How to create a financial forecast for a commodity brokerage firm?

Creating a financial forecast for your commodity brokerage 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 commodity brokerage 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 commodity brokerage firm?
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 commodity brokerage firm becomes handy.
Creating a commodity brokerage firm 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 commodity brokerage firm.
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 commodity brokerage firm 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 commodity brokerage firm'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.
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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 commodity brokerage firm financial forecast?
A commodity brokerage firm's financial forecast needs to be built on the right foundation: your assumptions.
The data required to create your assumptions will depend on whether you are a new or existing commodity brokerage firm.
If you are creating (or updating) the forecast of an existing commodity brokerage firm, then your main inputs will be historical accounting data and operating metrics, and your team’s view on what to expect for the next three to five years.
If you are building financial projections for a new commodity brokerage firm startup, you will need to rely on market research to form your go-to-market strategy and derive your sales forecast.
For a new venture, you will also need an itemised list of resources needed for the commodity brokerage firm to operate, along with a list of equipment required to launch the venture (more on that below).
Now that you understand what is needed, let’s have a look at what elements will make up your commodity brokerage firm's financial forecast.
The sales forecast for a commodity brokerage firm
The sales forecast, also called topline projection, is normally where you will start when building your commodity brokerage firm financial forecast.
Creating a coherent sales projection boils down to estimating two key drivers:
- The average price
- The number of monthly transactions
To do this, you will need to rely on historical data (for an existing business), market research data (for both new and existing commodity brokerage firms), and consider the elements below:
- Commodity market trends: The overall performance of the commodity market can greatly impact the average price and number of monthly transactions for your brokerage firm. Factors such as supply and demand, geopolitical events, and economic conditions can all affect market prices and trading activity.
- Technology advancements: The introduction of new technologies in the commodity trading industry can lead to changes in pricing and transaction volume. For example, the emergence of online trading platforms or the use of automated trading algorithms can impact the average price and frequency of transactions for your firm.
- Regulatory changes: Changes in regulations, both locally and globally, can have a significant impact on the commodity market and your brokerage firm. New regulations may restrict certain trading activities or introduce new fees, which can affect pricing and transaction volume.
- Weather conditions: As a commodity brokerage firm, your business is heavily influenced by the weather. Severe weather events can disrupt commodity production and transportation, leading to fluctuations in prices and trading activity.
- Competition: The actions of your competitors can also affect your firm's average price and monthly transactions. For example, if a competitor offers lower fees or a wider range of commodities, it may attract clients away from your firm, impacting your pricing and trading volume.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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The operating expenses for a commodity brokerage firm
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your commodity brokerage firm 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 commodity brokerage firm will include some of the following items:
- Staff costs: This includes salaries, bonuses, and benefits for all employees of the commodity brokerage firm, including brokers, analysts, and support staff.
- Accountancy fees: Your commodity brokerage firm will need to hire a professional accountant to handle financial statements, tax returns, and other financial reporting requirements.
- Insurance costs: As a commodity brokerage firm, you will need to protect your business from potential risks such as errors and omissions, cyber attacks, and other liabilities.
- Software licences: To efficiently manage trades and client accounts, your firm will need to invest in software and pay for annual licences for trading platforms, market data, and other necessary software.
- Banking fees: Your firm will incur fees for wire transfers, account maintenance, and other banking services necessary for conducting business in the commodity market.
- Marketing and advertising expenses: To attract new clients and promote your services, your firm will need to invest in marketing and advertising efforts, such as creating a website, attending industry events, and running targeted campaigns.
- Rent and utilities: Your firm will need office space to conduct business, and you will have to pay rent and utilities such as electricity, water, and internet access.
- Compliance costs: As a regulated industry, your commodity brokerage firm will need to comply with various laws and regulations, which may require hiring compliance officers and paying for legal fees.
- Professional development: To stay knowledgeable and up-to-date in the constantly changing commodity market, your firm may need to invest in training and development for employees.
- Office supplies and equipment: Your firm will need basic office supplies such as paper, pens, and printer ink, as well as equipment like computers, phones, and furniture.
- Travel expenses: If your firm conducts business with clients or attends industry events outside of the office, you will need to budget for travel expenses such as flights, hotels, and meals.
- Legal fees: In addition to compliance costs, your firm may also incur legal fees for contract negotiations, disputes, and other legal matters.
- Telephone and internet expenses: As a commodity brokerage firm, you will need reliable communication channels with clients and other market participants, which will require paying for telephone and internet services.
- Office cleaning and maintenance: To maintain a professional and organized workspace, your firm may need to budget for office cleaning and maintenance services.
- Continuity and disaster recovery: As a contingency plan, your firm may need to invest in continuity and disaster recovery measures to ensure business operations can continue in the event of unexpected disruptions.
This list will need to be tailored to the specificities of your commodity brokerage firm, but should offer a good starting point for your budget.
What investments are needed to start or grow a commodity brokerage firm?
Your commodity brokerage 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 commodity brokerage firm, these could include:
- Computer hardware and software: As a commodity brokerage firm, you will need to invest in the latest technology to stay competitive. This includes purchasing computers, servers, networking equipment, and software for trading, market analysis, and client management.
- Office furniture and equipment: To create a professional and efficient workspace, you will need to budget for office furniture such as desks, chairs, and filing cabinets. Additionally, you may need to purchase equipment like printers, scanners, and fax machines for daily operations.
- Trading platform fees: As a commodity brokerage firm, you will need to pay fees to use trading platforms for your clients. These fees can include initial setup costs and ongoing maintenance fees.
- Office space rent: Your expenditure forecast should include the cost of renting office space to house your team. This can include expenses such as rent, utilities, and maintenance fees.
- Security and compliance costs: As a financial institution, you will need to invest in security measures and comply with regulations to protect your clients' data. This can include expenses for cybersecurity software, compliance training, and audits.
Again, this list will need to be adjusted according to the size and ambitions of your commodity brokerage 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 commodity brokerage firm
The next step in the creation of your financial forecast for your commodity brokerage 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 commodity brokerage firm?
Now let's have a look at the main output tables of your commodity brokerage firm's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your commodity brokerage firm is likely to be in the years to come.

For your commodity brokerage firm 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 commodity brokerage firms, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your commodity brokerage 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 forecast
Your commodity brokerage firm'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 commodity brokerage firm:
- 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 commodity brokerage firm'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 commodity brokerage firm'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 commodity brokerage firm's financial forecast?
Using the right tool or solution will make the creation of your commodity brokerage firm's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your commodity brokerage firm'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 commodity brokerage 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 commodity brokerage firm'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 commodity brokerage firm 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 commodity brokerage firm'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
- 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 commodity brokerage firm.
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 commodity brokerage firm. 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 project sales for a business?
- Sample financial forecast for business idea
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