How to create a financial forecast for a baseball bat manufacturer?
Developing and maintaining an up-to-date financial forecast for your baseball bat manufacturing business is key in order to maintain visibility on your business’s future cash flows.
If you feel overwhelmed at the thought of putting together a baseball bat manufacturing business financial forecast then don’t worry as this guide is here to help you.
We'll cover everything from: the main objectives of a financial forecast, the data you need to gather before starting, to the tables that compose it, and the tools that will help you create and maintain your forecast efficiently.
Let's get started!
Why create and maintain a financial forecast for a baseball bat manufacturing business?
In order to prosper, your business needs to have visibility on what lies ahead and the right financial resources to grow. This is where having a financial forecast for your baseball bat manufacturing business becomes handy.
Creating a baseball bat manufacturing business financial forecast forces you to take stock of where your business stands and where you want it to go.
Once you have clarity on the destination, you will need to draw up a plan to get there and assess what it means in terms of future profitability and cash flows for your baseball bat manufacturing business.
Having this clear plan in place will give you the confidence needed to move forward with your business’s development.
Having an up-to-date financial forecast for a baseball bat manufacturing business is also useful if your trading environment worsens, as the forecast enables you to adjust to your new market conditions and anticipate any potential cash shortfall.
Finally, your baseball bat manufacturing business's financial projections will also help you secure financing, as banks and investors alike will want to see accurate projections before agreeing to finance your business.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
What information is used as input to build a baseball bat manufacturing business financial forecast?
A baseball bat manufacturing business's financial forecast is only as good as the inputs used to build it.
If you are creating (or updating) the forecast of an existing baseball bat manufacturing business, then you mostly need your accounting information, key historical operating non-financial data, and your team’s input on what to expect for the coming years.
If you are building financial projections for a baseball bat manufacturing business startup, you will need to have done your research and have a clear picture of your competitive environment and go-to-market strategy so that you can forecast sales accurately.
For a new venture, you will also need a precise list of the resources needed to keep the baseball bat manufacturing business running on a day-to-day basis and a list of the equipment and expenditures required to start the business (more on that later).
Let's now take a closer look at the elements that make up your baseball bat manufacturing business's financial forecast.
The sales forecast for a baseball bat manufacturing business
From experience, it is usually best to start creating your baseball bat manufacturing business financial forecast by your sales forecast.
To create an accurate sales forecast for your baseball bat manufacturing business, you will have to rely on the data collected in your market research, or if you're running an existing baseball bat manufacturing business, the historical data of the business, to estimate two key variables:
- The average price
- The number of monthly transactions
To get there, you will need to consider the following factors:
- The introduction of new technology and materials in the baseball bat industry may affect your average price. As new, more advanced materials become available, they may be more expensive to produce, which could lead to an increase in your average price.
- The popularity of baseball and participation in the sport may affect your number of monthly transactions. As more people become interested in playing baseball, the demand for your bats may increase, resulting in more monthly transactions.
- The success of professional baseball teams and players can also impact your average price and number of monthly transactions. If a popular team or player is using your bats and performing well, it can create a positive association with your brand and potentially lead to an increase in both price and transactions.
- Economic factors, such as inflation and changes in consumer spending, can also affect your business. In times of economic downturn, consumers may be more hesitant to spend money on non-essential items like baseball bats, resulting in a decrease in both price and transactions.
- Changes in regulations and safety standards in the sports industry can also impact your business. If new safety standards are put in place for baseball bats, it may require you to invest in new equipment or materials, leading to an increase in your average price.
Once you have an idea of what your future sales will look like, it will be time to work on your overhead budget. Let’s see what this entails.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
The operating expenses for a baseball bat manufacturing business
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your baseball bat manufacturing business on a daily basis.
Expenses normally vary based on how much revenue you anticipate (which is why, from experience, it is always better to start your forecast with the topline projection), and where your business is based.
