Business Plan and First-Year Budget: A Practical Model for a New Company

A business plan is valuable when it connects an idea with measurable assumptions. A new company does not necessarily need a hundred-page document — a model showing who the customer is, how the business earns money, what delivery costs and when cash actually enters and leaves the business is often more useful.

Start with the key assumptions

Before building a spreadsheet, describe a few core assumptions:

• what product or service you sell;
• the average selling price;
• how many sales you expect each month;
• how long customers take to pay;
• which costs increase with sales;
• which costs remain fixed regardless of turnover.

If an assumption is uncertain, identify it as such. The objective is not to “prove” that the business will succeed, but to understand what success depends on.

Build a 12-month budget

Set out revenue and expenditure month by month. This makes seasonality, periods of higher investment and the point at which hiring a new employee or taking on another cost becomes sustainable much easier to see.

Fixed costs

Rent, accounting, software, phones, subscriptions, fixed remuneration and other recurring expenditure.

Variable costs

Goods, materials, couriers, commissions, payment fees and other amounts that change with sales volume.

One-off investments

Equipment, website development, furniture, rental deposits, initial inventory or professional services.

Profit and cash flow are not the same thing

You may have issued invoices and recorded an accounting profit while still not having enough money in the bank if customers pay after 60 days and suppliers require immediate payment. Add a separate forecast of actual cash receipts and payments to the budget.

Prepare three scenarios

A single forecast creates a false sense of precision. It is more useful to prepare:

1. a base case — the most likely development;
2. a conservative case — slower sales or higher costs;
3. a growth case — stronger demand and a need for more resources.

The question is not only “how much will we earn?” but also “how much capital will we need if progress is slower than expected?”

Review the plan every month

A budget is not a document prepared when the company is formed and then forgotten. Compare actual results with the plan and investigate variances. If marketing costs twice as much as expected or the average sale is lower, update the model.

Which indicators are useful at the beginning?

Monitor at least turnover, gross profit or margin, fixed costs, available cash, overdue receivables and expected payments for the coming weeks. These figures provide early warning of potential problems.

Where additional support with budgets, investments and key business decisions is required, DESLIN’s Comprehensive Accounting Services can include financial and business consultations.

This material is for general information only. Every budget is based on assumptions and should be updated as actual business results become available.