How to create a financial forecast for a Ghanaian restaurant?
Creating a financial forecast for your Ghanaian restaurant, 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 Ghanaian restaurant 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 Ghanaian restaurant?
The financial projections for your Ghanaian restaurant 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 Ghanaian restaurant'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 Ghanaian restaurant financial forecast?
A Ghanaian restaurant'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 Ghanaian restaurant.
If you are creating (or updating) the forecast of an existing Ghanaian restaurant, 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 Ghanaian restaurant 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 Ghanaian restaurant 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 Ghanaian restaurant's financial forecast.
The sales forecast for a Ghanaian restaurant
From experience, it usually makes sense to start your Ghanaian restaurant's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your Ghanaian restaurant (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 Ghanaian restaurant'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:
- Availability and cost of key ingredients such as plantains, yams, and cassava can directly impact the average price of dishes on your menu.
- Seasonal fluctuations in the supply of certain ingredients, such as fresh fish or palm oil, can also affect the cost and availability of dishes on your menu.
- The popularity of traditional Ghanaian cuisine among non-Ghanaian customers can drive up demand and potentially increase the average price of dishes on your menu.
- The economic climate in Ghana, including factors such as inflation and exchange rates, can impact the cost of importing ingredients and thus influence the average price of dishes on your menu.
- The availability and cost of skilled labor, such as experienced chefs trained in Ghanaian cooking techniques, can impact the quality and complexity of dishes on your menu and potentially affect your average price.
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.
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The operating expenses for a Ghanaian restaurant
The next step is to estimate the expenses needed to run your Ghanaian restaurant 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 Ghanaian restaurant's operating expenses should include the following items at a minimum:
- Staff costs: This includes salaries, wages, and benefits for your kitchen staff, servers, and other employees. You may also need to factor in additional costs such as uniforms and training expenses.
- Food and beverage costs: This covers the cost of ingredients, beverages, and other supplies needed to prepare your dishes. Keep track of your inventory and regularly review your suppliers to ensure you are getting the best prices.
- Rent: Your rent or lease payments for your restaurant space will be a significant expense. Consider location and size when negotiating your rent to ensure it is affordable and suitable for your business.
- Utilities: This includes electricity, water, and gas expenses for your restaurant. Ghanaian restaurants may also need to factor in the cost of a generator for backup power in case of power outages.
- Marketing and advertising: You will need to promote your restaurant to attract customers. This may include expenses for advertising, social media marketing, and creating promotional materials.
- Accountancy fees: You will need to hire an accountant to manage your finances, prepare tax returns, and keep track of your business expenses. These fees may vary depending on the complexity of your business.
- Insurance costs: It is important to have insurance to protect your business from potential risks such as accidents, property damage, and theft. The cost of insurance will depend on the type of coverage you need.
- Software licenses: You may need to invest in software to help with managing your restaurant, such as accounting software, reservation systems, or point-of-sale systems. Consider the cost of purchasing or subscribing to these licenses.
- Banking fees: You will need to have a business bank account for managing your finances. This may come with fees for transactions, monthly maintenance, and other services.
- Cleaning and maintenance: Keeping your restaurant clean and well-maintained is crucial for attracting customers and ensuring food safety. This includes expenses for cleaning supplies, janitorial services, and equipment maintenance.
- Licenses and permits: Ghanaian restaurants will need to obtain various licenses and permits to operate legally. These may include food service licenses, liquor licenses, and health permits.
- Training and development: Investing in training and development for your employees can improve the quality of your service and help retain staff. This may include expenses for workshops, seminars, and online courses.
- Professional fees: You may need to hire lawyers, consultants, or other professionals to help with legal or business matters. Consider the cost of their services when budgeting for your restaurant.
- Taxes: Your restaurant will be subject to various taxes, including income tax, sales tax, and payroll taxes. Keep track of these expenses and consult with a tax professional for proper tax planning.
- Waste disposal: Proper waste disposal is important for maintaining a clean and hygienic restaurant. You may need to pay for waste removal services or invest in equipment for waste management.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small Ghanaian restaurant might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a Ghanaian restaurant?
Your Ghanaian restaurant 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 Ghanaian restaurant, these could include:
- Kitchen Equipment: This includes all of the equipment needed to prepare and cook Ghanaian dishes, such as stoves, ovens, grills, and fryers. You will also need pots, pans, utensils, and other tools specific to Ghanaian cuisine.
- Furniture and Decor: To create an authentic Ghanaian dining experience, you will need to invest in tables, chairs, and other furniture that reflects the culture and style of Ghana. This may include traditional fabrics, artwork, and other decorations.
- POS System: A point-of-sale system is essential for any restaurant, including a Ghanaian one. This will allow you to track sales, manage inventory, and process transactions. Make sure to choose a system that is tailored to the needs of a restaurant and can handle multiple payment methods.
- Refrigeration Units: Keeping food fresh and safe is crucial in any restaurant, so investing in high-quality refrigeration units is a must. This includes walk-in freezers and coolers, as well as smaller refrigerators for storing ingredients and prepared dishes.
- Dining Room Supplies: From plates and glasses to napkins and silverware, you will need to purchase a variety of dining room supplies to serve your customers. Consider choosing items that reflect the culture and traditions of Ghana, such as hand-carved wooden utensils or traditional serving dishes.
Again, this list will need to be adjusted according to the size and ambitions of your Ghanaian restaurant.
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 Ghanaian restaurant
The next step in the creation of your financial forecast for your Ghanaian restaurant 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 Ghanaian restaurant?
Now let's have a look at the main output tables of your Ghanaian restaurant's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your Ghanaian restaurant's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a Ghanaian restaurant should normally show:
- Sales growing above inflation
- Stable or expanding (ideally) profit margins
- A net profit
This will of course depend on the stage of your business: a new venture might be loss-making until it reaches its breakeven point in year 2 or 3, for example.
The projected balance sheet
Your Ghanaian restaurant'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 projected cash flow statement
A projected cash flow statement for a Ghanaian restaurant 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 Ghanaian restaurant'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 Ghanaian restaurant 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 Ghanaian restaurant's financial projections?
Building a Ghanaian restaurant 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 Ghanaian restaurant'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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional Ghanaian restaurant 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 Ghanaian restaurant's financial forecast?
Creating an accurate and error-free Ghanaian restaurant 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 projection templates for inspiration
The Business Plan Shop has dozens of financial forecasting templates available.
Our examples contain both the financial forecast, and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own Ghanaian restaurant, looking at our template is always a good way to get ideas on how to model financial items and what to write when creating a business plan to secure funding.
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 Ghanaian restaurant 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 Ghanaian restaurant, 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?
- Example of financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
