The financial plan in the business plan: three common mistakes and how to avoid them

06.06.2025

Financial planning is a decisive factor in whether a business idea will become a reality or not – and whether investors will have any confidence in it. That said, it’s often neglected in business plans. We show which mistakes you should avoid and which financial forecasts should be included in every business plan.

At a glance

  • The financial figures in a business plan aren’t just an obligatory requirement, they can decide whether your idea gets off the ground or not.
  • There are three common mistakes when it comes to financial planning: lack of strategic alignment, unrealistic figures and insufficient attention to liquidity.
  • Two proven startup experts explain how to avoid these mistakes. 

With PostFinance, founders and startups receive everything they need to get going – including insightful knowledge, attractive account conditions and much more.

For startups and founders, financial planning is one of the biggest challenges when creating a business plan. It’s often put off until later, even though financial planning is very important for investors and can influence whether a project gets off the ground or not. In this guest article, Dr Pius Küng and Simon May from the IFJ Institut für Jungunternehmen show which mistakes often crop up, how to avoid them and which financial forecasts should be included in the financial plan.

Finances in the business plan: three common mistakes

  • In the financial plan, the financial key figures are considered in isolation, without categorizing and aligning them with the overall strategic context.

    What you should do: derive all financial assumptions logically from the strategy. Pay particular attention to the links between the different financial aspects and, if necessary, make new revisions to the business plan and the financial forecasts. Give yourself enough time when preparing your business plan and the financial aspects within the finance plan. The creation process is just as valuable as the finished document, as it allows you to analyse your business idea in great depth.

  • Founders often have unrealistically optimistic figures – selling prices are set too high, for example, or variable costs, selling prices, sales and marketing costs, as well as personnel expenses are underestimated. This can lead to seriously flawed decision making.

    What you should do: use realistic figures in your financial plan. Realistic financial planning is based on understandable assumptions and well-researched values. By developing various scenarios (e.g. best case, realistic case, worst case), opportunities and risks can be better assessed. In addition, making comparisons with industry benchmarks, receiving expert feedback and taking buffer zones into account increase the stability of your planning and ensure it remains viable, even if there are deviations.

    Achievable selling prices, variable costs and personnel expenses are particularly important. Take the chosen business model into account: indirect sales via partners can often reduce revenue by 40 to 50 percent per unit, whereas personnel expenses tend to be lower. Make a realistic assessment of mixed forms as well; if you sell directly via an online shop and/or key accounts, for example, and serve smaller customers through partners.

  • Another frequent mistake when devising the financial plan for a business plan is insufficient attention to liquidity-related growth aspects. Whereas revenue and profit forecasts are often optimistic, it’s often forgotten that strong growth also leads to greater financial obligations – due to increased debtor balances, growing inventories or necessary investments, for example. Even a successful company can quickly find itself in a liquidity crisis if it doesn’t specifically plan for these items.

    What you should do: when creating the financial plan in a business plan, pay particular attention to how growth will affect your liquidity. Plan the cash reserves for accounts receivable, inventories and investments realistically and take into account long payment deadlines of up to 90 days. These “waiting times” must be specifically financed. Only by doing so can you ensure your company remains solvent during strong growth.

Business plan template: set up a business plan easily with the leading business plan tool

With the business plan tool provided by our partner IFJ, you receive an easy-to-use tool to create a professional business plan. It’s the most widely used tool of its kind in Switzerland. Real-life examples and tips in each section make it easy to draw up your business plan.

You can also use the opportunity to set up your business plan with the IFJ BusinessPlan tool live in one of the free webinars. Here, you can learn the basics about a business plan in a compact workshop.

Those interested can use the tool for six months, free of charge, via IFJ’s partner Atlanto. 

Financial forecasts for the business plan

The following financial elements, or key aspects of them, should be included in a professional financial plan in your business plan:

Both cash and non-cash costs are incorporated into a budgeted income statement. The most important factors of an income statement are:

  • Revenue (quantity x price)
  • Variable costs (quantity x price)
  • Personnel expenses including social security and personal insurance contributions
  • Marketing costs
  • Infrastructure costs
  • Depreciation (about 5 percent of revenue for manufacturing companies)

These elements usually cover 80 percent of a budgeted income statement.

Good to know: the term “income statement” is unique to Switzerland; the term “statement of profit or loss” is used in other countries.

An important success factor for startups is the long-term liquidity planning and calculation of cash requirements using the planned cash flow statement. This provides information about medium-term liquidity and cash requirements over the next few years and is required to show investors how much money will be required in the coming years. The calculation, which is carried out on a yearly basis, usually comes with a degree of uncertainty. If there are large deviations between the operating results and the investments, detailed annual liquidity planning is also essential.

Good to know: cash flow statement vs liquidity planning – the difference

  • Cash flow statement: this is included in the business plan as a forecast of the in- and outpayments over a defined time period. It shows how cash holdings are forecasted to develop and therefore forms the basis of financial planning. The cash flow projection is usually presented monthly or quarterly and enables potential liquidity bottlenecks to be identified in good time.
  • Liquidity planning: building on the cash flow statement, a liquidity plan is integrated to ensure the company remains solvent at all times. It is also included in the financial section and shows planned measures (e.g. financial reserves or lines of credit) to overcome potential liquidity bottlenecks.

Budgeted balance sheets for the coming years are based on the income statement and the cash flow statement. The left side of the balance sheet shows where the money is invested (assets: current and fixed assets), whereas the right side indicates how the assets will be financed (liabilities: equity and debt capital).

The valuation of a startup is essential to gain investors. There are numerous methods for valuing companies, such as the discounted cash flow method, the earnings value method, the asset value method, the mean value method or the EBIT multiple method. Existing SMEs can be valued on the basis of past performance. But what about startups, where only forecasts for the future exist, which are inherently subject to great uncertainties? 

Tips

  • Choice of valuation method: startups are often uncertain as valuations with the same budgeted figures give very different results depending on the method used. The discounted free cash flow method may be a good choice, as it is often preferred by investors. This form of valuation is based on the cash flow generated by the company in the future.
  • Be aware of other factors: also note that other factors are taken into consideration alongside the financial valuation. These include the innovative nature of your business idea, the growth potential, the market position and the competitive environment. Above all, the team of founders is of utmost importance to investors. Work out these factors carefully to convince investors of your business plan. 

How do I illustrate the financial forecasts in the business plan?

It makes sense to integrate the budgeted figures into the business plan only as a summary, with the details attached in the annex. The business plan focuses on the following key values:

  • Revenue targets
  • EBIT targets
  • Operating cash flow targets
  • Free cash flow after investments targets
  • Number of employees

It’s much easier for all stakeholders to assess the viability of a business idea on the basis of these key factors.

IFJ – the point of contact for startups and founders

IFJ has helped people realize their dream of founding their own company since 1989. With a wide range of services such as online courses and the business tool, IFJ has established itself as the leading point of contact in the Swiss startup area. Its services include an online founding service, a business plan tool as well as a variety of courses. PostFinance and IFJ have been in a partnership since 2009.

Authors

Pius Küng is the founder of the business and marketing consultancy company Dr Pius Küng & Partner and the IFJ Institut für Jungunternehmen, founded in 1989. He has decades of consultancy experience for startups in the areas of business planning, strategy, marketing and key account management.

Simon May is an economist and Co-Managing Director of the IFJ Institut für Jungunternehmen. Alongside managing the renowned IFJ, he is involved with the Board of Directors, Foundation Board and with executive boards to promote entrepreneurial, sporting and cultural projects.

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