Your project looks profitable on paper. But when will customers pay? How much must you advance for equipment, inventory and the first salaries? How much funding will you need if the launch takes three months longer?
A financial forecast turns a business idea into a set of connected numerical assumptions. It is useful beyond a loan application: it tests viability, the growth you can finance and when action is needed.
This guide explains how to build a financial plan for a Swiss business. A complete example connects revenue, expenses, investment, financing, cash flow and the balance sheet. The aim is to explain every figure, rather than produce a spreadsheet that mechanically shows a profit in year three.
At a glance
- The income statement, cash-flow forecast and balance sheet answer different questions and must reconcile.
- Link forecasts to documented assumptions about price, volume, capacity and payment timing.
- The lowest cash balance and downside scenario reveal the funding actually required.
What should a financial forecast contain?
A sound financial plan combines several schedules. None replaces the others.
| Schedule | Main question | Check |
|---|---|---|
| Assumptions | What evidence supports the project? | Sources, dates and calculation method |
| Forecast income statement | Does the activity generate a profit? | Income and expenses for the period |
| Capital expenditure | Which long-term resources must be purchased? | Amounts, timing and depreciation |
| Financing plan | Where does initial funding come from? | Equity, borrowing and the need covered |
| Cash-flow forecast | Can every payment be made when due? | Actual timing of receipts and payments |
| Forecast balance sheet | What will the financial position be? | Assets equal liabilities plus equity |
| Scenarios | What happens if assumptions change? | Maximum cash shortfall and possible actions |
The business plan (French) describes the project, market, team and strategy. The financial forecast translates it into numbers. The cash-flow budget (French) details the timing of receipts and payments and remains a separate schedule within that overall plan.
A three-year horizon is often useful for a start-up. Prepare the first twelve months monthly; extend that detail for seasonal activities, significant investment or continuing cash pressure. This is a management approach, not a universal statutory period for every project.
Start with assumptions, not the desired profit
The first worksheet should contain variables you can explain: customer numbers, average price, purchase frequency, capacity, unit costs, payment terms and hiring dates. Entering 20% growth every year is not a commercial explanation.
Record the source and reliability of each significant assumption. A signed contract, supplier quotation and personal estimate carry different weight. Keep committed sales separate from opportunities still under discussion.
| Assumption | Possible basis | What to check |
|---|---|---|
| Average price | Tested offer or completed sales | Inclusion or exclusion of discounts and options |
| Customer numbers | Qualified leads and observed conversion | Delivery capacity and sales-cycle length |
| Purchasing cost | Supplier quotations | Transport, losses and volume conditions |
| Payroll | Roles and starting dates | Employer contributions, pensions and 13th salary |
| Collections | Contractual terms and experience | Delays, deposits and partial payments |
| Capital expenditure | Documented offers | Delivery, commissioning and related costs |
Keep assumptions in one place and link them to the schedules. A price change should update revenue, VAT and cash flow together. Entering the same figures repeatedly in different worksheets creates inconsistencies that are hard to spot.
Build a credible sales forecast
For a service business
Link revenue to billable capacity. Two people with 1,200 billable hours each at an average net rate of CHF 150 represent revenue capacity of CHF 360,000. This does not mean every hour will sell: it sets a capacity limit to compare with the order book.
Alternatively, use active clients × average monthly fee × months billed. Model new clients, departures and the gradual build-up. Ten clients acquired in December do not generate twelve months of revenue that year.
For products
Use units sold × average net price. Separate ranges with different margins or cycles. Include discounts, normal returns and commissions without deducting the same item twice.
Growth also means purchasing, inventory, preparation, support and sometimes staff. A forecast in which sales double without any operational consequences needs an explanation.
For subscriptions
Track customers at the start of the month, new subscriptions, cancellations and average revenue. Distinguish billing date, service period and cash collection. Annual advance payment improves immediate cash, but is not necessarily recognised entirely as revenue in the month received.
For more on this distinction, see our business revenue guide.
Forecast expenses and capital expenditure separately
Variable expenses change with activity: goods consumed, subcontracting, commissions and payment fees. Fixed costs tend to change in steps: premises, software, management and subscriptions. An additional employee is a step increase; the cost does not automatically track a percentage of revenue.
For staff, begin with annual gross salary, starting date and total employment cost. Social security contributions and pensions should reflect your circumstances. Do not use a general multiplier without knowing what it includes.
In an LLC or limited company, a director’s salary can be a company expense. In a sole proprietorship, the owner’s drawings are not an accounting salary expense, but still belong in the cash forecast and the assessment of whether the business can support them. This distinction changes the interpretation of profit.
Equipment: three separate effects
A CHF 60,000 machine may create an immediate CHF 60,000 cash outflow, be recognised as an asset and then depreciated over time. If annual depreciation is CHF 12,000, that is the amount affecting that year’s profit in this example.
If funded with a loan, the loan receipt increases both cash and debt. Principal repayments reduce both; they are not income-statement expenses. Interest, however, is a financing expense.
One of the first checks is therefore to keep investment, depreciation and loan repayments separate.
