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Creating a financial plan for starting a business is one of the most critical steps in turning your entrepreneurial vision into reality. Starting a business is more than just a great idea—it’s a financial commitment that requires careful planning from day one. Whether launching a side hustle or going full-time with your startup, creating a solid financial plan helps you stay focused, fund your goals, and avoid costly surprises. From estimating startup costs to forecasting revenue and managing cash flow, a financial plan is your roadmap for turning ambition into action and sustaining long-term growth.
By outlining your financial strategy early, you increase your chances of building a resilient, profitable business from the ground up. In this guide, you’ll learn how to create a financial plan to start a business and how you can use Beem to plan your startup.
1. Estimate Startup Costs and One-Time Expenses
Having your estimates appropriately done is important before starting a business. You should calculate the startup cost and the one-time payments. You will have expenses other than the regular expenses, such as registration fees, business licenses, and legal costs, which are necessary for operating a business. You must also set up finances for acquiring equipment, initial inventory, and a basic website to advertise your business. Then, you must spend money on marketing and promotions to spread the word. And if you hire people, you will have to earn to pay their salaries.
So, when you prepare your estimates, you first need to categorize the list of all the new time expenses and separate them into necessary and optional ones. This way, you can make adjustments to your budget and create a solid financial plan. You can use free planning templates provided by the Small Business Administration (SBA) or SCORE to structure and validate your predictions. With the help of these tools, you can overlook the costs and get a realistic view of the capital you will need before you open the business.
Creating a formal report of your expected startup costs is a good idea. You want it in a format that’s clear and easy to understand. Investors and lenders compare expected costs to expected income and determine the potential for your business to profit.
Read related blog: Starting a Small Business? How to Manage Your Cash Flow
2. Set Up Your Operating Budget
The operating budget is the amount you set aside to manage day-to-day expenses effectively. It includes fixed costs (rent, employee salaries, and software subscriptions) and regular expenses like raw materials, utility bills, shipping, and marketing costs. These costs are not fixed and can fluctuate depending on new orders and production levels.
To plan an operating budget, calculate your monthly cash inflows and outflows for at least 12 months. This forecast helps you identify possible cash shortfalls and should be a central part of your overall financial plan. Your operating budget should include an emergency fund to tackle incidents or sudden emergencies.
This emergency fund becomes your safety shield.
- Put a 10–15% buffer on your monthly totals.
- This safety net can be helpful in cases of sudden price increases, missed client payments, or unforeseen expenditures.
3. Choose How to Fund Your Business
Half your job is already done if you can figure out how to fund your business. You can start a stable and scalable business with the proper funding plan. Your financing plan influences how much control you retain, how fast you grow, and how well you handle risks. You can take the risk of using your savings to bootstrap your business or contact a VC and get your idea funded by an investor.
A smart financial plan should evaluate all funding options available—bootstrapping, business loans, venture capital, and crowdfunding—and select the combination that aligns with your growth goals.
Business credit cards are helpful for short-term expenses, but high interest rates require careful use. Although the application process is rigorous, SBA loans offer low-interest, long-term financing. Venture capital offers significant funds and guidance in exchange for equity, reducing your control. Friends and family funding is quick but should be documented.
Beem’s Everdraft™ is an innovative tool for early-stage founders. It offers short-term funds with no credit check and fills gaps, such as delayed payments or emergency repairs. Use Everdraft™ early so you’re prepared before a crisis hits.
4. Forecast Revenue and break-even Point
The following important task is conducting deep research to forecast your business revenue and understand how to reach your break-even point as soon as possible. Having a sales forecast allows you to plan your inventory wisely and well in advance, which also helps in managing cash flows.
When you approach an investor, these forecasts will highlight your business acumen and knowledge about the business, which will help you gain the investor’s confidence.
Create your break-even evaluation with this calculator and determine your business’s break-even point in units using the following formula:
Fixed Costs Ă· (Price – Variable Costs) = Break-Even Point in Units
Build three scenarios:
1. Best-case: strong purchase, good customer feedback, high conversions.
2: Base-case: In this, you need to steady your growth with minor setbacks
3: Worst-case (slow sales, low interest, unexpected costs).
These three scenarios help you stay prepared and make smart financial decisions. Keep a cash buffer or access to tools like Beem Everdraft™ to survive tough periods. Use spreadsheets, LivePlan, or Wave to build and update forecasts every quarter. Good forecasting isn’t guesswork—it’s planning for reality.
