How to create a financial forecast for a chemical engineering advisory firm?

Creating a financial forecast for your chemical engineering advisory firm, 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 chemical engineering advisory firm 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 chemical engineering advisory firm?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your chemical engineering advisory firm and ensure that it can be financially viable in the years to come.
A financial plan for a chemical engineering advisory firm 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 chemical engineering advisory firm 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 chemical engineering advisory firm'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 chemical engineering advisory firm 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 chemical engineering advisory firm, 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 chemical engineering advisory firm 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 chemical engineering advisory firm, 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 chemical engineering advisory firm's financial forecast.
The sales forecast for a chemical engineering advisory firm
From experience, it usually makes sense to start your chemical engineering advisory firm's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your chemical engineering advisory firm (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 chemical engineering advisory firm'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:
- You can expect to see an increase in the average price of your services as the demand for sustainable and environmentally friendly solutions in the chemical engineering industry continues to grow. This can be attributed to increasing regulations and consumer awareness.
- The number of monthly transactions may decrease if there is a major economic downturn, as companies may cut back on consulting services to reduce costs. This can also be affected by the overall health of the chemical engineering industry.
- Your average price may be impacted by the availability and cost of raw materials, as well as any fluctuations in the market for these materials. This can directly affect your profit margins and should be closely monitored.
- The introduction of new technologies or software in the chemical engineering field may affect the demand for your services. If these technologies are able to provide similar solutions at a lower cost, your average price may need to be adjusted to remain competitive.
- The political climate and government policies can also play a role in your sales forecast. Changes in regulations or incentives for certain industries may create opportunities for your firm, but can also pose challenges if your services are affected by these policies.
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 chemical engineering advisory firm
The next step is to estimate the costs you’ll have to incur to operate your chemical engineering advisory firm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your chemical engineering advisory firm's operating expenses should normally include the following items:
- Staff Costs: This includes salaries, benefits, and bonuses for all employees, including chemical engineers, consultants, and administrative staff.
- Accountancy Fees: You will need to hire a certified public accountant (CPA) to handle your financial statements, tax filings, and other accounting needs.
- Insurance Costs: As a chemical engineering advisory firm, you will need to obtain various types of insurance, such as professional liability insurance, general liability insurance, and workers' compensation insurance.
- Software Licences: To effectively run your business, you will need to invest in software licenses for programs such as project management software, CAD software, and simulation software.
- Banking Fees: This includes fees for maintaining business bank accounts, wire transfers, and credit card processing fees.
- Rent/Lease: You will need to pay for office space to conduct your business operations, whether through rent or lease payments.
- Office Supplies: This includes expenses for items such as stationery, printer ink, and other office supplies.
- Marketing/Advertising: To attract clients, you will need to invest in marketing and advertising efforts, such as creating a website, attending networking events, and running advertisements.
- Travel Expenses: As a chemical engineering advisory firm, you may need to travel for client meetings, conferences, and other business-related trips.
- Professional Memberships: You may need to join professional organizations and pay for membership fees to stay updated on industry trends and network with other professionals.
- Training/Education: To stay relevant and competitive in the field of chemical engineering, you may need to invest in training and education programs for yourself and your employees.
- Telephone/Internet: These are essential tools for communication and conducting business, so you will need to budget for monthly telephone and internet expenses.
- Legal Fees: You may need to consult with a lawyer for legal advice on contracts, intellectual property, or other business matters.
- Utilities: This includes expenses for electricity, water, and other utilities needed to run your office space.
- Office Equipment: This includes expenses for purchasing or leasing office equipment, such as computers, printers, and furniture.
This list is not exhaustive by any means, and will need to be tailored to your chemical engineering advisory firm's specific circumstances.
What investments are needed to start or grow a chemical engineering advisory firm?
Your chemical engineering advisory firm 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 chemical engineering advisory firm, these could include:
- Laboratory Equipment: This includes specialized equipment such as reactors, distillation columns, and spectrophotometers that are essential for conducting experiments and analysis in a chemical engineering advisory firm.
- Computer Software and Hardware: As technology plays a crucial role in the field of chemical engineering, your firm will need to invest in various software programs and hardware devices such as computers, servers, and printers to efficiently carry out projects and store data.
- Office Furniture and Fixtures: Furnishing your office space with desks, chairs, filing cabinets, and other necessary furniture and fixtures is an important capital expenditure for a chemical engineering advisory firm. These items not only provide a comfortable work environment but also contribute to the professional image of your firm.
- Transportation Vehicles: If your firm offers on-site services or has a need for frequent travel, investing in transportation vehicles such as vans or trucks can be a valuable capital expenditure. These vehicles can also serve as mobile advertising for your firm.
- Renovations and Improvements: As your firm grows and evolves, it may require renovations and improvements to its office space to accommodate more staff or equipment. These can include expanding the office, upgrading electrical or plumbing systems, or adding new lab space.
Again, this list will need to be adjusted according to the size and ambitions of your chemical engineering advisory firm.
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 chemical engineering advisory firm
The next step in the creation of your financial forecast for your chemical engineering advisory firm 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 chemical engineering advisory firm?
Now let's have a look at the main output tables of your chemical engineering advisory firm'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 chemical engineering advisory firm'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 chemical engineering advisory firm will look different than for a startup.
The projected balance sheet
Your chemical engineering advisory firm'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 projection
The cash flow forecast of your chemical engineering advisory firm 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 chemical engineering advisory firm'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 chemical engineering advisory firm 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 chemical engineering advisory firm'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 chemical engineering advisory firm's financial forecast?
Using the right tool or solution will make the creation of your chemical engineering advisory firm's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your chemical engineering advisory firm'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.
Calling in a financial consultant or chartered accountant
Outsourcing the creation of your chemical engineering advisory firm 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 chemical engineering advisory firm's financial forecast?
Creating an accurate and error-free chemical engineering advisory firm 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 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 chemical engineering advisory firm, 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 chemical engineering advisory firm

Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your chemical engineering advisory firm.
- 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 chemical engineering advisory firm. 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
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- Financial forecast for a business idea
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