Integrated example: a small business with CHF 360,000 in sales
Consider a fictional company. Its founders contribute CHF 100,000 in equity and it receives a CHF 50,000 loan. At launch, it buys CHF 60,000 of equipment, leaving CHF 90,000 in cash.
The example is simplified: figures exclude VAT, whose cash flows must be added in an actual plan. Tax is estimated using an illustrative 15% of profit before tax, not an official uniform Swiss tax rate. All estimated tax is assumed paid during the year. There are no dividends or other equity movements.
Forecast income statement
| Annual item | Amount |
|---|---|
| Revenue | CHF 360,000 |
| Cost of goods sold | −CHF 108,000 |
| Gross profit after goods | CHF 252,000 |
| Total employment costs | −CHF 132,000 |
| Other operating expenses | −CHF 60,000 |
| Earnings before depreciation, interest and tax | CHF 60,000 |
| Depreciation | −CHF 12,000 |
| Operating profit | CHF 48,000 |
| Interest | −CHF 3,000 |
| Profit before tax | CHF 45,000 |
| Illustrative estimated tax | −CHF 6,750 |
| Net profit | CHF 38,250 |
The company is profitable under these assumptions. That does not yet tell us its bank balance: inventory, receivables, payables and repayments must also be considered.
From profit to cash flow
At year-end, CHF 30,000 of sales remains uncollected. Inventory is CHF 12,000 and CHF 9,000 of purchases remains payable to suppliers. The company repays CHF 10,000 of loan principal.
| Reconciliation from profit to cash movement | Amount |
|---|---|
| Net profit | CHF 38,250 |
| Depreciation, with no cash outflow for the charge itself | +CHF 12,000 |
| Increase in trade receivables | −CHF 30,000 |
| Increase in inventory | −CHF 12,000 |
| Increase in trade payables | +CHF 9,000 |
| Loan principal repayment | −CHF 10,000 |
| Cash movement after the initial investment | +CHF 7,250 |
| Opening cash after the equipment purchase | CHF 90,000 |
| Closing cash | CHF 97,250 |
Cash increases by CHF 7,250 while profit is CHF 38,250. Identifiable items explain the difference. This reconciliation is a concrete control over the figures.
The same result follows from receipts and payments: CHF 330,000 collected from customers; CHF 111,000 paid to suppliers; CHF 132,000 for staff; CHF 60,000 of other expenses; CHF 3,000 interest; CHF 6,750 tax; and CHF 10,000 principal repayment. The net movement is indeed CHF 7,250.
Check the year-end balance sheet
| Assets | Amount | Liabilities and equity | Amount |
|---|---|---|---|
| Cash | CHF 97,250 | Trade payables | CHF 9,000 |
| Trade receivables | CHF 30,000 | Remaining loan | CHF 40,000 |
| Inventory | CHF 12,000 | Contributed equity | CHF 100,000 |
| Equipment after depreciation | CHF 48,000 | Profit for the year | CHF 38,250 |
| Total | CHF 187,250 | Total | CHF 187,250 |
Both sides balance. This is more than presentation: the check can reveal an omitted loan repayment or equipment counted twice.
The monthly plan: identify the lowest cash balance
Positive cash at 31 December does not rule out a shortfall in April. For each month, calculate: opening cash + receipts − payments = closing cash. One month’s closing balance becomes the next month’s opening balance.
Apply realistic customer payment timing. Thirty-day terms can lead to later receipts if invoices go out at month-end or customers pay late. Put deposits and annual payments in the correct months.
Schedule annual charges when they are actually paid: insurance, licences, 13th salaries, tax instalments and social insurance settlements. Dividing annual costs evenly by twelve may help the income statement but hide a cash deadline.
Additional funding needs despite a profit
Suppose an additional CHF 30,000 of already recognised sales remains unpaid at year-end, with no change to profit or other items. Closing cash falls from CHF 97,250 to CHF 67,250. Profit remains CHF 38,250. The customer delay has tied up money without removing the recorded sale.
The lowest monthly balance identifies the operational funding requirement. Add an explicit, justified buffer and show when financing must be available. A credit line merely being considered is not committed funding.
Working capital and initial financing
The operating working capital requirement reflects, among other items, funding for inventory and customer receivables less supplier credit and other relevant operating balances. In our simplified example: 12,000 + 30,000 − 9,000 = CHF 33,000.
A growing business may consume cash because it finances more inventory and customers before collecting sales. That is why “sales are much higher” is not always good news for the bank balance in the short term.
In the initial financing plan, separate investment, launch expenses, initial working capital and the cash buffer. Match them with equity, shareholder loans, bank borrowing or other confirmed resources. Do not count share capital twice: it is funding contributed, not a second pot in addition to the founders’ actual payments.
Match financing duration to its use. Equipment used for several years and a payment gap of a few weeks do not necessarily require the same instrument. Our business loan guide explains the application and repayment capacity.
Swiss considerations to include correctly
VAT
The income statement is generally prepared excluding recoverable VAT, while cash flow follows actual payments and settlements. Budget the rates applicable to your supplies, registration, accounting method and reporting timetable. Non-recoverable VAT has a different economic treatment.