Read related blog: Financial Planning for Your First Job: Setting a Strong Foundation
5. Separate Business and Personal Finances
Keeping business and personal finances means keeping your professional earnings, expenses, and savings away from your funds. While it may seem more straightforward to keep your personal and business funds in one account, it will be more efficient in the long run when they are in two separate accounts, one for your personal and one for your business. Reasons why you need to separate business and personal finances.
A clear financial plan must include the separation of personal and business accounts, especially to ease tax preparation and simplify audits.
Legal protection: Sole proprietors, LLPs, and private limited companies should separate personal and business finances to reduce personal liability and improve financial clarity.
Tax Accuracy: Keeping separate finances makes tax time easier. You can quickly spot deductions, avoid reporting errors, and handle audits less stressfully. Clear records also help ensure you don’t miss any claimable business expenses.
Professional credibility: Using a personal account for your business would be unprofessional. Instead, try to have a dedicated business account and proper invoicing. This will build credibility with vendors, investors, and lenders, making your business more trustworthy and reliable.
You may also open a business checking account to keep your finances sorted and ready for audits. To build credit, you can get a business credit card tied to your company’s EIN for all work expenses. You can use budgeting tools like Beem’s BFF Budget Planner to track your expenses and income.
6. Prepare for Taxes and Compliance Costs
Tax payment is required. Make your plans in advance to avoid fines, stress, and legal problems. Recognize your local, state, and federal tax responsibilities to maintain your company’s compliance and safety. All of these considerations must be a part of your financial plan for starting a business, from the beginning.
1. Federal Taxes
The majority of enterprises are required to pay federal income tax. Some owners report on Schedule C. LLCs and corporations may submit separate forms. Additionally, self-employment taxes (a combination of Medicare and Social Security) account for 15.3% of enterprises.
2. State and Local Taxes
These taxes are different for each state; they vary from state to state, but usually they include
- State income tax (for both you and your business)
- Franchise tax (for specific business types)
- Gross receipts tax
- Local business permits and registration fees
3. Sales Tax
If you offer tangible products or specific services, you may need to collect sales tax from clients and remit it to the relevant state. Sales tax requirements also vary from state to state, so it’s essential to register for a sales tax permit and follow the collection rules set by your state.
It’s a great idea to set aside 20–30% of your income in a separate account to cover taxes and avoid last-minute stress.
Read related blog: Can You Use a Personal Loan to Start a Business?
FAQs on Creating a Financial Plan for Starting a Business
What’s the minimum amount I need to start a small business?
Startup costs vary from business to business. Most small service businesses in the U.S. can start with $1,000 to $5,000. However, if you plan to start a product-based business or venture into manufacturing, it may cost around $10,000 or more to cover inventory, licensing, packaging, and equipment. Before starting a business, gather details about one-time and ongoing expenses to create a clear and precise budget.Â
How can I effectively separate my personal and business finances?
To simplify tax filing and keep company and personal funds apart, you can open a distinct business account, use credit cards or UPI, and monitor cash flow using accounting software.
Can I use a personal loan or credit card to fund my startup?
You can use a personal loan or credit card to fund your startup. Personal loans and credit cards can provide fast access to funds but come with high interest rates. If used regularly, try to keep borrowings minimal and pay on time. Before relying solely on personal credit, you can opt for low-interest options like micro-loans, government grants, or startup incubators.
How can Everdraft™ help new business owners?
Beem’s Everdraft™ provides instant financial support during short-term cash gaps. It acts as a safety net when sales decline or expenses pile up. There’s no credit check, and the repayment is automatic when funds are available. When you are just starting a business, this helps maintain stability and avoid missed payments or service disruptions in critical early stages.
What financial documents do I need to attract investors?
You’ll need a solid business plan, income statement, balance sheet, cash flow forecast, and break-even analysis. These show how your business earns, spends, and plans to grow. Investors look for clarity, risk management, and a path to profitability. Make sure your documents are accurate, updated, and professionally presented.
Conclusion
Starting a business without a financial plan is like a ship without a compass—it may be able to move, but it won’t get there. You will be unstoppable if you have a clear guideline and know your purpose and goals well. Solutions like Beem’s Everdraft are always there to help you grow faster and fulfill your dreams. They provide immediate assistance when unexpected bills arise, keeping you calm and on track.
You can use Beem’s tools for innovative solutions, expert advice, and actionable insights to confidently grow your business. Download the app here.
