Avoid These Mistakes: Successful Financial Plan Creation

Many entrepreneurs hire financial planners because creating a financial plan is one of the most complicated parts of a business plan. This is because regardless of how great a product is or how sophisticated the marketing strategy is, ultimately everything depends on how much revenue the business idea generates. That’s why it’s crucial to present investors and financial institutions with a profitable company development using appropriate and realistic figures in the financial plan. We’ll show you how to have a professional financial plan created by experts and what pitfalls you need to watch out for.

If you’d rather not put together your business plan and numbers alone, we support you in Strategy Consulting.

Why should you hire a financial planner?

Creating a financial plan that is professional and compelling can be a challenge even for business school graduates. The financial plan translates the written portion of the business plan into numbers. Accuracy, numerical knowledge, and experience are essential to convince lenders and banks. Number experts like bankers and investors are naturally good at what they do, and they immediately spot errors.

For this reason, financial plan templates and standard software have limited value, as they are often too universal and not tailored to your business. Moreover, templates are often incomplete and important elements are overlooked. We create financial plans using our own concept, tailored to your venture.

What does a financial plan include?

The financial plan is an essential part of the business plan and consists of at least the following points. From these, it should be clear how much capital is needed as an investment and how the company will generate long-term profits:

Profit and Loss Statement: A profit and loss statement, also called a profitability forecast, shows what profit or loss is generated by business operations. Key figures for a profit and loss statement include, for example, profit margin, revenue, and raw material consumption.

Liquidity Plan: The liquidity plan is one of the most critical factors for companies and should be continuously updated over the long term. For example, a payment delay from a major customer can put the company in difficulty. An important controlling instrument determines the liquidity status, identifies potential bottlenecks early, and helps the company to take countermeasures early to secure liquidity.

Cash Flow Statement: The cash flow statement presents the payment flows of a company and shows the origin and use of liquid assets. Using the cash flow statement, you can check, for example, whether a company has enough cash on hand to maintain ongoing business operations despite high investments.

Overhead Budget: The overhead budget clearly presents all operating costs of the company and ideally breaks them down into clear parameters such as personnel costs, facility costs, and maintenance costs. These costs are general and cannot be directly attributed to a cost center, such as a product.

Additional components of a financial plan include:

Product data sheet with unit costs
Sales plan
Bank loan (if applicable)
Break-even analysis

Tips for selecting a financial plan expert

There are many financial plan providers on the market, and their prices often vary widely. Yet especially in the digital age, it is all the more difficult to find reliable providers. Fake customer reviews and hidden costs are just the tip of the iceberg. Therefore, when selecting a service provider, pay attention to the following points:

References: When hiring financial planning experts, you should always pay attention to the company’s previous results. Read the company’s reviews and references on the website carefully. Additionally, previous successes can be explained in an initial consultation.
Consulting Services: Financial plan experts should not only support you in creating the overall financial concept. From experience, they should also be able to tell you which funding programmes fit your venture.
Guaranteed Price: Carefully read the service agreement before signing and make sure the contract is clear. For example, have a financial plan created at a fixed price, and the exact deliverables should be specified in the contract.
Initial Consultation: A free initial consultation should be mandatory when creating a financial plan. Here, expectations can be discussed and you can determine whether the service provider is personally suitable for your company.
Certifications and Listings for Subsidies such as BAFA consulting grants: Depending on location, it covers 50 or 80% of eligible consulting costs and ensures that a government agency has approved the company.

It’s also important to compare multiple providers to get a market overview.

3 Success Factors for a Professional Financial Plan

Be realistic with your assumptions when creating a financial plan. Investors and banks are often very familiar with the industry and can immediately recognize inflated revenues and underestimated costs.

As with planning expenses, the liquidity plan should be detailed and take into account the payment terms customary in your industry. In industries with extended payment terms, such as food retail, options like factoring can be included in the financial plan. This shows that you’ve thought about potential liquidity problems and developed solutions.

Consider the future development of your company and adjust long-term figures accordingly. Important factors include economies of scale, which allow you to negotiate lower costs for products or services. Another critical point is employees who will demand higher salaries after a longer tenure. When planning company growth, you must also factor in the costs of hiring new employees. To run a company as efficiently as possible over the long term, new positions such as department managers who lead, for example, the sales team, are inevitable and must be included in the financial plan. This is the only way you can demonstrate to banks and investment firms that you think like an entrepreneur and are willing to efficiently delegate areas of responsibility to employees.

Hiring a Financial Planner - The Optimal Process

Based on our experience, the following process is the optimal and most efficient approach when you want to have a financial plan created:

In the needs assessment and onboarding conversation, the business idea is evaluated, existing documents are analyzed, and a timeline is created together with the service provider.
Within a defined timeframe, the service provider creates the financial plan and clarifies any questions with you. The first draft should be discussed thoroughly with you, and your feedback should then be incorporated into the financial plan. An appropriate timeframe for creating a financial plan is four weeks.
After completion, the company should support you with its experience in applying for subsidies.

How much does it cost to hire financial planners?

An individual, professional financial plan starts at €1,000 and can quickly become significantly more expensive for large projects. The final price is determined by factors such as the target audience of the financial plan, the business idea, the scope, and the level of detail of the financial plan.

In any case, check whether a funding programme covers some or all of the cost of having the plan created externally. For more information on the individual subsidies and financial plan creation, we are happy to help.

Now schedule a free initial consultation.