Do not automatically treat collected VAT as freely available cash. Conversely, investment may generate deductible input tax under applicable conditions. The delay between payment and recovery can affect liquidity.
Salaries and social insurance
Rates and coverage differ across AHV/AVS, IV/AI, EO/APG, unemployment insurance, family allowances, accident insurance, pensions and any daily sickness allowance cover. Costs are not identical for every employee or employer. Base the budget on planned insurance contracts and affiliations.
Taxes and legal form
For a company, forecast corporate income tax and any applicable capital tax, together with payment timing. For a self-employed person, business profit and drawings must fit their personal position and contributions. The illustrative 15% tax rate is not a benchmark for every Swiss business.
Share capital and liquidity
A legal form’s minimum capital is not a recommended launch budget. An LLC can meet its legal capital requirement and still lack money for six months of operations. The plan must address the project’s actual economic needs.
Build three scenarios that affect decisions
The base case represents your working assumptions. The downside case tests identified risks: launch delays, lower sales, higher purchasing costs or slower collection. The upside case checks whether the business can finance and deliver faster growth.
In the example, a 20% revenue decrease reduces sales to CHF 288,000. Variable purchases at 30% of sales fall to CHF 86,400. If other expenses remain unchanged, profit before tax becomes −CHF 5,400, compared with the original +CHF 45,000. A 20% sales decline therefore wipes out more than the forecast profit.
| Assumption tested | Effect to monitor | Possible action |
|---|---|---|
| Launch delayed by three months | Expenses before the first receipts | Delay recruitment or secure a buffer |
| Sales 20% below forecast | Profit and cash requirements | Reduce fixed commitments before signing |
| Slower customer payments | Receivables and the lowest bank balance | Deposits, debtor follow-up and committed credit |
| Strong growth | Inventory, capacity and staffing | Growth financing and hiring timetable |
Do not automatically reduce every expense when sales fall. An existing lease or salary commitment does not disappear the following month. Revealing that constraint is precisely the purpose of the scenario.
Presenting the plan to a bank or investor
Include a clear summary: funding requested, use of funds, timing, confirmed contributions and principal assumptions. Show the base case and most significant cash risk, followed by detailed schedules.
A bank considers the ability to pay interest and repay principal, security and project strength. An equity investor also focuses on growth, future value and dilution. The same financial plan can serve both, but the financing perspective differs.
Support assumptions with quotations, proposed leases, contracts, orders, conversion data and relevant CVs. A precise spreadsheet without evidence explaining its amounts remains weak.
Keep the forecast useful after launch
Each month, replace completed periods with actual figures and refresh future months. Separate price, volume and timing variances. Delayed revenue does not necessarily call for the same decision as a lasting drop in average price.
Retain the original budget to understand variances. Overwriting it at each update loses the record of assumptions and decisions. Our guide to budgeting and budget control (French) explains this process.
Update cash flow before major decisions: hiring, equipment purchases, higher stock levels, new offers or distributions. The model then becomes a management tool rather than a forgotten appendix to a loan application.
A sound plan connects a commercial promise to available cash
Your forecast is ready when sales can be explained, expenses are complete, the balance sheet balances and cash needs are financed at the right time. It should also show what you will do if progress is slower than planned.
Start simply, but connect the schedules. Clear assumptions, verifiable calculations and a realistic downside case add more value than a complex document whose figures nobody can explain.
Frequently asked questions
How many years should the forecast cover?
Three years is often useful for a start-up. Detail depends on the project. Monthly planning for the first year is especially important for identifying timing gaps and the lowest cash balance.
What is the difference between a business plan and a financial forecast?
The business plan describes the overall project. The forecast translates its assumptions into profit, a balance sheet, financing and cash flow. It must remain consistent with the commercial and operational choices described.
Can a profitable business run out of cash?
Yes. Uncollected sales, inventory, investment and loan repayments can consume cash despite a profit. That is why profit and cash-flow forecasts should be prepared separately and then reconciled.
Should the founder’s salary be included?
Include the economic cost of their work and their income needs. Accounting treatment differs: salary within a company where appropriate, private drawings in a sole proprietorship. In every case, the plan must finance their actual living needs.
How much should I request from the bank?
The amount follows from investment and the maximum cash shortfall, plus a justified buffer, less other available resources. Avoid requesting only the equipment price while overlooking the operating launch period.
Can I use a financial-plan template?
Yes, if you can understand its formulas and adapt its assumptions. Check links between schedules, VAT, capital expenditure and financing. A template does not replace knowledge of your business.
Sources and references
- BCV: financial planning (French).
- Swiss Code of Obligations, SR 220: accounting framework and management obligations according to legal form.
- Figures and scenarios are constructed examples; the illustrative tax rate is not a recommended cantonal rate.
- Entreprendre.ch: cash-flow budgeting (French).
Romain Prieur is a Swiss-qualified chartered accountant and founder of Entreprendre.ch. With more than ten years of experience in audit and supporting Swiss businesses, he advises entrepreneurs on company formation, accounting and taxation.
