Most new business founders, including those in the online betting industry, are sooner or later faced with the task of having to create a business plan. This is used to present the most important information about their own company in an objective and understandable way so that potential investors can get an idea of the founder and the business idea.
The business plan consists of several chapters, some of which have their own subsections. It is best to start with the financial plan rather than the written part in chronological order. Because no matter how good the founding team or the business idea is, the financial plan decides whether this idea is feasible at all. If not, then the plan must be revised again, which also affects the content of the text part. So it is best to start writing only after the financial planning has been completed.
Accordingly, these instructions also start with the financial plan. Here is an example of a possible chronology when all chapters have been created:
- Title page
- Summary
- Founder presentation
- Business idea
- Market & competition
- Marketing & sales
- Team & organization
- SWOT analysis
- Financial plan
- Appendix
The financial plan is usually created based on a forecast for the next 36 months. It is important that each month is considered individually.
Step 1: Determine start-up costs
Before you start presenting the financial plan in the correct format, you first need to collect the relevant data. The first step is to determine the start-up costs. These include expenses that arise before the actual business activity and form the basic framework for starting a business.
Attention: Investments are not part of the start-up costs!
Step 2: Sales planning
Sales planning is one of the most important factors in the business plan. This involves forecasting sales for the next 36 months. This data can later be used to create a graph that shows exactly when sales will cover the costs incurred, i.e. when the company crosses the threshold for profitability.
When forecasting sales, you cannot rely on gut feeling, as estimates are not based on actual facts and therefore tend to represent a best-case scenario. If you were to present the sales forecast using a curve, it should not rise constantly or gradually at equal intervals. This seems very implausible and does not really reflect the usual sales trend of a company, which usually also varies downward.
Step 3: Direct and variable costs
These costs relate to expenses related to sales. The best example of this are products that must first be ordered from the manufacturer or wholesaler and are sold after the production and delivery times have expired. The more products you order, the more sales are generated by this order.
Direct costs are forecast for 36 months and listed in a table. The prerequisite for being able to make realistic forecasts is that you know your market and know which sales are possible with which measures.
Step 4: Fixed costs
Fixed costs are all costs that are independent of sales and that arise regularly and in the same amount.
In order to plan the fixed costs precisely, you should take the sales plan and go through the individual months step by step. Since the fixed costs vary greatly depending on the business model, there are no general points that apply to every company. However, the highest fixed costs usually arise in the following areas:
- Personnel
- Marketing
- Accounting
- Subscriptions
- Rent (additional costs)
In order to be able to plan the costs in a structured manner, it is helpful to present each of these points in a separate table. Even if fixed costs generally remain the same, you should check exactly at what level of sales additional fixed costs arise.
Step 5: Investments
In most cases, investments must first be made before a business can be carried out. This does not refer to goods, but to the equipment required by the company. This includes, for example, office furniture, laptops, machines, building land, or an expensive computer program.
It is important to note how long these investments will last, i.e. when, for example, a laptop must or can be replaced. This point in time is determined by the so-called depreciation rate. The depreciation rate is a certain amount that is deducted from the value of each investment every month. At some point, the value of an investment will reach $0, which means that the item is replaced or no longer has any value.
Step 6: Liquidity plan
The liquidity plan is the most interesting and also the most important part of a financial plan. This is because it summarizes all the detailed plans from steps 1 – 5 and thus provides a precise overview of the account movements.
The liquidity plan should contain the following information in chronological order for each month:
Starting account balance: In the first month, this amount represents the total equity or the available start-up capital.
Deposits: This point includes all deposits from business activities. However, these should not simply be summarized in one column but sorted by source of income.
Expenses: All expenses from the detailed plans are listed in order under this point. In addition, taxes are added here, with particular attention being paid to sales tax. As a new company, you pay this monthly or get money refunded by the tax office.
Expenses: If external capital already exists, then of course this should also be integrated into the profitability plan.
Account balance at the end of the month: The account balance at the end of the month is the result of all positive and negative account movements within the month. So account balance at the beginning + income – expenses = account balance at the end. The account balance at the end is therefore automatically the account balance at the beginning of the next month.
Step 7: Financing plan
The financing plan describes which funds are to be used to ensure the company’s liquidity. Depending on the company, it can take a few weeks to months (or even years for very large companies) until a company becomes viable. A company is viable when it covers its own costs, including the managing director’s salary.
The liquidity plan should provide information about when the company is short of money, and the financing plan should provide information about how this shortfall is to be covered. There are various options for this, such as a private loan, a bank loan, subsidies, goods financing or equity.
If you can cover all of your costs 100% with equity, you don’t need a financing plan at first. This becomes important as soon as money comes in from other sources.
Step 8: Profitability plan
The profitability plan can be created on the basis of the liquidity plan by summarizing all incoming and outgoing payments per year. All income – all expenses in a year then result in the net profit for the respective year before taxes.
The financial plan is not necessarily easy to create, both technically and in terms of content. Depending on how complex the company is, writing a financial plan can be very time-consuming, but also very complicated. With this 8-step program, everyone should understand what a financial plan is and what points it contains. In theory, this guide can be used to create a financial plan that contains all the information.
