The financing plan is one of the stages of starting a business. It is used to constitute and anticipate the financial forecasts of a company. His goal? List on the one hand the investments necessary to launch its activity, and on the other, the resources envisaged to face these investments. The financing plan makes it possible to assess the estimated cost of a business creation project and its financing over several years. 10 delicious name ideas for an organic business
In principle, an entrepreneur must make an initial financing plan when creating the project, then a financing plan over several years (generally over three years) to anticipate the expenses related to the development of the company. The objective of the multi-year financing plan is to balance the balance between resources and expenses in order to ensure that the business project is viable in the long term.
In this guide, find out why and how to draw up a financing plan as well as advice for implementing a sound financial forecast to support your business project.
The initial financing plan
During the feasibility study of an entrepreneurial project or when creating a company, it is necessary to establish an initial financing plan. The initial financing plan is used to assess the situation of the company at the time of its creation; even though it does not yet save any recipes. It is used to assess whether the financial package between sustainable resources and sustainable needs is viable. It usually takes the form of a two-part table, with sustainable needs on one side and sustainable resources on the other. What is Startup? How to Start a Startup Company?
These are the investments that must be made to create the activity, as well as the need for initial working capital. For instance:
- The purchase of tools, machines, and vehicles necessary for the activity
- The acquisition of an office, land, a building, and associated works
- Intangible purchases related to the activity: licenses, patents, trademarks, goodwill, the entry fee for a franchise, etc.
- Securities in the event of a takeover or acquisition of a stake in another company
- The BFR working capital requirement: this is the sum necessary to finance the start of the activity, for example, the purchase of small equipment, salaries, company establishment costs, etc.
These are all the financial resources that the company can use to cover the needs listed above. For instance :
- Cash contribution to the share capital
- Contributions in kind to the share capital
- A bank loan
- Operator contributions or shareholder current account contributions
- The subsidies
The financing plan over several accounting years
An initial financing plan is a good indicator for determining the amount of share capital to be provided or the use of any loans, but it is an insufficient tool for assessing the viability of a business over the long term. This is all the more critical since it is estimated that 3 years after their creation, 3 out of 4 companies are still in business, ie 25% of companies closing their doors. This is why a company’s financing plan is generally assessed in four parts: the initial financing plan and then its evolution over the company’s first three financial years. Example of female entrepreneurship with handicraft business ideas
The elements to take into account in a financing plan over 3 years
In addition to the elements of the initial financing plan, its implementation over the following three years also takes into account:
- Investments made during years 1-3
- Any new contributions in capital or in a partner’s current account
- Subscription to new loans
- New subscriptions or State aid received
- The distribution of dividends or payments for an individual operator
- The variation of the WCR
- Repayments of bank loans
- The self-financing capacity or on the contrary, the company’s insufficient self-financing
Carrying out your financing plan is an essential activity for business creation. Fortunately, entrepreneurs can rely on FINE to carry out other financial and administrative procedures for their company. FINOM is an all-in-one financial tool for companies, freelancers, and SMEs. How to make a marketing plan
When you create a business account on FINOM, you can benefit from a bank account with a French IBAN in 48 hours, and obtain a physical credit card and virtual cards with 0% commission and up to 3%cashback. FINOM also offers an expense management and control solution and a mobile invoicing tool that allows you to create an invoice rapidly. The integration tool also automates the company’s accounting by integrating the main accounting software.
Example financing plan over 3 years
|Financing plan (Needs)||Initial funding||AF1||AF2||AF3|
|Fixed assets||50 000 €||–||–||–|
|Intangible assets||20 000 €||–||–||–|
|Financial fixed assets||10 000 €||–||–||–|
|Repayment of loans||–||9 500 €||9 500 €||9 500 €|
|Change in working capital requirement||–||1 000 €||3 950 €||5 000 €|
|Total requirements||80 000 €||10 500 €||13 450 €||14 500 €|
|Financing Plan (Resources)||Initial funding||AF1||AF2||AF3|
|Current account contribution||10 000 €||–||–||–|
|Capital contribution||50 000 €||–||5 000 €||–|
|Loan||60 000 €||–||–||–|
|Self-financing capacity||–||10 000 €||15 000 €||30 000 €|
|Total Resources||120 000 €||10 000 €||20 000 €||30 000 €|
|Cash balance||40 000 €||500 €||6 550 €||15 500 €|
The objective of the multi-year financing plan is to ensure that the situation of the company improves or is maintained according to forecasts. It also allows highlighting points of vigilance such as:
- Check that the contributions mentioned in the financing plan actually correspond to those which appear in the statutes. In principle, equity must represent at least 30% of the company’s overall financing. This is all the more important for companies that do not have a minimum share capital. Banks, in particular, will want to see sufficient financial inflows before accepting a loan application.
- Check that the distribution of any dividends is provided for in the financing plan.
- Check that the loan repayment schedule is provided for in the financing plan.
In summary: How to make a financing plan
Carrying out a financing plan is an integral part of the business plan of a business creation project. The initial financing plan is used to assess the amount of a loan required or the amount of capital contribution to be made in order to be able to carry out the steps to create and launch your project. The provisional plan makes it possible to identify possible areas of risk and to take into account all the elements of needs and resources of his company. Top 10 Best Website Builders