How to create a financial forecast for a couscous producer?
Developing and maintaining an up-to-date financial forecast for your couscous producing company 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 couscous producing company 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 couscous producing company?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your couscous producing company and ensure that it can be financially viable in the years to come.
A financial plan for a couscous producing company 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 couscous producing company 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 couscous producing company'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 used as input to build a couscous producing company financial forecast?
A couscous producing company'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 couscous producing company.
If you are creating (or updating) the forecast of an existing couscous producing company, 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 couscous producing company 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 couscous producing company 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 couscous producing company's financial forecast.
The sales forecast for a couscous producing company
The sales forecast, also called topline projection, is normally where you will start when building your couscous producing company 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 couscous producers), and consider the elements below:
- Seasonal demand: As a couscous producing company, you may experience fluctuations in demand based on the season. For example, during the summer months, there may be a higher demand for couscous due to its light and refreshing nature, while in the winter months, demand may decrease as people opt for heartier meals. This can impact your average price and number of monthly transactions.
- Competition: The presence of other couscous producing companies in the market can affect your average price and number of monthly transactions. If there is high competition, you may need to lower your prices to remain competitive, which can impact your average price. Additionally, if your competitors are offering promotions or discounts, this can also affect your number of monthly transactions.
- Ingredient costs: The cost of the ingredients used to make couscous can have a direct impact on your average price. If the cost of ingredients increases, you may need to raise your prices to maintain profitability. This can also affect your number of monthly transactions, as some customers may be deterred by the higher prices.
- Health trends: In recent years, there has been a growing trend towards healthier eating habits. This can have both positive and negative effects on your couscous producing company. On one hand, the demand for healthier options may increase your number of monthly transactions. However, if your couscous is perceived as unhealthy or not in line with current health trends, this can negatively impact your average price and number of transactions.
- Economic factors: Economic factors such as inflation, unemployment rates, and disposable income can also affect your average price and number of monthly transactions. For example, during times of economic downturn, people may opt for cheaper food options, which can impact your average price. Additionally, if unemployment rates are high, this can decrease the number of monthly transactions as people may have less disposable income to spend on food.
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 couscous producing company
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your couscous producing company 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 couscous producing company will include some of the following items:
- Staff Costs: This includes salaries, wages, benefits, and other expenses related to your employees, such as training and recruitment costs.
- Raw Materials: The cost of purchasing ingredients and supplies for making couscous, such as semolina, vegetables, spices, and packaging materials.
- Rent and Utilities: This includes the cost of renting a production facility, as well as utilities such as electricity, water, and internet.
- Equipment Maintenance: The cost of maintaining and repairing equipment used in the production process, such as grinders, mixers, and packaging machines.
- Marketing and Advertising: Expenses related to promoting your couscous brand, such as advertisements, packaging design, and social media marketing.
- Transportation and Shipping: The cost of transporting raw materials to your production facility and delivering finished products to customers.
- Insurance Costs: This includes insurance for your production facility, equipment, and products to protect against potential losses and liabilities.
- Accountancy Fees: The cost of hiring an accountant or accounting firm to manage your financial records and prepare tax returns.
- Software Licenses: Expenses for software used in the production process, such as inventory management, accounting, and customer relationship management systems.
- Banking Fees: This includes fees for banking services, such as checking and savings accounts, wire transfers, and credit card processing.
- Packaging Materials: The cost of purchasing packaging materials for your couscous products, such as bags, boxes, and labels.
- Utilities: Expenses for utilities used in the production process, such as gas, water, and electricity.
- Legal Fees: The cost of hiring a lawyer or law firm for legal advice and assistance with contracts, trademarks, and other legal matters.
- Research and Development: Expenses for researching and developing new couscous products, as well as improving existing ones.
- Office Supplies: The cost of purchasing office supplies, such as paper, pens, and printer ink, for administrative tasks and record keeping.
This list will need to be tailored to the specificities of your couscous producing company, but should offer a good starting point for your budget.
What investments are needed to start or grow a couscous producing company?
Your couscous producing company 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 couscous producing company, these could include:
- Couscous Manufacturing Equipment: This includes purchasing and installing machinery such as grinders, mixers, and packaging machines specifically designed for producing couscous. These are essential fixed assets for a couscous producing company and can be a significant capital expenditure.
- Storage and Packaging Facilities: In order to properly store and package couscous, a producing company will need to invest in storage facilities such as warehouses or refrigerated rooms. These facilities will also need to be equipped with packaging equipment, such as sealing and labeling machines.
- Transportation Vehicles: Transportation is a crucial aspect of the couscous production process, as the product needs to be delivered to distributors and retailers. A producing company may need to purchase vehicles, such as trucks or vans, for this purpose.
- Building Renovations: Depending on the scale of the couscous producing company, they may need to renovate or build a facility specifically for production. This could include constructing a factory or renovating an existing building to meet the needs of couscous production.
Again, this list will need to be adjusted according to the size and ambitions of your couscous producing company.
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 couscous producing company
The next step in the creation of your financial forecast for your couscous producing company 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 couscous producing company?
Now let's have a look at the main output tables of your couscous producing company's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your couscous producing company is likely to be in the years to come.
For your couscous producing company 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 couscous producers, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your couscous producing company'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 couscous producing company 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 couscous producing company'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 couscous producing company 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 couscous producing company'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 couscous producing company's financial forecast?
Using the right tool or solution will make the creation of your couscous producing company's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your couscous producing company'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 couscous producing company 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 couscous producing company's financial forecast?
Creating an accurate and error-free couscous producing company 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 forecast shows expected growth, profitability, and cash generation metrics for your couscous producing company.
- 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 couscous producing company. 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 create a sales forecast for a business?
- Financial forecast template for a business idea
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Founder & CEO at The Business Plan Shop Ltd
