How to create a financial forecast for a beach bar?
Creating a financial forecast for your beach bar, and ensuring it stays up to date, is the only way to maintain visibility on future cash flows.
This might sound complex, but with the right guidance and tools, creating an accurate financial forecast for your beach bar is not that hard.
In this guide, we'll cover everything from the main goal of a financial projection, the data you need as input, to the tables that compose it, and the tools that can help you build a forecast efficiently.
Without further ado, let us begin!
Why create and maintain a financial forecast for a beach bar?
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 beach bar becomes handy.
Creating a beach bar 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 beach bar.
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 beach bar 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 beach bar'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 needed to build a beach bar financial forecast?
The quality of your inputs is key when it comes to financial modelling: no matter how good the model is, if your inputs are off, so will the forecast.
If you are building a financial plan to start a beach bar, you will need to have done your market research and have a clear picture of your sales and marketing strategies so that you can project revenues with confidence.
You will also need to have a clear idea of what resources will be required to operate the beach bar on a daily basis, and to have done your research with regard to the equipment needed to launch your venture (see further down this guide).
If you are creating a financial forecast of an existing beach bar, things are usually simpler as you will be able to use your historical accounting data as a budgeting base, and complement that with your team’s view on what lies ahead for the years to come.
Let's now zoom in on what will go in your beach bar's financial forecast.
The sales forecast for a beach bar
From experience, it is usually best to start creating your beach bar financial forecast by your sales forecast.
To create an accurate sales forecast for your beach bar, you will have to rely on the data collected in your market research, or if you're running an existing beach bar, 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:
- Weather conditions: The weather can greatly affect the number of monthly transactions at your beach bar. During sunny and warm months, more people may be inclined to visit your bar, resulting in higher sales. However, during colder or stormy months, there may be a decrease in customers and sales may decrease as well.
- Tourism season: The tourism season can also have a significant impact on your beach bar's average price and number of monthly transactions. During peak tourist season, you may be able to charge higher prices and attract more customers. However, during the off-season, you may have to lower prices to remain competitive and may see a decrease in sales as a result.
- Local events: Local events, such as music festivals or sporting events, can also affect your beach bar's sales. If there are popular events happening near your bar, you may see an increase in customers and sales. Alternatively, if there are no events or if they are not well-attended, you may experience a decrease in sales.
- Beach conditions: The condition of the beach can also impact your beach bar's sales. If the beach is clean and well-maintained, more people may be inclined to spend time there and visit your bar. However, if the beach is dirty or damaged, it may deter potential customers and result in lower sales.
- Customer satisfaction: Lastly, the satisfaction of your customers can have a direct impact on your beach bar's sales. If customers have a positive experience at your bar, they may be more likely to return and recommend your bar to others. On the other hand, if customers have a negative experience, it may result in a decrease in sales as they may choose to visit other beach bars instead.
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 beach bar
The next step is to estimate the costs you’ll have to incur to operate your beach bar.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your beach bar's operating expenses should normally include the following items:
- Staff Costs: This includes the salaries, benefits, and training costs for all employees at the beach bar. You'll need to budget for bartenders, servers, kitchen staff, and any other positions necessary to run your bar efficiently.
- Accountancy Fees: You may need to hire an accountant to help you with tax preparation, payroll, and other financial tasks. This expense will ensure that your books are accurate and up-to-date.
- Insurance Costs: It's important to have insurance coverage for your beach bar in case of any accidents or damages. This could include liability insurance, property insurance, and workers' compensation.
- Software Licences: You'll need to purchase software licences for point-of-sale systems, inventory management, and other programs to keep your beach bar running smoothly.
- Banking Fees: You'll likely have to pay fees for business bank accounts, credit card processing, and ATM transactions. These fees can add up, so it's important to budget for them.
- Food and Beverage Costs: This includes the cost of ingredients for your menu items and the beverages you serve. You'll need to constantly monitor and adjust these costs to maintain profitability.
- Rent or Lease Payments: If you're not buying the property for your beach bar, you'll need to budget for rent or lease payments. This expense may include utilities and maintenance fees.
- Marketing and Advertising: You'll need to promote your beach bar to attract customers. This could include social media advertising, print advertisements, and event sponsorships.
- Utilities: You'll need to pay for electricity, water, and other utilities to keep your beach bar running. These costs may fluctuate depending on the season.
- Supplies and Inventory: This includes the cost of purchasing and restocking supplies such as glassware, utensils, and cleaning supplies. You'll also need to replenish inventory for your menu items.
- Entertainment Expenses: If you plan on having live music or other forms of entertainment at your beach bar, you'll need to budget for these expenses. This could include paying performers, sound equipment rentals, and marketing for events.
