Are you planning to open a kebab shop, or trying to grow an existing one? For it to be successful, you’ll need to have clear visibility on your future profits and cash fows: that's where having a financial forecast becomes key.
Creating a financial forecast for a kebab shop is the closest you’re going to get to seeing the future of your business.
If you’re overwhelmed at the thought of putting together a financial forecast for a kebab shop then don’t worry, as in this guide we’ll give you all the information needed to create them with ease.
First, we will look at what the role of the financial forecast is and what data we need to create one. We will cast our eyes over the three main parts of the financial forecast, and the tables that compose it. And last but not least, we will give you several tools that will help you create your own financial forecast.
Why make a financial forecast for a kebab shop?
A financial forecast allows you to assess whether or not your business is likely to be profitable and sufficiently funded in the future.
You will analyze every detail of your kebab shop (from operating costs to menu prices) to make sure that it’s financially viable.
You will also list the investments required for starting up or growing your business, such as kitchen equipment and furniture, to set out how much money you need to invest in the coming years.
The financial forecast will also give you an idea of what you can expect in terms of growth, profit and cash flow over the next three years, allowing you to plan the development of your business with confidence.
It’s also important to remember that your kebab shop's financial forecast will be essential when you’re looking for financing. You can be 100% sure that a banker or investor will ask you for these numbers when presenting your project, so make sure they’re set out accurately and attractively.
What information do I need to create a financial forecast for a kebab shop?
Your kebab shop’s financial forecast will be based on specific data that you will need to have collected beforehand.
First of all, you will need to have already carried out market research to evaluate the commercial potential of your location.
The market research allows you to answer the following questions:
- How much will the average spend per head be?
- How many times per year will the average customer visit the shop?
- How many people are likely to visit your kebab shop during opening hours? When assessing this, think about the potential customers around you (e.g. office workers, students, families) and split it into lunch and dinner hours during the week and on weekends.
- Who are your competitors? Do they serve the same type of cuisine or do they have a very different menu from yours?
Your market analysis will also consider the marketing strategy you need to put in place to get your kebab shop’s name out there. Whether you set up your own website, use popular delivery platforms such as Deliveroo or Uber Eat, or pay people to hand out flyers on the street, these promotional costs will need to be included in your budget.
Finally, you will also need to draw up a precise list of the resources needed to keep the kebab shop running on a day-to-day basis. Between staff, utility bills and maintaining stock, it’s important to ensure these are all accounted for if you want to create a budget that’s as close to reality as possible.
Your kebab shop's sales forecast
When creating your kebab shop's financial projections, the first thing you should do is create a sales forecast.
Your level of inventory and staffing requirements will depend on how busy you expect your kebab shop to be, so it’s easier to start with how much you intend to sell.
To estimate your sales projections, you will need to estimate the number of orders your are likely to receive every day and the average price of each order.
When putting together these assumptions, it’s important to bear in mind:
- The kebab shop’s opening hours
- The amount of traffic in store and out if providing deliveries
- The time it takes the kitchen to prepare the orders and how many they can process during a shift
Your kebab shop's overheads budget
Overheads are the expenses needed to run the business on a day-to-day basis.
To make sure these figures are as precise as possible, it’s important to quantify each expense item using estimates provided by your suppliers.
Generally speaking, a kebab shop will have significant overhead costs in terms of payroll. You will need both kitchen and counter staff, not to mention part time workers who will fill in during the busy periods.
It’s therefore vital that you accurately estimate the number of employees you will need by taking your number of potential customers into account.
Your overheads will also include rent for the premises as well as water, gas and electricity bills. Typically, additional costs will include licensing costs, insurance, maintenance, cleaning, and/or commissions if you use online delivery platforms.
Investments required for your kebab shop
There’s no getting away from it, several investments will need to be made in setting up your business and maintaining its equipment up to date.
You’ll need to stock up on kitchen and counter equipment, it’s important to create a list of all the appliances needed. This will change depending on your kebab shop’s concept.
Research quotes for kitchen equipment, furniture, packaging and all the elements that are vital for the day to day operations of your establishment.
The tables setting out your kebab shop's financial forecast
Now let's take a look at your kebab shop's financial forecast tables.
The kebab shop's forecasted P&L statement
This table will give you an idea of your business’ growth over the next three to five years, and allow you to see if it’s likely to be profitable.
Keep an eye on the operating profit to make sure your business model is a sustainable one.
The projected balance sheet of your kebab shop
The balance sheet will give you an overview of the company's debts (suppliers, taxes, etc.) as well as what it owns (fixed assets, inventory, etc.).
The cash flow forecast of your kebab shop
This table will show the cash generated or spent by your kebab shop.
This gives you the ability to assess whether the kebab shop will have sufficient cash flow to repay its loans and finance the development of the business as time goes on.
How do you develop a financial forecast for a kebab shop?
As you can see, creating a budget for your kebab shop's can quickly become technical, which is why we’re presenting you with a range of solutions that will help you create one.
Create your kebab shop's financial forecast using a spreadsheet
A spreadsheet software like Excel offers a cheap solution, since you have the option to either buy the license or use a free version such as Google Sheets.
The downside? It's very easy to make mistakes. Therefore, this is a better option for those with a solid background in accounting and advanced knowledge of financial modeling.
If you have neither of those things, Excel probably won’t be the best option for you - but don’t worry, as we have alternative solutions available below.
Hire a chartered accountant or a consultant
Enlisting the help of a consultant or accountant will let you obtain accurate figures from a professional point of view.
While it will save you time, this expertise comes at a price. We estimate that for a simple financial forecast over 3 years (including a balance sheet, income statement and cash flow statement) calling on professional help will set you back around £700 or $1,000 (excluding VAT/taxes).
Using an online forecasting software
The final solution available to you is to use an online financial forecast software.
Using professional software offers multiple advantages:
- You can easily make your financial projections, letting the software take care of the calculations
- You have access to complete financial forecast templates
- You get a complete financial forecast ready to be sent to your bank
- You can easily track your forecast against accounting data to ensure you are on track to deliver what you planned, or make adjustments if needed
If you are interested in this type of solution, you can try our budgeting software for free by signing up here.
We hope that this guide helped you to see more clearly what needs to be done to create a financial forecast for a kebab shop.
Don't hesitate to contact us if you have any questions!
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