How to create a financial forecast for a bird farm?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your bird farm.
Putting together a bird farm financial forecast may sound complex, but don’t worry, with the right tool, it’s easier than it looks, and The Business Plan Shop is here to guide you.
In this practical guide, we'll cover everything you need to know about building financial projections for your bird farm.
We will start by looking at why they are key, what information is needed, what a forecast looks like once completed, and what solutions you can use to create yours.
Let's dive in!
Why create and maintain a financial forecast for a bird farm?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your bird farm and ensure that it can be financially viable in the years to come.
A financial plan for a bird farm enables you to look at your business in detail - from income to operating costs and investments - to evaluate its expected profitability and future cash flows.
This gives you the visibility needed to plan future investments and expansion with confidence.
And, when your trading environment gets tougher, having an up to date bird farm forecast enables you to detect potential upcoming financing shortfalls in advance, enabling you to make adjustments or secure financing before you run out of cash.
It’s also important to remember that your bird farm's financial forecast will be essential when looking for financing. You can be 100% certain that banks and investors will ask to see your numbers, so make sure they’re set out accurately and attractively.
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 bird farm 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 bird farm, 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 bird farm 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 bird farm, 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 bird farm's financial forecast.
The sales forecast for a bird farm
The sales forecast, also called topline projection, is normally where you will start when building your bird farm financial forecast.
Creating a coherent sales projection boils down to estimating two key drivers:
- The average price
- The number of monthly transactions
To do this, you will need to rely on historical data (for an existing business), market research data (for both new and existing bird farms), and consider the elements below:
- Weather conditions: Weather can have a significant impact on the demand for your birds. Severe weather, such as storms or extreme temperatures, can limit the number of buyers willing to travel to your farm. On the other hand, mild and pleasant weather can attract more customers and increase sales.
- Avian diseases: The occurrence of avian diseases, such as avian influenza or Newcastle disease, can lead to a decrease in demand for your birds. Customers may be hesitant to purchase birds from your farm if there is a risk of them carrying a disease.
- Market trends: Keep an eye on market trends to help you forecast future demand for your birds. For example, if there is a growing trend towards organic and free-range poultry products, you may be able to charge a higher price for your birds that fit into this category.
- Breeding success: The success of your breeding program can have a direct impact on the number of birds available for sale. If you have a high hatch rate and healthy chicks, you may have more birds to sell and potentially increase your sales. On the other hand, if there are issues with breeding, you may have a lower supply of birds and decrease in sales.
- Competition: Keep an eye on your competitors in the local and regional market. If there is an increase in the number of bird farms in your area, it may lead to higher competition and lower prices. On the other hand, if your farm is the only one in the area, you may be able to charge a premium price.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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 bird farm
The next step is to estimate the costs you’ll have to incur to operate your bird farm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your bird farm's operating expenses should normally include the following items:
- Staff costs: This includes salaries, wages, and benefits for your farm workers who will be responsible for caring for the birds and maintaining the farm.
- Feed and supplies: You will need to purchase feed for your birds, as well as any necessary supplies such as bedding, nesting materials, and cleaning products.
- Veterinary expenses: It is important to have a budget for potential vet visits and treatments for your birds, as well as any vaccinations or medications they may need.
- Utilities: This includes the cost of electricity, water, and gas for your farm. These expenses can add up quickly, especially if you have large barns or coops.
- Rent or mortgage: If you do not own the land your bird farm is located on, you will need to factor in the cost of rent or mortgage payments.
- Marketing and advertising: You will need to promote your bird farm in order to attract customers and generate sales. This may include expenses for advertising materials, website development, and social media marketing.
- Accountancy fees: It is important to have a professional accountant to help you manage your finances and file taxes for your farm. This will come with a cost, so be sure to budget accordingly.
- Insurance costs: To protect your farm and its assets, you will need to purchase insurance. This may include property insurance, liability insurance, and insurance for your birds.
- Transportation expenses: If you will be selling your birds at markets or delivering them to customers, you will need to budget for transportation costs such as gas, maintenance, and vehicle insurance.
- Building maintenance: Your farm buildings, including barns and coops, will require regular maintenance and repairs to ensure the safety and well-being of your birds. Be sure to budget for these expenses.
- Software licenses: Depending on how you choose to manage your farm, you may need to purchase software licenses for programs such as accounting, inventory management, or customer management.
- Banking fees: You will likely have a business bank account for your farm, which may come with fees for transactions, wire transfers, and other services.
- Pest control: Birds are susceptible to pests, so it is important to have a plan in place for pest control and budget for any necessary products or services.
