Quick answer
To cost a growth plan, sort every cost into five buckets: one-off assets, one-off set-up costs, extra running costs, the ramp-up gap before new revenue covers those costs, and a contingency buffer. Total them, subtract the cash you can safely contribute, and the remainder is your funding ask. Then match each bucket to suitable finance and test that repayments fit a slow month.
Key points
- Five buckets: assets, set-up, running costs, ramp-up gap, buffer.
- The ramp-up gap is the cost owners most often forget.
- Borrow the gap between total cost and your safe contribution — no more.
- Test repayments against a slow month, not your best month.
Every growth plan starts as a sentence. “We should open in Geelong.” “We need a second truck.” “Let’s launch the wholesale range.” The sentence is exciting. The problem is that sentences don’t have numbers, and lenders — quite reasonably — want numbers. This guide turns your sentence into a costed plan and a clear funding ask, using a method simple enough to sketch on a whiteboard.
Why do growth plans run out of money?
Rarely because the idea was bad. Usually because:
- Costs were quoted, not total. The builder’s quote was right; the approvals, signage and extra power weren’t in it.
- The ramp-up was ignored. New staff, new stock and a new site cost money from day one, but revenue builds slowly.
- There was no buffer. Something always takes longer or costs more.
- The funding didn’t match. Long-life assets went on short loans, squeezing cash. See matching the loan to the job.
The five-bucket method below fixes all four.
What are the five buckets?
| Bucket | What goes in it | Examples |
|---|---|---|
| 1. One-off assets | Things you buy once and keep | Equipment, vehicles, fit-out, technology |
| 2. One-off set-up costs | Costs to get started that don’t leave an asset | Bonds, legal fees, recruitment, launch marketing, approvals |
| 3. Extra running costs | New monthly costs the growth creates | Wages, rent, software, insurance, stock top-ups |
| 4. Ramp-up gap | Shortfall until new revenue covers bucket 3 | Months of costs minus early revenue |
| 5. Buffer | Contingency for delays and surprises | A sensible percentage of buckets 1–4 |
How do you fill bucket one — assets?
Get written quotes for every asset. Include delivery, installation and any training. For fit-outs, get itemised quotes so equipment can be separated from building works (they’re often funded differently). For vehicles, include on-road costs and any signage or fit-out. Assets are usually the easiest bucket to fund, because they can often secure themselves through equipment or vehicle finance.
How do you fill bucket two — set-up costs?
This is where plans quietly leak. Think through everything that has to happen before day one: lease costs (bond or bank guarantee, rent in advance, legal fees), council and building approvals, licences and registrations, recruitment, training, initial marketing, new systems and software set-up, and professional advice. None of it leaves an asset a lender can secure against, so it usually comes from your contribution, an unsecured loan or a property-backed loan.
How do you fill bucket three — running costs?
List every new monthly cost the growth creates. For new staff, use the full employment cost, not just the salary — super (the ATO lists the super guarantee at 12%), leave, workers compensation and equipment. Our hire staff page has a checklist. Add rent, utilities, insurance, extra stock, software subscriptions and any loan repayments on the bucket one assets.
How do you work out bucket four — the ramp-up gap?
This is the bucket most owners forget, and it’s often the biggest:
- Take the monthly running costs from bucket three.
- Estimate new revenue month by month from launch. Be conservative — new things take time.
- For each month, subtract revenue from costs.
- Add up the shortfalls until revenue covers costs.
The cash-flow gap estimator gives a quick version. For a fuller view, business.gov.au’s free budget and cash-flow templates let you lay it out month by month.
How big should bucket five be?
Big enough that a delay or a cost overrun doesn’t sink the plan. Building works, new locations and new markets carry more uncertainty than adding an identical machine to a proven process, so they deserve a bigger buffer. A buffer you don’t use is a happy ending; a plan without one is a gamble.
How do you turn the total into a funding ask?
- Add up buckets one to five for the total cost.
- Decide your safe contribution — the cash you can put in while still keeping a buffer for the existing business.
- The difference is your funding need.
