your startup.

Finally, you don't have complete freedom regarding the presentation of your financial tables: you must respect a certain formalism.

THE 3-YEAR FINANCIAL FORECAST FOR YOUR STARTUP MUST BE COMPLETE

Do not think presenting the list of expenses that justify the fundraising will be enough.

The business plan writers will want to be able to consult the following tables: a financing plan, a forecast income statement, a forecast balance sheet, the analysis of interim management balances, a cash budget, details of the break-even point, or the details of the calculation of the working capital requirement.

It's even better if you add financial charts and ratios. Finally, unless otherwise instructed, favor three years rather than 5 years (financial forecasts over 5 years are not very credible).