Calculating capital needs: start-up costs, working capital, reserve and the Kapitalbedarfsplan

What you will learn

• The three blocks of a Kapitalbedarfsplan (capital requirements plan): start-up costs, working capital and a liquidity reserve.
• How to find the working capital need from a month-by-month cash plan instead of guessing.
• Why value-added tax (VAT) on purchases and your own living costs belong in the plan.
• How the plan turns into a financing gap that you can show to a bank or investor.

Explanation

Revenue, profit and cash flow were covered in Business Basics. This lesson applies them to the first question every bank or funding institution asks: how much capital do you need, and for what? The answer is the Kapitalbedarfsplan, usually one page with three blocks.

Block 1: one-off start-up costs

Start-up costs are paid once before or shortly after opening: Gründungskosten (formation costs: trade registration, notary and register fees for a GmbH or UG, advice, permits) and Investitionen (equipment, vehicles, fit-out, software, first stock, the rental deposit or Kaution, website and launch marketing). List every item with its net price and payment date.

Block 2: working capital

Working capital here means the cash that covers running costs until the business pays for itself; costs start on day one while revenue builds slowly. Size it with a monthly cash plan: list cash in and cash out per month, calculate the cumulative balance and take the largest cumulative deficit. That number, not the first-month loss, is your working capital need.

Two items are often forgotten: the Unternehmerlohn (owner's living costs, because a sole trader has no salary) and payment timing (if customers pay after 30 days, revenue of month 2 is cash of month 3).

Block 3: liquidity reserve

A liquidity reserve is a buffer for things that go wrong: a broken machine, a late-paying customer, a delayed opening. A common rule of thumb is three months of fixed costs plus living costs; seasonal businesses need more. The reserve is not spent in the plan.

VAT and the plan

Most purchases carry 19 percent VAT (German Umsatzsteuer). A business that is registered for VAT gets this input VAT (Vorsteuer) back through the monthly or quarterly Umsatzsteuer-Voranmeldung, but it must pay the gross price first. For large investments this is a short-term financing need of its own. A business using the Kleinunternehmerregelung (small-business VAT exemption; as of 2026 the limits are 25,000 euros previous-year and 100,000 euros current-year turnover, check the current rule) cannot reclaim input VAT at all, so its start-up costs should be planned gross.

From capital need to financing gap

Capital need = start-up costs + working capital + reserve. Subtract the equity you can bring in (Eigenkapital: savings, equipment you already own, money from family). What remains is the financing gap that the rest of this course is about. Banks like to see the founder carry a meaningful share, often quoted as 15 to 20 percent, but there is no legal minimum.

Worked example

Hypothetical example: Lena opens a bicycle repair workshop as a sole trader. All amounts are net of VAT and rounded; VAT, taxes and loan interest are excluded.

Monthly cash out: rent €1,200 + insurance €150 + software €100 + energy €250 + marketing €300 = €2,000 fixed costs, plus €2,200 living costs = €4,200 per month. Parts cost 40 percent of revenue, so each euro of revenue leaves 60 percent as contribution. Assumed revenue: €1,500, €3,000, €4,500, €6,000, €7,000, €8,000 in months 1 to 6, paid in cash the same month.

The largest cumulative deficit is €7,800 (months 4 and 5), so Block 2 = €7,800. Block 3 = 3 × €4,200 = €12,600.

Capital need = €42,100 + €7,800 + €12,600 = €62,500. Lena has €15,000 in savings, so the financing gap is €62,500 − €15,000 = €47,500. The 19 percent VAT on her taxable investments (about €6,745 on €35,500) must also be paid before it is refunded; she bridges it from the reserve.

Common mistake

Practice activity

On paper: Jonas starts a small online shop. Start-up costs are €24,000. Monthly cash out including his living costs is €3,000. Contribution from sales (after goods) is €800, €1,600, €2,400, €3,200, €3,600 and €4,000 in months 1 to 6. He uses the three-months rule for the reserve and has €12,000 of equity. Calculate the working capital need, the reserve, the total capital need and the financing gap.

Key takeaways

• A Kapitalbedarfsplan has three blocks: one-off start-up costs, working capital and a liquidity reserve.
• Working capital is the largest cumulative cash deficit of the start-up phase, found with a monthly cash plan.
• Include the owner's living costs, payment delays and the VAT you pay before you get it back.
• Capital need minus equity equals the financing gap you need to close.

Next step

Before borrowing a cent, the next lesson shows how far you can shrink the financing gap with bootstrapping and internal financing.