Operating expenses for a baseball bat manufacturing business will include some of the following items:
- Staff costs: This includes salaries, wages, and benefits for employees who work in your manufacturing facility, as well as any administrative staff.
- Raw materials: This includes the cost of purchasing wood, metal, and any other materials needed to make baseball bats.
- Equipment maintenance: In order to keep your manufacturing equipment in top condition, you will need to budget for regular maintenance and repairs.
- Utilities: This includes the cost of electricity, water, and gas used in your manufacturing facility.
- Rent or mortgage: If you do not own your manufacturing facility, you will need to budget for monthly rent or mortgage payments.
- Marketing and advertising: In order to attract customers and increase sales, you may need to invest in marketing and advertising efforts such as print ads, online ads, and sponsorships.
- Accountancy fees: You will need to hire an accountant or use accounting software to manage your financial records and ensure compliance with tax laws.
- Insurance costs: In order to protect your business and employees, you will need to purchase insurance policies such as liability insurance and workers' compensation insurance.
- Software licenses: This includes the cost of any software programs needed to manage your manufacturing processes, such as inventory management software or customer relationship management software.
- Banking fees: In order to manage your business finances, you may need to pay fees for services such as checking accounts, credit card processing, and loans.
- Packaging materials: In addition to the cost of materials used to make baseball bats, you will also need to budget for packaging materials such as boxes, tape, and labels.
- Shipping and freight: If you sell your bats online or ship them to retailers, you will need to cover the cost of shipping and freight charges.
- Office supplies: This includes the cost of everyday items such as paper, pens, and printer ink used in your office and manufacturing facility.
- Training and development: In order to maintain high-quality production and stay up-to-date with industry trends, you may need to budget for training and development opportunities for yourself and your employees.
- Legal fees: If you encounter any legal issues related to your business, you may need to hire a lawyer and budget for legal fees.
This list will need to be tailored to the specificities of your baseball bat manufacturing business, but should offer a good starting point for your budget.
What investments are needed to start or grow a baseball bat manufacturing business?
Once you have an idea of how much sales you could achieve and what it will cost to run your baseball bat manufacturing business, it is time to look into the equipment required to launch or expand the activity.
For a baseball bat manufacturing business, capital expenditures and initial working capital items could include:
- Equipment: This includes all machinery and tools needed for the production of baseball bats, such as lathes, saws, sanders, and finishing equipment.
- Facility: You will need a space to manufacture and store your bats. This could include renting or purchasing a building, as well as any necessary renovations or improvements to make the space suitable for your business.
- Inventory: As a manufacturer, you will need to purchase raw materials and supplies to make your bats. This could include wood, metal, adhesives, and other materials.
- Transportation: In order to get your bats to customers, you will need a reliable method of transportation. This could include purchasing delivery vehicles or partnering with a shipping company.
- Technology: To streamline your production process and stay competitive, you may need to invest in technology such as automation equipment, inventory management software, or customer relationship management software.
Again, this list will need to be adjusted according to the specificities of your baseball bat manufacturing business.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
The financing plan of your baseball bat manufacturing business
The next step in the creation of your financial forecast for your baseball bat manufacturing business is to think about how you might finance your business.
You will have to assess how much capital will come from shareholders (equity) and how much can be secured through banks.
Bank loans will have to be modelled so that you can separate the interest expenses from the repayments of principal, and include all this data in your forecast.
Issuing share capital and obtaining a bank loan are two of the most common ways that entrepreneurs finance their businesses.
What tables compose the financial plan for a baseball bat manufacturing business?
Now let's have a look at the main output tables of your baseball bat manufacturing business's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your baseball bat manufacturing business's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a baseball bat manufacturing business should normally show:
- Sales growing above inflation
- Stable or expanding (ideally) profit margins
- A net profit
This will of course depend on the stage of your business: a new venture might be loss-making until it reaches its breakeven point in year 2 or 3, for example.
