How to create a financial forecast for a Brazilian restaurant?
Creating a financial forecast for your Brazilian restaurant, 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 Brazilian restaurant 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 Brazilian restaurant?
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 Brazilian restaurant becomes handy.
Creating a Brazilian restaurant 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 Brazilian restaurant.
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 Brazilian restaurant 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 Brazilian restaurant'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 Brazilian restaurant financial forecast?
A Brazilian restaurant'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 Brazilian restaurant, 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 Brazilian restaurant 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 Brazilian restaurant 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 Brazilian restaurant's financial forecast.
The sales forecast for a Brazilian restaurant
From experience, it usually makes sense to start your Brazilian restaurant's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your Brazilian restaurant (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 Brazilian restaurant'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:
- Tourism in Brazil: As Brazil is a popular tourist destination, the number of visitors to your restaurant can greatly impact your average price and number of monthly transactions. An increase in tourism can lead to higher demand and prices, while a decrease can result in lower sales.
- Local events and festivals: Brazilian festivals and events, such as the Carnival, can attract a large number of people to your restaurant. This can lead to an increase in both your average price and number of monthly transactions during these periods.
- Food trends and preferences: Changes in food trends and preferences can affect your average price and number of monthly transactions. For example, if there is a growing demand for healthy and organic food, you may need to adjust your menu and prices accordingly.
- Economic conditions: Economic conditions, such as inflation and unemployment rates, can also impact your business. During an economic downturn, people may be less likely to dine out, leading to a decrease in your average price and number of monthly transactions.
- Competition: The presence of other Brazilian restaurants in your area can affect your average price and number of monthly transactions. If there is a lot of competition, you may need to adjust your prices or offer unique menu items to attract customers.
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 Brazilian restaurant
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your Brazilian restaurant 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 Brazilian restaurant will include some of the following items:
- Staff costs: This includes salaries, wages, and benefits for all employees working in your Brazilian restaurant, such as chefs, servers, and kitchen staff.
- Food and beverage costs: This expense covers the cost of all ingredients and beverages used in your dishes and drinks, including meat, produce, and alcoholic beverages.
- Rent or lease: If you do not own your restaurant space, you will need to pay rent or lease payments to your landlord.
- Utilities: This expense includes electricity, water, gas, and other utility bills necessary for running your restaurant.
- Marketing and advertising: To attract customers to your Brazilian restaurant, you will need to invest in marketing and advertising efforts, such as social media ads, flyers, and promotions.
- Accountancy fees: You may choose to hire an accountant to help with your restaurant's financial management and tax preparation.
- Insurance costs: It is important to have insurance coverage for your restaurant to protect against potential risks and liabilities.
- Software licenses: You may need to purchase software licenses for your point-of-sale system, accounting software, and other programs used in your restaurant.
- Banking fees: This includes fees for credit card processing, monthly bank account fees, and other banking services.
- Cleaning and maintenance: To keep your restaurant clean and well-maintained, you will need to pay for cleaning supplies and services, as well as equipment repairs and maintenance.
- Waste disposal: Properly disposing of waste and recycling is essential for any restaurant, and this expense includes garbage collection and recycling services.
- Uniforms and linens: If you require your staff to wear uniforms, you will need to cover the cost of purchasing and maintaining them. Additionally, you may need to rent or purchase linens for your tables and kitchen.
- Taxes and licenses: As a business owner, you will need to pay various taxes and fees, including sales tax, liquor licenses, and health permits.
- Training and development: To ensure your staff is well-trained and up-to-date on industry trends, you may need to invest in training and development programs.
- Security: Keeping your restaurant and customers safe is crucial, so you may need to pay for security measures such as surveillance cameras and alarm systems.
This list will need to be tailored to the specificities of your Brazilian restaurant, but should offer a good starting point for your budget.
What investments are needed to start or grow a Brazilian restaurant?
Once you have an idea of how much sales you could achieve and what it will cost to run your Brazilian restaurant, it is time to look into the equipment required to launch or expand the activity.
For a Brazilian restaurant, capital expenditures and initial working capital items could include:
- Kitchen Equipment: This includes items such as grills, ovens, refrigerators, and fryers. These are essential for cooking and storing food in a Brazilian restaurant.
- Furniture and Decor: This includes tables, chairs, and other decorative items that give your restaurant a Brazilian flair. It is important to invest in high-quality, comfortable furniture to create a welcoming atmosphere for your customers.
- POS System: A point-of-sale system is essential for keeping track of sales, inventory, and managing orders. This is a crucial investment for any restaurant, including a Brazilian restaurant.
- Bar Equipment: If your Brazilian restaurant offers alcoholic beverages, you will need to invest in bar equipment such as a bar counter, glasses, shakers, and other tools. This will help you serve drinks efficiently and maintain a well-stocked bar.
- Sound System: Brazilian restaurants often have live music or play traditional Brazilian music, so investing in a good sound system is important. This will enhance the dining experience for your customers and create a lively atmosphere.
Again, this list will need to be adjusted according to the specificities of your Brazilian restaurant.
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 Brazilian restaurant
The next step in the creation of your financial forecast for your Brazilian restaurant 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 Brazilian restaurant?
Now let's have a look at the main output tables of your Brazilian restaurant's financial forecast.
The forecasted profit & loss statement
The profit & loss forecast gives you a clear picture of your business’ expected growth over the first three to five years, and whether it’s likely to be profitable or not.
A healthy Brazilian restaurant's P&L statement should show:
- Sales growing at (minimum) or above (better) inflation
- Stable (minimum) or expanding (better) profit margins
- A healthy level of net profitability
This will of course depend on the stage of your business: numbers for an established Brazilian restaurant will look different than for a startup.
The projected balance sheet
Your Brazilian restaurant'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 projected cash flow statement
A projected cash flow statement for a Brazilian restaurant 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 Brazilian restaurant'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 Brazilian restaurant 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 Brazilian restaurant's financial forecast?
Using the right tool or solution will make the creation of your Brazilian restaurant's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial projection software to build your Brazilian restaurant'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 Brazilian restaurant 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 Brazilian restaurant's financial forecast?
Creating an accurate and error-free Brazilian restaurant 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 Brazilian restaurant, 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 Brazilian restaurant.
- 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 Brazilian restaurant. 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 sales for a business?
- Financial forecast template for a business idea
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Founder & CEO at The Business Plan Shop Ltd
