Is a financial plan a business plan?

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One of the legal obligations when establishing a private company with limited liability consists of drawing up a financial plan that justifies the capital for the company and provides an estimate of needs and revenue. In short, this preliminary plan must state the means the founders of the company have foreseen in order to guarantee the company's financial viability during the first two years of operation.

The founders may be held personally liable for the company's obligations in case of bankruptcy during the three years following the foundation due to insufficient funding during the first two years of the company's existence.

However, this legal obligated financial plan is not the same as a business plan. A real business plan is much more then a financial plan.

A business plan is the formal blueprint of the financial and operational objectives for the company's near future and it forecasts how to reach those goals. Furthermore, it usually contains information about the company, the management and the organization; the mission and vision; the products or services; a market and competition analysis; a swot-analysis; the strategy and an executive summary describing the elements of the business.

So one can say that the financial plan is a part of the business plan.

Some entrepeneurs believe that passion, optimism and good ideas are enough to build a successful company, however make no mistake: professional investors, such as venture capitalists, are going to require a business plan.