How to create a financial forecast for a buffalo farm?
Developing and maintaining an up-to-date financial forecast for your buffalo farm 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 buffalo farm 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 buffalo farm?
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 buffalo farm becomes handy.
Creating a buffalo farm 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 buffalo farm.
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 buffalo farm 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 buffalo farm'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 buffalo farm financial forecast?
A buffalo farm'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 buffalo farm, 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 buffalo farm 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 buffalo farm 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 buffalo farm's financial forecast.
The sales forecast for a buffalo farm
From experience, it is usually best to start creating your buffalo farm financial forecast by your sales forecast.
To create an accurate sales forecast for your buffalo farm, you will have to rely on the data collected in your market research, or if you're running an existing buffalo farm, 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:
- Breeding success rate: The number of successful breeding pairs on your farm can directly impact the number of buffalo calves available for sale each year. A higher success rate means more calves for sale and potentially higher prices.
- Weather conditions: Severe weather events such as droughts, floods, or extreme temperatures can affect the health and well-being of your buffalo herd. This can lead to changes in the availability and quality of your buffalo for sale, which can impact the average price and number of monthly transactions.
- Competition: The number of other buffalo farms in your area can also impact your sales forecast. If there are many other farms selling similar products, it may be harder to sell your buffalo at higher prices or to make as many transactions.
- Government regulations: Changes in government regulations related to the farming and sale of buffalo can also affect your business. For example, stricter regulations on the treatment of animals or the sale of certain products can impact your costs and potentially your prices.
- Trends in demand: The demand for buffalo meat and products can also vary over time. Factors such as consumer preferences, cultural traditions, and dietary trends can all affect the demand for your buffalo and ultimately the prices you can charge and the number of transactions you can make.
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 buffalo farm
The next step is to estimate the expenses needed to run your buffalo farm on a day-to-day basis.
These will vary based on the level of sales expected, and the location and size of your business.
But your buffalo farm's operating expenses should include the following items at a minimum:
- Livestock Feed: This includes hay, grain, and other feed for your buffalo herd. Depending on the size of your farm and the number of buffalo, this can be a significant expense.
- Veterinary Expenses: Keeping your buffalo healthy is crucial for the success of your farm. This includes routine check-ups, vaccinations, and any necessary medical treatments.
- Farm Supplies: From fencing materials to tools and equipment, these are the necessary items for daily operations on your buffalo farm.
- Staff Costs: Whether you have hired employees or family members helping out, their wages or salaries should be factored into your operating expenses.
- Utilities: This includes the cost of electricity, water, and other utilities that are essential for running your farm.
- Insurance Costs: Protecting your farm and livestock is crucial, and insurance costs should be included in your operating expenses. This includes liability insurance, property insurance, and animal mortality insurance.
- Accountancy Fees: Keeping track of your farm's finances and taxes can be complicated, so it may be necessary to hire an accountant to assist you with this.
- Land Lease/Rent: If you do not own the land where your buffalo farm is located, you will need to include the cost of leasing or renting the land in your operating expenses.
- Marketing and Advertising: Getting the word out about your buffalo farm and promoting your products may require marketing and advertising expenses.
- Software Licenses: In today's digital age, there are many software programs that can help with farm management, record-keeping, and other tasks. These licenses should be included in your operating expenses.
- Transportation Costs: Whether it's for transporting your buffalo to market or bringing in supplies, there will be transportation costs associated with running your farm.
- Building Maintenance: Maintaining the structures on your farm, such as barns and fences, is necessary for the safety and well-being of your buffalo.
- Banking Fees: Keeping your farm's finances in order may require you to pay banking fees, such as transaction fees or account maintenance fees.
- Legal Fees: From obtaining necessary permits to handling any legal issues that may arise, you may need to budget for legal fees in your operating expenses.
- Consulting/Professional Services: Depending on the size and complexity of your farm, you may need to hire outside consultants or professionals for assistance with things like farm management or herd health.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small buffalo farm might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a buffalo farm?
Your buffalo 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 buffalo farm, these could include:
- Buffalo breeding stock: This includes the cost of purchasing healthy and genetically superior buffalo cows and bulls to start your farm. You may also need to invest in artificial insemination services and veterinary care for the breeding stock.
- Fencing and infrastructure: Fencing is crucial for keeping your buffalo herd contained and safe. You may also need to invest in other infrastructure such as water tanks, feeding troughs, and shelter for the animals.
- Machinery and equipment: Depending on the size of your farm, you may need to invest in machinery and equipment such as tractors, trailers, and handling facilities for the buffalo. These tools will help you manage your farm efficiently and effectively.
- Land development: Buffalo farms require a significant amount of land for grazing. If you are starting from scratch, you may need to invest in land development, such as clearing and leveling the land, installing irrigation systems, and building access roads.
- Barns and storage facilities: These structures are essential for storing feed, equipment, and other supplies. You may also need to invest in a barn for sheltering your buffalo during harsh weather conditions.
Again, this list will need to be adjusted according to the size and ambitions of your buffalo 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 buffalo farm
The next step in the creation of your financial forecast for your buffalo 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 buffalo farm?
Now let's have a look at the main output tables of your buffalo farm's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your buffalo farm is likely to be in the years to come.
For your buffalo farm 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 buffalo farms, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your buffalo farm'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 buffalo farm 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 buffalo farm'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 buffalo farm 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 buffalo farm'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 buffalo farm's financial projections?
Building a buffalo farm 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 forecasting software to build your buffalo 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
Outsourcing the creation of your buffalo farm financial forecast is another possible solution.
This will cost more than using software as you can expect as your price will have to cover the accountant’s time, software cost, and profit margin.
Price can vary greatly based on the complexity of your business. For a small business, from experience, a simple three-year financial forecast (including a balance sheet, income statement, and cash flow statement) will start at around £700 or $1,000.
Bear in mind that this is for forecasts produced at a single point in time, updating or tracking your forecast against actuals will cost extra.
If you decide to outsource your forecasting:
- Make sure the professional has direct experience in your industry and is able to challenge your assumptions constructively.
- Steer away from consultants using sectorial ratios to build their client’s financial forecasts (these projections are worthless for a small business).
Why not use a spreadsheet such as Excel or Google Sheets to build your buffalo farm's financial forecast?
Creating an accurate and error-free buffalo farm 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 forecast templates for inspiration
The Business Plan Shop has dozens of financial forecast examples available.
Our templates contain both a financial forecast and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Our templates are a great source of inspiration, whether you just want to see what a complete business plan looks like, or are looking for concrete examples of how you should model financial elements in your own forecast.
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 buffalo farm.
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 buffalo farm. 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?
- Sample financial forecast for business idea
Know someone who runs or wants to start a buffalo farm? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