The projected balance sheet
Your baseball bat manufacturing business's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits and losses generated by the business to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.
The cash flow projection
The cash flow forecast of your baseball bat manufacturing business will show how much cash the business is expected to generate or consume over the next three to five years.
There are multiple ways of presenting a cash flow forecast but from experience, it is better to organise it by nature in order to clearly show these elements:
- Operating cash flow: how much cash is generated by the baseball bat manufacturing business's operations
- Investing cash flow: what is the business investing to expand or maintain its equipment
- Financing cash flow: is the business raising additional funds or repaying financiers (debt repayment, dividends)
Your cash flow forecast is the most important element of your overall financial projection and that’s where you should focus your attention to ensure that your baseball bat manufacturing business is adequately funded.
Note: if you are preparing a financial forecast in order to try to secure funding, you will need to include both a yearly and monthly cash flow forecast in your baseball bat manufacturing business's financial plan.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Which tool should you use to create your baseball bat manufacturing business's financial projections?
Building a baseball bat manufacturing business financial forecast is not difficult provided that you use the right tool for the job. Let’s see what options are available below.
Using online financial projection software to build your baseball bat manufacturing business's forecast
The modern and easiest way to build a forecast is to use professional financial projection software such as the one we offer at The Business Plan Shop.
There are several advantages to using specialised software:
- You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
- You have access to complete financial forecast templates
- You get a complete financial forecast ready to be sent to your bank or investors
- You can easily track your actual financial performance against your financial forecast, and recalibrate your forecast as the year goes by
- You can create scenarios to stress test your forecast's main assumptions
- You can easily update your forecast as time goes by to maintain visibility on future cash flows
- You have a friendly support team on standby to assist you when you are stuck
- It’s cost-efficient and much cheaper than using an accountant or consultant (see below)
If you are interested in this type of solution, you can try our forecasting software for free by signing up here.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional baseball bat manufacturing business financial projection.
As you can imagine, this solution is much more expensive than using software. From experience, the creation of a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to start around £700 or $1,000 excluding taxes.
The indicative estimate above, is for a small business, and a forecast done as a one-off. Using a financial consultant or accountant to track your actuals vs. forecast and to keep your financial forecast up to date on a monthly or quarterly basis will naturally cost a lot more.
If you choose this solution, make sure your service provider has first-hand experience in your industry, so that they may challenge your assumptions and offer insights (as opposed to just taking your figures at face value to create the forecast’s financial statements).
Why not use a spreadsheet such as Excel or Google Sheets to build your baseball bat manufacturing business's financial forecast?
Creating an accurate and error-free baseball bat manufacturing business financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.
Most entrepreneurs lack the expertise required to create an accurate financial forecast using spreadsheet software like Excel or Google Sheets. As a result, it is unlikely anyone will trust your numbers.
The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.
This is why professional forecasters all use software. With the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and updating your forecast as the year progresses is manual, tedious, error-prone, and time-consuming. Whereas financial forecasting software like The Business Plan Shop is built for this.
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Use our financial projection templates for inspiration
The Business Plan Shop has dozens of financial forecast templates available.
Our examples contain a complete business plan with a financial forecast and a written presentation of the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own baseball bat manufacturing business, looking at our financial forecast template is a good way to:
- Understand what a complete business plan should look like
- Understand how you should model financial items for your baseball bat manufacturing business
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your baseball bat manufacturing business.
- Tracking actuals vs. forecast and having an up-to-date financial forecast is key to maintaining visibility on your future cash flows.
- Using financial forecasting software is the modern way of creating and maintaining financial projections.
We hope that this guide helped you gain a clearer perspective on the steps needed to create the financial forecast for a baseball bat manufacturing business. Don't hesitate to contact us if you have any questions!
Need a convincing business plan?
The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.
Also on The Business Plan Shop
- Financial forecast example
- How to project revenues for a business?
- Sample financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