- Match each bucket to finance: assets to equipment or vehicle finance; set-up and ramp-up to a working capital, unsecured or property-backed loan; ongoing stock and swings to a line of credit.
- Test the repayments against a slow month for the whole business. If they don’t fit, shrink or stage the plan.
What does it look like on paper? (illustrative)
A Sydney design studio plans to open a small second studio and hire two designers to service a new corporate client.
- Bucket 1, assets: computers, monitors, furniture — quoted.
- Bucket 2, set-up: lease bond, legal fees, recruitment, signage.
- Bucket 3, running costs: two designers’ full employment cost, rent, software seats, insurance.
- Bucket 4, ramp-up: the client starts with a small retainer that grows over four months; the shortfall is added up month by month.
- Bucket 5, buffer: added on top for delays.
The studio contributes part of the set-up costs from savings, finances the computers and furniture with equipment finance, and covers the remaining set-up and ramp-up with a working capital loan sized on its existing trading. It tests the combined repayments against its quietest month last year — and they fit. All figures and outcomes here are illustrative.
What do lenders want to see in the plan?
- A one-page summary: what you’re doing, why, how much, and how it pays back.
- The five-bucket costing with quotes attached.
- A 12-month cash-flow forecast showing the ramp-up.
- Evidence of demand: contracts, pre-orders, a waiting list, a successful pilot.
- Your contribution and any security.
- Current trading — bank statements and BAS — showing the existing business can carry repayments if growth is slow.
business.gov.au’s business plan templates are a good structure to follow, and its guide to growing a business has helpful checklists. When you’re ready, send us the plan and we’ll tell you how lenders are likely to see it.
Which numbers do owners most often get wrong?
- Time to first revenue. Fit-outs, approvals and recruitment almost always take longer than planned, and every week of delay is a week of costs without income.
- Early revenue. Owners tend to assume the new site, product or hire will perform like the established ones from the start. It rarely does.
- Staff costs. Salary plus super is not the full cost — leave, insurance, training and equipment add up.
- Payment timing. Customers on 30- or 60-day terms push revenue further out than the sales date suggests.
- Tax. More profit means more tax and higher PAYG instalments the following year. Put some aside as you go.
- The owner’s time. If you’ll be pulled away from the existing business, its performance may dip while the new venture beds in. Budget for that too.
Building these into the plan from the start makes it more conservative — and much more believable to a lender.
Should you include your own wage in the plan?
If the growth will take your time away from paid work in the existing business, yes. Owners often leave their own pay out of the numbers, which makes the plan look better than it is and leaves the household budget exposed. Include a realistic draw for yourself, even if you choose to defer it.
How do you stage a plan that’s too big?
If the funding ask feels too large, it often is. Staging helps: open the second site before hiring the third designer; buy one machine now and the second when the first is busy; pilot the new product with existing customers before a full launch. Each stage proves the next, and each is easier to fund.
Ready to turn your idea into numbers — and the numbers into funding?
Got an awesome plan? Cost it with the five buckets, and you’ll know exactly what you need and why. We’ll help you match each bucket to the right finance.
Asking is safe — no credit check when you enquire, no handing your plan to a parade of lenders, and a real person reading it and calling you. Please share accurate costs, your contribution and current trading so we can find the right structure first time. See if you qualify.
Frequently asked questions
How do I work out how much to borrow for expansion?
Total the five buckets — assets, set-up costs, extra running costs, the ramp-up gap and a buffer — then subtract the cash you can contribute without leaving the business exposed. The difference is your funding need.
What is a ramp-up gap?
It's the shortfall between the new costs your growth creates and the new revenue it brings in, during the months before the growth pays for itself.
How big should my contingency be?
It depends on how uncertain the plan is. Projects with building works, new markets or new staff tend to need a bigger buffer than simply adding a second identical machine. Many owners add a meaningful percentage on top of quoted costs.
Do lenders need a full business plan?
For larger amounts, a short written plan with costings, a cash-flow forecast and evidence of demand helps a lot. business.gov.au has free templates. For smaller loans, a clear summary is often enough.