How to create a financial forecast for a blanket manufacturer?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your blanket manufacturing business.
Putting together a blanket manufacturing business 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 blanket manufacturing business.
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 blanket manufacturing business?
The financial projections for your blanket manufacturing business act as a financial blueprint to guide its growth with confidence and ensure its long-term financial viability.
To create them, you will need to look at your business in detail - from sales to operating costs and investments - to assess how much profit it can generate in the years to come and what will be the associated cash flows.
During challenging market conditions, maintaining an up-to-date financial forecast enables early detection of potential financial shortfalls, allowing for timely adjustments or securing financing before facing a cash crisis.
Your blanket manufacturing business's financial forecast will also prove invaluable when seeking financing. Banks and investors will undoubtedly request a thorough examination of your financial figures, making precision and presentation essential.
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 blanket manufacturing business 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 blanket manufacturing business, 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 blanket manufacturing business 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 blanket manufacturing business, 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 blanket manufacturing business's financial forecast.
The sales forecast for a blanket manufacturing business
From experience, it usually makes sense to start your blanket manufacturing business's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your blanket manufacturing business (which can be used as a starting point for existing businesses) and the data collected in your market research (which both new ventures and existing businesses need to project their sales forward).
Your blanket manufacturing business's sales forecast can be broken down into two key estimates:
- The average price
- The number of monthly transactions
To assess these variables accurately, you will need to consider the following factors:
- Your production efficiency can impact the average price of your blankets. If you are able to streamline your manufacturing process and produce more blankets in the same amount of time, you may be able to lower the average cost per blanket and increase your profit margins.
- Changes in raw material prices can also affect the average price of your blankets. If the cost of the materials used to make your blankets increases, you may need to adjust your prices accordingly to maintain profitability.
- The seasonal demand for blankets can impact the number of monthly transactions. During colder months, there may be a higher demand for blankets, resulting in increased sales. However, during warmer months, the demand may decrease, leading to a decline in transactions.
- The introduction of new technology in the blanket manufacturing industry can also affect your business. If competitors are using more advanced technology to produce their blankets, it may impact your sales if you are unable to keep up with their quality and efficiency.
- The availability of skilled labor can also impact your business. If there is a shortage of skilled workers in your area, it may be difficult to maintain the same level of production, which can lead to a decrease in monthly transactions.
Once you have a sales forecast in place, the next step will be to work on your overhead budget. Let’s have a look at that now.
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 blanket manufacturing business
The next step is to estimate the costs you’ll have to incur to operate your blanket manufacturing business.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your blanket manufacturing business's operating expenses should normally include the following items:
- Staff Costs: This includes salaries, wages, benefits, and payroll taxes for all employees working in your blanket manufacturing business.
- Accountancy Fees: You will need to hire an accountant or use accounting software to manage your financial records, prepare tax returns, and ensure compliance with regulations.
- Insurance Costs: As a business owner, you will need to protect your company with various insurance policies such as property insurance, liability insurance, and workers' compensation insurance.
- Software Licenses: To run your business efficiently, you may need to purchase licenses for software programs such as inventory management, accounting, and design software.
- Banking Fees: You will need to pay fees for maintaining a business bank account, processing transactions, and using other banking services.
- Raw Materials: The main cost of producing blankets is the raw materials such as fabric, thread, and stuffing. Keep track of your inventory levels to ensure you have enough materials to meet demand.
- Manufacturing Equipment: You will need to purchase or lease equipment such as sewing machines, cutting tables, and irons to manufacture your blankets.
- Shipping and Delivery: If you are selling your blankets online or to retailers, you will need to factor in the cost of shipping and delivery to get your products to customers.
- Marketing and Advertising: To attract customers and promote your brand, you may need to invest in marketing and advertising efforts such as social media ads, print ads, and trade shows.
- Utilities: Your manufacturing facility will require electricity, water, and gas. Make sure to budget for these ongoing expenses.
