How to create a financial forecast for a cheesemonger shop?
Developing and maintaining an up-to-date financial forecast for your cheesemonger shop 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 cheesemonger shop 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 cheesemonger shop?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your cheesemonger shop and ensure that it can be financially viable in the years to come.
A financial plan for a cheesemonger shop 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 cheesemonger shop 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 cheesemonger shop'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 cheesemonger shop 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 cheesemonger shop, 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 cheesemonger shop 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 cheesemonger shop, 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 cheesemonger shop's financial forecast.
The sales forecast for a cheesemonger shop
From experience, it is usually best to start creating your cheesemonger shop financial forecast by your sales forecast.
To create an accurate sales forecast for your cheesemonger shop, you will have to rely on the data collected in your market research, or if you're running an existing cheesemonger shop, 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:
- Seasonal demand: As a cheesemonger shop owner, you know that the demand for cheese varies throughout the year. During the holiday season, customers may be more willing to splurge on specialty cheeses for gatherings and gifts, leading to a higher average price and number of transactions.
- Competition: The presence of other cheese shops in your area can affect your average price and number of transactions. If there are several shops in close proximity, customers may have more options and be more price-sensitive, leading to lower prices and fewer transactions.
- Cheese selection: The types of cheese you offer can also impact your sales. If you have a variety of rare and unique cheeses, you may be able to charge a higher average price and attract customers who are willing to pay for a special experience.
- Economic climate: Changes in the economy can also affect your business. During times of economic downturn, customers may be more budget-conscious and opt for cheaper cheese options, leading to a decrease in average price and number of transactions.
- Tourism: If your shop is located in a popular tourist destination, you may experience fluctuations in sales depending on the season. During peak tourist season, you may see an increase in sales as visitors look for local delicacies to try and bring home as souvenirs.
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 cheesemonger shop
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your cheesemonger shop 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 cheesemonger shop will include some of the following items:
- Staff Costs: This includes the salaries and benefits for your employees, such as cheesemongers, sales associates, and other staff members.
- Rent: You will need to pay rent for your shop space, which can vary depending on the location and size of your shop.
- Inventory Costs: This includes the cost of purchasing cheese and other products to stock your shop.
- Utilities: You will need to pay for electricity, water, and other utilities to keep your shop running.
- Marketing and Advertising: It's important to promote your shop and reach potential customers through various marketing and advertising efforts.
- Accountancy Fees: You may need to hire an accountant to help with bookkeeping, tax preparation, and other financial tasks.
- Insurance Costs: It's important to have insurance to protect your business from potential risks and liabilities.
- Packaging and Shipping: If you offer online sales or shipping services, you will need to budget for the costs of packaging materials and shipping fees.
- Software Licences: You may need to purchase software licences for point-of-sale systems, inventory management, and other business operations.
- Banking Fees: You will need to pay fees for banking services, such as credit card processing and business checking accounts.
- Equipment Maintenance: Your shop may have equipment, such as refrigerators and slicers, that require regular maintenance and repairs.
- Professional Memberships: You may choose to join industry organizations or associations, which often require annual membership fees.
- Delivery Services: If you offer delivery services, you will need to budget for the costs of gas, vehicle maintenance, and potential delivery fees.
- Legal Fees: You may need to consult with a lawyer for legal advice or assistance with contracts, leases, or other business matters.
- Cleaning and Maintenance: It's important to keep your shop clean and well-maintained, which may require hiring cleaning services or purchasing cleaning supplies.
This list will need to be tailored to the specificities of your cheesemonger shop, but should offer a good starting point for your budget.
What investments are needed to start or grow a cheesemonger shop?
Creating and expanding a cheesemonger shop also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a cheesemonger shop could include elements such as:
- Equipment: This includes items such as refrigerators, display cases, cheese cutters, and other tools necessary for the daily operation of your cheesemonger shop.
- Furniture and Fixtures: This category includes tables, chairs, shelving units, and other furniture and fixtures needed to create a welcoming and functional atmosphere for your customers.
- Renovations: If you are opening a new cheesemonger shop or expanding your current one, you may need to make renovations to the space. This could include things like painting, flooring, or building out a new cheese counter.
- Point of Sale System: A modern and efficient point of sale (POS) system is essential for any retail business, including a cheesemonger shop. This can include a cash register, credit card reader, and inventory management software.
- Delivery Vehicles: If you offer delivery services to your customers, you may need to purchase a delivery vehicle or add one to your existing fleet. This can include vans or trucks to transport your cheese and other products to your customers' homes or businesses.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your cheesemonger shop.
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 cheesemonger shop
The next step in the creation of your financial forecast for your cheesemonger shop 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 cheesemonger shop?
Now let's have a look at the main output tables of your cheesemonger shop'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 cheesemonger shop'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 cheesemonger shop will look different than for a startup.
The projected balance sheet
Your cheesemonger shop'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 cheesemonger shop'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 cheesemonger shop:
- 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 cheesemonger shop'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 cheesemonger shop'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 cheesemonger shop's financial forecast?
Using the right tool or solution will make the creation of your cheesemonger shop's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your cheesemonger shop'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 cheesemonger shop 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 cheesemonger shop'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 cheesemonger shop 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 cheesemonger shop'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 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
- 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 cheesemonger shop 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 cheesemonger shop, 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?
- Financial forecast template for a business idea
Know someone who owns or is thinking of starting a cheesemonger shop? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
