How to create a financial forecast for a currant farm?
Creating a financial forecast for your currant farm, 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 currant farm 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 currant farm?
The financial projections for your currant farm act as a financial blueprint to guide its growth with confidence and ensure its long-term financial viability.
To create them, you will need to look at your business in detail - from sales to operating costs and investments - to assess how much profit it can generate in the years to come and what will be the associated cash flows.
During challenging market conditions, maintaining an up-to-date financial forecast enables early detection of potential financial shortfalls, allowing for timely adjustments or securing financing before facing a cash crisis.
Your currant farm's financial forecast will also prove invaluable when seeking financing. Banks and investors will undoubtedly request a thorough examination of your financial figures, making precision and presentation essential.
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 currant farm financial forecast?
A currant farm's financial forecast is only as good as the inputs used to build it.
If you are creating (or updating) the forecast of an existing currant farm, then you mostly need your accounting information, key historical operating non-financial data, and your team’s input on what to expect for the coming years.
If you are building financial projections for a currant farm startup, you will need to have done your research and have a clear picture of your competitive environment and go-to-market strategy so that you can forecast sales accurately.
For a new venture, you will also need a precise list of the resources needed to keep the currant farm running on a day-to-day basis and a list of the equipment and expenditures required to start the business (more on that later).
Let's now take a closer look at the elements that make up your currant farm's financial forecast.
The sales forecast for a currant farm
From experience, it is usually best to start creating your currant farm financial forecast by your sales forecast.
To create an accurate sales forecast for your currant farm, you will have to rely on the data collected in your market research, or if you're running an existing currant farm, 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:
- Weather patterns: The average price and number of monthly transactions for your currant farm may be affected by unpredictable weather patterns, such as droughts or excessive rainfall. These conditions can impact the quality and quantity of your crop, leading to fluctuations in prices and sales.
- Pests and diseases: The presence of pests and diseases can greatly affect the average price and number of monthly transactions for your currant farm. These issues can lead to a decrease in crop yield and quality, resulting in lower prices and sales.
- Competition: The presence of other currant farms in the market can also impact your average price and number of monthly transactions. If there is high competition, you may need to adjust your prices to remain competitive and attract customers, which could affect your sales.
- Consumer trends: Changes in consumer preferences and trends can also affect the average price and number of monthly transactions for your currant farm. For example, if there is a growing demand for organic or locally grown produce, you may be able to charge higher prices and see an increase in sales.
- Crop rotation and soil health: Proper crop rotation and maintaining soil health are crucial for the success of a currant farm. Neglecting these factors can lead to lower crop yields and quality, which can impact your average price and number of monthly transactions.
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 currant farm
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your currant farm 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 currant farm will include some of the following items:
- Staff costs: These include wages, salaries, and benefits for your employees, such as farm workers, harvesters, and administrative staff.
- Accountancy fees: You may need to hire an accountant or bookkeeper to help you manage your finances and keep track of expenses.
- Insurance costs: It's important to have insurance coverage for your currant farm to protect against potential risks, such as crop damage, equipment breakdowns, and liability claims.
- Software licenses: You may need to purchase software licenses for programs that help with farm management, accounting, or inventory tracking.
- Banking fees: As a business owner, you will likely have to pay fees for various banking services, such as checking accounts, credit card processing, and loans.
- Seed and plant costs: This covers the expenses for purchasing currant seeds, seedlings, and plants for your farm.
- Fertilizer and pesticide costs: These are essential for maintaining healthy and productive currant plants.
- Water and irrigation costs: Currants require regular watering, so you may have to pay for irrigation systems or water usage fees.
- Equipment maintenance: Regular maintenance and repairs for farm equipment, such as tractors, pruning tools, and harvesters, are necessary to keep your farm running smoothly.
- Energy costs: This includes electricity, fuel, and gas expenses for powering your farm operations, such as irrigation systems, refrigeration, and lighting.
- Marketing and advertising: To promote your currant farm and attract customers, you may need to invest in marketing materials, advertising campaigns, and events.
- Packaging and shipping: If you plan to sell your currants to customers or distributors, you will need to cover the costs of packaging materials and shipping services.
- Rent or mortgage: If you do not own the land for your currant farm, you will have to pay rent or a mortgage for the property.
- Taxes and permits: As a business owner, you will have to pay taxes on your farm income and obtain necessary permits for operating a farm.
- Training and education: To stay updated on the latest farming practices and techniques, you may need to attend workshops, conferences, or training programs.
This list will need to be tailored to the specificities of your currant farm, but should offer a good starting point for your budget.
What investments are needed to start or grow a currant farm?
Your currant farm 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 currant farm, these could include:
- Tractor - A tractor is an essential piece of equipment for a currant farm. It can be used for plowing, tilling, and harvesting the fields. Make sure to budget for the purchase or lease of a reliable tractor that can handle the workload of your farm.
- Irrigation System - Currant plants require consistent watering to produce high-quality fruit. Investing in a proper irrigation system, such as drip irrigation or sprinklers, can save you time and labor costs in the long run. Include the cost of installation and any necessary maintenance in your expenditure forecast.
- Storage Shed - Currants need to be stored in a cool and dry place to maintain their freshness and quality. Consider building or purchasing a storage shed to store your harvested currants. This will protect them from the elements and potential pests, ensuring a longer shelf life.
- Fencing - Installing a fence around your currant farm can help protect your crops from wildlife and prevent unwanted foot traffic. Factor in the cost of materials and labor for fencing in your expenditure forecast.
- Truck or Trailer - You will need a reliable means of transportation to transport your currants to market or processing facilities. Consider purchasing or leasing a truck or trailer that can handle the weight and volume of your harvest. Don't forget to include any insurance or maintenance costs in your forecast.
Again, this list will need to be adjusted according to the size and ambitions of your currant farm.
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 currant farm
The next step in the creation of your financial forecast for your currant farm 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 currant farm?
Now let's have a look at the main output tables of your currant farm's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your currant farm is likely to be in the years to come.
For your currant farm 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 currant farms, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
The projected balance sheet gives an overview of your currant farm's financial structure at the end of the financial year.
It is composed of three categories of items: assets, liabilities and equity:
- Assets: are what the business possesses and uses to produce cash flows. It includes resources such as cash, buildings, equipment, and accounts receivable (money owed by clients).
- Liabilities: are the debts of your currant farm. They include accounts payable (money owed to suppliers), taxes due and bank loans.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits 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 currant farm 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 currant farm'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 currant farm 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 currant farm'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 currant farm's financial projections?
Building a currant farm financial forecast is not difficult provided that you use the right tool for the job. Let’s see what options are available below.
Using online financial forecasting software to build your currant farm'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 currant farm 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 currant farm's financial forecast?
Creating an accurate and error-free currant farm financial forecast with a spreadsheet is very technical and requires a deep knowledge of accounting and an understanding of financial modelling.
Very few business owners are financially savvy enough to be able to build a forecast themselves on Excel without making mistakes.
Lenders and investors know this, which is why forecasts created on Excel by the business owner are often frowned upon.
Having numbers one can trust is key when it comes to financial forecasting and to that end using software is much safer.
Using financial forecasting software is also faster than using a spreadsheet, and, with the rise of artificial intelligence, software is also becoming smarter at helping us analyse the numbers to make smarter decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and keeping your projections up to date as the year progresses is manual, tedious, and error-prone. Whereas financial projection 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
- 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 currant farm 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 currant farm, 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 create a sales forecast for a business?
- Financial forecast template for a business idea
Know someone who owns or is thinking of starting a currant farm? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
