Making an investment budget
An investment budget sets out how much money you need for fixed assets such as machinery or a website. This budget forms part of your financial plan. Find out what you should and should not include in this budget, and when you need it.
What is an investment budget?
An investment budget is an overview of your business’s major expenses. It covers one-off purchases of fixed assets that you will use for more than 1 year.
Fixed assets are all the items and resources you need to run your business. For example, machinery, computers, a company car, stock, office equipment, and (start-up) cash in hand. These are investments.
In your investment budget, you list these purchases and their costs in a clear overview. You look 1 to 3 years ahead. This way, you know how much money you need for your fixed assets.
When do you need an investment budget?
You will often need an investment budget if you:
- are starting a business
- are expanding your business
- are applying for finance
- are applying for a grant
Banks, grant providers, or investors may ask to see this budget. It forms part of your financial plan.
What do you include in an investment budget?
An investment budget includes:
- what you are buying or having made for your business
- what each item costs
- the total amount you need
Only include expenditure on fixed assets that last longer than 1 year.
Divide business assets into fixed and current assets
Everything owned by your business is an asset. An investment budget is divided into ‘fixed assets’ and ‘current assets’.
- Fixed assets: assets that you use for a longer period (for example, a machine, car, or computer)
- Current assets: assets that are quickly used up or converted into cash (for example, money in your account or stock)
Start-up costs (pre-opening and opening costs) are also current assets
Costs that you pay only once at the start of your business can be included under current assets in the investment budget. These costs are necessary to start your business and will not recur or be used up quickly. For example:
- licences
- initial stock
- notary fees
- registration with KVK
- living expenses in the first period after starting up
- market research
- consultancy fees
- business cards, stationery
Other budgets in your financial plan
The investment budget is just one part of your financial plan. This plan also includes:
- financial budget: this sets out how you will pay for the investments (for example, with your own money or a loan)
- liquidity or cash flow budget: this shows when money comes in and when you spend it, and whether you have enough money at any given time
- operating budget (profit and loss budget): this sets out your expected costs and revenues (what you earn and what you spend)
- personal budget: this shows how much money you need to live on (for example, for rent, food, and clothing)