- Liquor Licences and Permits: You'll need to obtain a liquor licence and any necessary permits to sell alcohol at your beach bar. These costs may vary depending on your location.
- Cleaning and Maintenance: It's important to keep your beach bar clean and well-maintained to provide a pleasant experience for customers. This could include hiring a cleaning crew or budgeting for regular maintenance tasks.
- Waste Management: You'll need to dispose of waste and recyclables from your beach bar. This could include paying for garbage pickup or investing in a recycling program.
- Taxes and Licences: You'll need to budget for taxes and licences specific to your beach bar, such as business taxes and permits for outdoor seating.
This list is not exhaustive by any means, and will need to be tailored to your beach bar's specific circumstances.
What investments are needed to start or grow a beach bar?
Once you have an idea of how much sales you could achieve and what it will cost to run your beach bar, it is time to look into the equipment required to launch or expand the activity.
For a beach bar, capital expenditures and initial working capital items could include:
- Beach furniture and equipment: This includes items such as beach chairs, tables, umbrellas, and sand toys for customers to use. These items are essential for creating a comfortable and enjoyable beach bar experience for your customers.
- Outdoor bar and kitchen equipment: As a beach bar, you will need to invest in equipment that can withstand outdoor elements, such as a barbeque grill and outdoor refrigeration units. These items are crucial for preparing and serving food and drinks to your customers.
- Beach bar structure: Your beach bar will need a sturdy and attractive structure to provide shelter and shade for your customers. This may include items such as a thatched roof, flooring, and a bar counter. These items are important for creating a welcoming and visually appealing environment.
- Water sports equipment: If your beach bar offers water sports activities, you will need to invest in equipment such as kayaks, paddleboards, and snorkeling gear. These items are essential for attracting customers and providing them with a unique beach experience.
- Sound and lighting system: A beach bar is not complete without a quality sound and lighting system to create a fun and lively atmosphere for your customers. This may include speakers, microphones, and lighting fixtures. These items are crucial for hosting events and keeping your customers entertained.
Again, this list will need to be adjusted according to the specificities of your beach bar.
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 beach bar
The next step in the creation of your financial forecast for your beach bar 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 beach bar?
Now let's have a look at the main output tables of your beach bar's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your beach bar is likely to be in the years to come.
For your beach bar to be financially viable, your projected P&L should ideally show:
- Sales growing above inflation (the higher the better)
- Profit margins which are stable or expanding (the higher the better)
- A net profit at the end of each financial year (the higher the better)
This is for established beach bars, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your beach bar's projected balance sheet provides a snapshot of your business’s financial position at year-end.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business possesses including cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. They include accounts payable (money owed to suppliers), taxes payable and loans from banks and financial institutions.
- 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 forecast
Your beach bar's cash flow forecast shows how much cash your business is expected to consume or generate in the years to come.
It is best practice to organise the cash flow forecast by nature to better explain where cash is used or generated by the beach bar:
- Operating cash flow: shows how much cash is generated by the operating activities
- Investing cash flow: shows how much will be invested in capital expenditure to maintain or expand the business
- Financing cash flow: shows if the business is raising new capital or repaying financiers (debt repayment, dividends)
Keeping an eye on (and regularly updating) your beach bar's cash flow forecast is key to ensuring that your business has sufficient liquidity to operate normally and to detect financing requirements as early as possible.
If you are trying to raise capital, you will normally be asked to provide a monthly cash flow forecast in your beach bar's financial plan - so that banks or investors can assess seasonal variation and ensure your business is appropriately capitalised.
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 beach bar's financial forecast?
Creating your beach bar's financial forecast may sound fairly daunting, but the good news is that there are several ways to go about it.
Using online financial projection software to build your beach bar'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.
Calling in a financial consultant or chartered accountant
Enlisting the help of a consultant or accountant is also a good way to obtain a professional beach bar financial forecast.
The downside of this solution is its cost. From experience, obtaining a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to cost a minimum of £700 or $1,000.
The indicative cost above, is for a small business, and a forecast is done as a one-shot exercise. Using a consultant or accountant to track your actuals vs. forecast and to keep your financial projections up to date on a monthly or quarterly basis will cost a lot more.
If you opt for this solution, make sure your accountant has in-depth knowledge of your industry, so that they may challenge your figures and offer insights (as opposed to just taking your assumptions at face value to create the forecast).
Why not use a spreadsheet such as Excel or Google Sheets to build your beach bar's financial forecast?
Creating an accurate and error-free beach bar 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 forecasting templates available.
Our examples contain both the financial forecast, and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own beach bar, looking at our template is always a good way to get ideas on how to model financial items and what to write when creating a business plan to secure funding.
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your beach bar.
- 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 beach bar. 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
