How to create a financial forecast for a cricket ball manufacturer?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your cricket ball manufacturing business.
Putting together a cricket ball manufacturing business financial forecast may sound complex, but don’t worry, with the right tool, it’s easier than it looks, and The Business Plan Shop is here to guide you.
In this practical guide, we'll cover everything you need to know about building financial projections for your cricket ball manufacturing business.
We will start by looking at why they are key, what information is needed, what a forecast looks like once completed, and what solutions you can use to create yours.
Let's dive in!
Why create and maintain a financial forecast for a cricket ball manufacturing business?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your cricket ball manufacturing business and ensure that it can be financially viable in the years to come.
A financial plan for a cricket ball manufacturing business 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 cricket ball manufacturing business 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 cricket ball manufacturing business'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 cricket ball manufacturing business 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 cricket ball manufacturing business, 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 cricket ball manufacturing business 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 cricket ball manufacturing business, 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 cricket ball manufacturing business's financial forecast.
The sales forecast for a cricket ball manufacturing business
The sales forecast, also called topline projection, is normally where you will start when building your cricket ball manufacturing business 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 cricket ball manufacturers), and consider the elements below:
- Seasonal demand: As a cricket ball manufacturing business, you may experience fluctuations in demand throughout the year. For example, during the peak cricket season, there may be a higher demand for your products, resulting in an increase in the average price and number of monthly transactions.
- Competition: The presence of other cricket ball manufacturers in the market can affect your average price and number of monthly transactions. If there is strong competition, you may need to lower your prices to stay competitive, which could lead to a decrease in average price. Similarly, if your competitors offer better deals or promotions, you may experience a decrease in the number of monthly transactions.
- Changes in technology: As technology advances, it may affect the materials and production processes used in cricket ball manufacturing. If there is a shift towards more advanced and efficient methods, it may result in a decrease in your costs, allowing you to offer lower prices to customers and potentially increase the number of monthly transactions.
- International demand: The popularity of cricket is not limited to one country, and there may be demand for your products from international markets. This can greatly impact your average price and number of monthly transactions. For instance, if there is a surge in demand from a particular country, you may be able to charge higher prices and see an increase in the number of monthly transactions.
- Quality and reputation: The quality of your cricket balls and the reputation of your brand can also affect your price and number of monthly transactions. If you are known for producing high-quality and durable cricket balls, you may be able to charge a premium price and attract more customers. On the other hand, if your reputation is damaged due to product recalls or negative reviews, it may result in a decrease in both average price and number of monthly transactions.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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 cricket ball manufacturing business
The next step is to estimate the expenses needed to run your cricket ball manufacturing business 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 cricket ball manufacturing business's operating expenses should include the following items at a minimum:
- Staff Costs: This includes salaries, wages, benefits, and training for employees involved in the manufacturing process such as production workers, quality control staff, and warehouse personnel.
- Raw Materials: The main raw materials for cricket ball manufacturing are cork, leather, thread, and rubber. You will need to purchase these materials in bulk and keep track of inventory to ensure a steady production flow.
- Equipment Maintenance: As with any manufacturing business, regular maintenance and repairs for machinery and equipment are necessary to keep them in good working condition. This expense may also include the cost of spare parts and servicing.
- Utilities: This includes electricity, water, and gas used in the manufacturing process. You may also need to consider the cost of any specialized equipment or machinery that requires specific energy sources.
- Rent: If you do not own a facility for manufacturing, you will need to rent or lease a space for your operations. This expense will vary depending on the location and size of the facility.
- Packaging and Shipping: Once the cricket balls are manufactured, they will need to be packaged and shipped to customers. This may include the cost of packaging materials, shipping fees, and any specialized packaging for international orders.
- Marketing and Advertising: To promote your cricket ball manufacturing business and attract customers, you may need to invest in marketing and advertising efforts such as creating a website, attending trade shows, and running social media campaigns.
- Insurance: It is important to protect your business with insurance coverage for potential risks such as property damage, product liability, and worker's compensation.
- Accounting and Bookkeeping: As a business owner, you will need to keep track of your finances, taxes, and other financial obligations. This may include the cost of hiring an accountant or bookkeeper.
- Software Licenses: To streamline your operations and keep track of inventory, sales, and finances, you may need to invest in software licenses for accounting, inventory management, and other business tools.
- Banking Fees: As a business, you will need a business bank account to manage your finances. This may include monthly maintenance fees, transaction fees, and other banking charges.
- Legal Fees: As a business owner, you may need to consult with a lawyer for legal advice on contracts, employment agreements, and other business matters.
- Training and Development: To keep up with industry trends and improve the skills of your employees, you may need to invest in training and development programs.
- Office Supplies: This includes expenses for stationery, printing, and other office supplies used in day-to-day operations such as invoicing, record-keeping, and communication.
- Travel Expenses: If your business involves attending trade shows, meeting with suppliers, or visiting customers, you may need to budget for travel expenses such as airfare, accommodation, and meals.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small cricket ball manufacturing business might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a cricket ball manufacturing business?
Your cricket ball manufacturing business 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 cricket ball manufacturing business, these could include:
- Machinery and Equipment: This includes the cost of purchasing and maintaining specialized machinery and equipment used in the manufacturing process, such as ball-making machines and ball polishing machines.
- Facility Renovations and Upgrades: In order to ensure a safe and efficient production process, you may need to make renovations or upgrades to your facility, such as installing proper lighting, ventilation, and flooring.
- Raw Materials and Supplies: As a cricket ball manufacturer, you will need to purchase high-quality raw materials, such as cork, leather, and thread, to produce your balls. These materials can be expensive and should be included in your expenditure forecast.
- Packaging Materials: Packaging is an essential part of selling your cricket balls, and you will need to budget for the cost of purchasing packaging materials, such as boxes, labels, and packaging inserts.
- Maintenance and Repairs: It is important to regularly maintain and repair your machinery and equipment to ensure a smooth production process. This may include routine maintenance, as well as unexpected repairs, which should be accounted for in your expenditure forecast.
Again, this list will need to be adjusted according to the size and ambitions of your cricket ball manufacturing 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.
The financing plan of your cricket ball manufacturing business
The next step in the creation of your financial forecast for your cricket ball manufacturing business 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 cricket ball manufacturing business?
Now let's have a look at the main output tables of your cricket ball manufacturing business'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 cricket ball manufacturing business'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 cricket ball manufacturing business will look different than for a startup.
The projected balance sheet
Your cricket ball manufacturing business'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 projected cash flow statement
A projected cash flow statement for a cricket ball manufacturing business is used to show how much cash the business is generating or consuming.
The cash flow forecast is usually organised by nature to show three key metrics:
- The operating cash flow: do the core business activities generate or consume cash?
- The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
- The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?
Cash is king and keeping an eye on future cash flows is imperative for running a successful business. Therefore, you should pay close attention to your cricket ball manufacturing business's cash flow forecast.
If you are trying to secure financing, note that it is customary to provide both yearly and monthly cash flow forecasts in a financial plan - so that the reader can analyze seasonal variation and ensure the cricket ball manufacturing 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 cricket ball manufacturing business's financial forecast?
Using the right tool or solution will make the creation of your cricket ball manufacturing business's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your cricket ball manufacturing business'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 cricket ball manufacturing business 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 cricket ball manufacturing business'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 cricket ball manufacturing business 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 cricket ball manufacturing business'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 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 cricket ball manufacturing business, 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 cricket ball manufacturing business
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 cricket ball manufacturing business 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 cricket ball manufacturing business, 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 for a business idea
Know someone who owns or is thinking of starting a cricket ball manufacturing business? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
