How to create a financial forecast for a fish farm?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your fish farm.
Putting together a fish farm 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 fish farm.
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 fish farm?
The financial projections for your fish 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 fish 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 needed to build a fish farm 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 fish farm, 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 fish farm 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 fish farm, 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 fish farm's financial forecast.
The sales forecast for a fish farm
From experience, it usually makes sense to start your fish farm's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your fish farm (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 fish farm'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:
- Your location can greatly affect the average price of your fish. If you are located in a coastal area with easy access to water, your fish may be more expensive due to the convenience and freshness of the product.
- The type of fish you farm can also impact the average price. For example, exotic or rare fish may demand a higher price compared to common fish species.
- The time of year can play a significant role in the number of monthly transactions. During peak fishing season, you may see an increase in sales as people are more likely to purchase fish for outdoor activities such as barbecues and fishing trips.
- Weather conditions can also affect the number of monthly transactions. If there is a severe storm or natural disaster, it may be difficult for customers to access your farm and purchase fish, leading to a decrease in sales for that month.
- The quality of your fish can impact both the average price and number of monthly transactions. If you maintain high standards and produce top-quality fish, customers may be willing to pay a premium price and come back for repeat purchases.
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 fish farm
The next step is to estimate the expenses needed to run your fish farm 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 fish farm's operating expenses should include the following items at a minimum:
- Staff Costs: Salaries and wages for employees, including farm workers, fish handlers, and administrative staff.
- Accountancy Fees: Fees for financial consulting services and tax preparation.
- Insurance Costs: Premiums for insurance coverage on the farm, including property, liability, and crop insurance.
- Software Licences: Fees for software used for managing inventory, tracking sales, and analyzing data.
- Banking Fees: Charges for bank transactions, such as wire transfers, check processing, and ATM fees.
- Feed Costs: Expenses for purchasing feed for the fish, including pellets, live feed, and supplements.
- Medication and Treatments: Costs for purchasing medication and treatments for fish diseases and parasites.
- Water and Electricity: Charges for water usage and electricity consumption on the farm.
- Maintenance and Repairs: Expenses for repairing and maintaining equipment, facilities, and infrastructure on the farm.
- Transportation Costs: Fees for transporting fish, equipment, and supplies to and from the farm.
- Marketing and Advertising: Costs for promoting the farm and its products, including website development, print ads, and social media campaigns.
- Packaging and Labeling: Expenses for packaging materials and labeling supplies for the fish products.
- Licenses and Permits: Fees for obtaining necessary licenses and permits for operating the fish farm.
- Rent or Land Leases: Payments for renting land or leasing ponds for fish farming.
- Water Testing and Quality Control: Costs for testing water quality and implementing measures to maintain optimal conditions for the fish.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small fish farm might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a fish farm?
Your fish 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 fish farm, these could include:
- Fish Tanks: These are large tanks used to house and grow fish. They are a necessary capital expenditure for a fish farm as they provide the primary environment for the fish to live and thrive.
- Aeration Systems: Aeration systems are essential for keeping the water in the fish tanks oxygenated and clean. They can include items such as air pumps, diffusers, and filters.
- Feeders: Fish feeders are used to automatically dispense food to the fish in the tanks. They can range from simple gravity-fed systems to more advanced automatic feeders.
- Pumps and Pipes: Pumps and pipes are necessary for circulating and filtering water in the fish tanks. They also help to maintain proper water flow and oxygen levels for the fish.
- Harvesting Equipment: As a fish farm owner, you will need equipment to harvest and process your fish. This can include items such as nets, scales, and processing machinery.
Again, this list will need to be adjusted according to the size and ambitions of your fish 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 fish farm
The next step in the creation of your financial forecast for your fish 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 fish farm?
Now let's have a look at the main output tables of your fish farm's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your fish farm is likely to be in the years to come.
For your fish 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 fish farms, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your fish farm's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- 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 fish farm'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 fish farm:
- 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 fish farm'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 fish farm'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 fish farm's financial forecast?
Creating your fish farm's financial forecast may sound fairly daunting, but the good news is that there are several ways to go about it.
Using online financial forecasting software to build your fish 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.
Calling in a financial consultant or chartered accountant
Enlisting the help of a consultant or accountant is also a good way to obtain a professional fish farm financial forecast.
The downside of this solution is its cost. From experience, obtaining a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to cost a minimum of £700 or $1,000.
The indicative cost above, is for a small business, and a forecast is done as a one-shot exercise. Using a consultant or accountant to track your actuals vs. forecast and to keep your financial projections up to date on a monthly or quarterly basis will cost a lot more.
If you opt for this solution, make sure your accountant has in-depth knowledge of your industry, so that they may challenge your figures and offer insights (as opposed to just taking your assumptions at face value to create the forecast).
Why not use a spreadsheet such as Excel or Google Sheets to build your fish farm's financial forecast?
Creating an accurate and error-free fish 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
- 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 fish farm.
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 fish farm. 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 write a business plan for a fish farm
- How to project revenues for a business?
- Example of financial forecast for business idea
Know someone who runs or wants to start a fish farm? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