- Rent or Mortgage: If you are not operating your business out of your home, you will need to pay rent or a mortgage for your manufacturing facility.
- Repairs and Maintenance: As with any equipment, your manufacturing equipment may need repairs or maintenance over time. Budget for these costs to keep your operations running smoothly.
- Packaging Materials: In addition to raw materials, you will need to purchase packaging materials such as bags, boxes, and labels to package and ship your blankets.
- Professional Services: You may need to hire consultants or other professionals for specialized services such as product design or legal advice.
- Taxes and Licenses: Don't forget to budget for taxes and business licenses, which may vary depending on your location and business structure.
This list is not exhaustive by any means, and will need to be tailored to your blanket manufacturing business's specific circumstances.
What investments are needed to start or grow a blanket manufacturing business?
Your blanket manufacturing business 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 blanket manufacturing business, these could include:
- Machinery and Equipment: This includes items such as looms, sewing machines, and cutting machines, which are essential for the production of blankets. These are long-term investments and can be expensive, but they are necessary for your business to operate efficiently.
- Facility Renovation: If you are starting your blanket manufacturing business from scratch, you may need to invest in renovating a space to serve as your production facility. This can include expenses such as installing flooring, lighting, and ventilation systems, as well as creating designated areas for different stages of the manufacturing process.
- Transportation Vehicles: Depending on the size of your business and the volume of blankets you plan to produce, you may need to invest in transportation vehicles to deliver your products to customers. This could include trucks, vans, or even smaller vehicles for local deliveries.
- Inventory Storage Systems: As you build up your inventory of blankets, you will need a system in place to store and organize them. This could include purchasing warehouse shelving, pallet racks, and storage bins. These items may seem small, but they can add up in cost, especially if you need a large amount of storage space.
- Technology and Software: To keep up with the demands of a modern manufacturing business, you will likely need to invest in technology and software. This could include purchasing computers, printers, and software programs for tasks such as inventory management, accounting, and customer relationship management.
Again, this list will need to be adjusted according to the size and ambitions of your blanket 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 blanket manufacturing business
The next step in the creation of your financial forecast for your blanket 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 blanket manufacturing business?
Now let's have a look at the main output tables of your blanket manufacturing business's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your blanket manufacturing business is likely to be in the years to come.
For your blanket manufacturing business 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 blanket manufacturers, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your blanket 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 blanket 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 blanket 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 blanket 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 blanket 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 blanket manufacturing business's financial forecast?
Creating your blanket manufacturing business'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 blanket manufacturing business's projections
The modern and easiest way is to use an online financial forecasting tool 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 projection 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 blanket 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 blanket manufacturing business's financial forecast?
Creating an accurate and error-free blanket manufacturing business financial forecast with a spreadsheet is very technical and requires a deep knowledge of accounting and an understanding of financial modelling.
Very few business owners are financially savvy enough to be able to build a forecast themselves on Excel without making mistakes.
Lenders and investors know this, which is why forecasts created on Excel by the business owner are often frowned upon.
Having numbers one can trust is key when it comes to financial forecasting and to that end using software is much safer.
Using financial forecasting software is also faster than using a spreadsheet, and, with the rise of artificial intelligence, software is also becoming smarter at helping us analyse the numbers to make smarter decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and keeping your projections up to date as the year progresses is manual, tedious, and error-prone. Whereas financial projection 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 blanket manufacturing business, 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 projection shows expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial forecast up-to-date is the only way to maintain visibility on future cash flows.
- Using financial forecasting software makes it easy to create and maintain up-to-date projections for your blanket manufacturing business.
You have reached the end of our guide. We hope you now have a better understanding of how to create a financial forecast for a blanket manufacturing business. Don't hesitate to contact our team if you have any questions or want to share your experience building forecasts!
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 projections
- How to create a sales forecast for a business?
- Financial forecast template for a business idea
Know someone who runs or wants to start a blanket manufacturing business? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