- Legal fees: As a business owner, you may encounter legal issues that require the assistance of a lawyer. Be prepared to budget for legal fees in case any issues arise.
- Training and education: It is important to constantly educate yourself and your staff on proper bird care and farm management techniques. This may include attending workshops or conferences, which will come with a cost.
This list is not exhaustive by any means, and will need to be tailored to your bird farm's specific circumstances.
What investments are needed to start or grow a bird farm?
Your bird farm financial forecast will also need to include the capital expenditures (aka investments in plain English) and initial working capital items required for the creation or development of your business.
For a bird farm, these could include:
- Land and buildings: This includes the cost of purchasing or leasing land for the bird farm, as well as any buildings or structures that need to be constructed or renovated for housing the birds. This can also include the cost of fencing and other infrastructure needed for the farm.
- Equipment: The purchase of equipment such as feeders, waterers, incubators, and egg hatchers is essential for a bird farm. Additionally, larger equipment such as tractors, plows, and harvesters may be necessary for managing the land and crops on the farm.
- Livestock: The cost of purchasing or breeding the birds themselves is a major capital expenditure for a bird farm. This can include the cost of purchasing chicks, eggs, or adult birds, as well as any expenses related to breeding and raising them.
- Utilities and infrastructure: In order to operate a bird farm, you will need to have access to electricity, water, and other utilities. This may require installing wells, pumps, and other infrastructure to ensure the birds have access to clean water and adequate ventilation.
- Transportation: Depending on the size and location of your bird farm, you may need to purchase vehicles for transporting birds, feed, and other supplies. This can also include the cost of fuel and maintenance for these vehicles.
Again, this list will need to be adjusted according to the size and ambitions of your bird farm.
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 bird farm
The next step in the creation of your financial forecast for your bird farm 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 bird farm?
Now let's have a look at the main output tables of your bird farm's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your bird farm's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a bird farm 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
The projected balance sheet gives an overview of your bird farm's financial structure at the end of the financial year.
It is composed of three categories of items: assets, liabilities and equity:
- Assets: are what the business possesses and uses to produce cash flows. It includes resources such as cash, buildings, equipment, and accounts receivable (money owed by clients).
- Liabilities: are the debts of your bird farm. They include accounts payable (money owed to suppliers), taxes due and bank loans.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.
The projected cash flow statement
A projected cash flow statement for a bird farm is used to show how much cash the business is generating or consuming.
The cash flow forecast is usually organised by nature to show three key metrics:
- The operating cash flow: do the core business activities generate or consume cash?
- The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
- The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?
Cash is king and keeping an eye on future cash flows is imperative for running a successful business. Therefore, you should pay close attention to your bird farm's cash flow forecast.
If you are trying to secure financing, note that it is customary to provide both yearly and monthly cash flow forecasts in a financial plan - so that the reader can analyze seasonal variation and ensure the bird farm 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 bird farm's financial forecast?
Creating your bird farm's financial forecast may sound fairly daunting, but the good news is that there are several ways to go about it.
Using online financial forecasting software to build your bird farm's projections
The modern and easiest way is to use professional online financial forecasting 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 bird farm 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 bird farm's financial forecast?
You and your financial partners need numbers you can trust. Unless you have studied finance or accounting, creating a trustworthy and error-free bird farm financial forecast on a spreadsheet is likely to prove challenging.
Financial modelling is very technical by nature and requires a solid grasp of accounting principles to be done without errors. This means that using spreadsheet software like Excel or Google Sheets to create accurate financial forecasts is out of reach for most business owners.
Creating forecasts in Excel is also inefficient nowadays:
- Software has advanced to the point where forecasting can be done much faster and more accurately than manually on a spreadsheet.
- With artificial intelligence, the software is capable of detecting mistakes and helping decision-making.
Spreadsheets are versatile tools but they are not tailor-made for reporting. Importing your bird farm's accounting data in Excel to track actual vs. forecast is incredibly manual and tedious (and so is keeping forecasts up to date). It is much faster to use dedicated financial planning tools like The Business Plan Shop which are built specially 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 bird farm, 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 bird farm
Takeaways
- Having a financial forecast enables you to visualise the expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial projections up-to-date is the only way to get a view on what your bird farm future cash flows may look like.
- Using financial forecasting software is the mordern and easy way to create and maintain your forecasts.
This is the end of our guide on how to build the financial forecast for a bird farm, we hope you found it useful. Don't hesitate to contact us if you want to share your feedback or 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
- Example of financial forecast
- How to project revenues for a business?
- Sample financial forecast for business idea
Know someone who owns or is thinking of starting a bird farm? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
