An initial financing plan is essential to ensure the availability of the funds needed to launch your business. By identifying investment needs and financing resources, it ensures a financial balance between equity and borrowing. This forward-looking approach helps secure the financial viability of your project from the outset.
Discover our tutorial: how to create the initial financing plan?
This financial table, prepared before starting your business, lists your initial investment, cash flow, and working capital requirements, as well as your planned sources of financing.
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Why make an initial financing plan?
The initial financing plan allows you to verify that you will have the necessary capital to finance the large amounts of expenses required to launch your business.
It is one of the financial tables that make up the business plan. It is located on day “zero”, that is to say before the actual start of the activity, and presents:
All the needs necessary for the start:
Cash flow to cover unforeseen expenses and certain expenses (rent, insurance premiums, etc.) and cash advances to be made (VAT on investments, for example).
Working capital requirement (WCR): the expected cash flow gap between expenses and receipts. WCR appears after the start of the business, but you must plan how to finance it from day one.
The rules of caution to be respected
The needs thus defined must be fully covered by sustainable resources . The two columns of the initial financing plan must therefore have the same total.
If the sum of your contributions, possibly increased by a bonus or a subsidy, remains lower than the total of your permanent needs, you will have to make up this difference with external financing .
Strive for a balance between equity and borrowed funds. Banks are reluctant to grant long- and medium-term loans for amounts greater than your equity and collateral.
Do not hesitate to resize or postpone your project if the loan burden is excessive given the repayment capacity of your future business.
And above all, get support in building your project. Support networks and accountants will have an external and therefore neutral perspective on your project, which will be very useful to you. They will also be able to help you build a realistic financial forecast. This is one of the conditions for the success of a business project.
Identify the networks likely to help you
The aim of this webinar, which took place on Thursday, March 25, 2021, was to introduce you to our free online business plan tool and to give you practical advice for developing your business plan by answering the following questions:a