How to create a financial forecast for a kiwi fruit farm?
Developing and maintaining an up-to-date financial forecast for your kiwi fruit farm 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 kiwi fruit farm 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 kiwi fruit farm?
The financial projections for your kiwi fruit 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 kiwi fruit 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 kiwi fruit farm financial forecast?
A kiwi fruit 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 kiwi fruit 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 kiwi fruit 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 kiwi fruit 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 kiwi fruit farm's financial forecast.
The sales forecast for a kiwi fruit farm
The sales forecast, also called topline projection, is normally where you will start when building your kiwi fruit farm 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 kiwi fruit farms), and consider the elements below:
- Your average price may be affected by the global demand for kiwi fruit, especially in countries that do not produce it locally. If there is a high demand, you may be able to sell your kiwis at a higher price, resulting in higher revenue.
- The weather can also have a significant impact on your average price. If there is a drought or other adverse weather conditions, your kiwis may be smaller in size and lower in quality, leading to a decrease in price.
- The number of monthly transactions can be affected by the availability of your kiwi fruit. If you have a bountiful harvest, you may have more kiwis available to sell, resulting in an increase in transactions.
- The seasonality of kiwi fruit may also play a role in your sales forecast. Kiwis are typically harvested in the fall, and if you have a large supply during this time, you may see a spike in transactions. However, in the off-season, you may experience a decrease in sales.
- The average price may also be impacted by the cost of production. If your production costs increase, you may need to raise your prices to maintain profitability, which could potentially lead to a decrease in transactions.
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 kiwi fruit farm
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your kiwi fruit 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 kiwi fruit farm will include some of the following items:
- Labor Costs: This includes salaries, wages, and benefits for all farm employees, such as farm managers, pickers, and packers.
- Supplies and Materials: This covers the cost of purchasing materials and supplies needed for day-to-day operations, such as fertilizers, pesticides, and packaging materials.
- Equipment Maintenance: Regular maintenance of farm equipment, such as tractors and harvesters, is necessary for efficient operation and to avoid costly breakdowns.
- Fuel and Utilities: Running a kiwi fruit farm requires fuel for tractors and other machinery, as well as electricity and water for irrigation.
- Land Rental: If you do not own the land on which your kiwi fruit farm operates, you will need to pay rent to the landowner.
- Crop Insurance: This expense protects you from potential losses due to weather events, pests, and other factors that could damage your kiwi fruit crop.
- Marketing and Advertising: To attract customers and increase sales, you may need to spend money on marketing and advertising efforts, such as creating a website or attending trade shows.
- Professional Fees: This includes fees for hiring consultants, lawyers, and accountants to help with various aspects of your kiwi fruit farm, such as legal compliance and financial planning.
- Transportation: You will need to transport your kiwi fruit from the farm to the market, which may involve purchasing or leasing a truck, as well as paying for fuel and maintenance.
- Software Licenses: To manage your farm operations efficiently, you may need to purchase software licenses for accounting, inventory management, and other purposes.
- Banking Fees: This includes fees for maintaining a business bank account, as well as charges for wire transfers, check processing, and other financial transactions.
- Taxes: Depending on your location, you may need to pay property taxes, income taxes, and other taxes related to your kiwi fruit farm.
- Rent or Mortgage Payments: If you own the land on which your kiwi fruit farm operates, you may have a mortgage to pay. If you rent a building for storage or other purposes, you will also need to budget for rent payments.
- Pest Control: Kiwi fruit farms are susceptible to various pests, so you may need to pay for pest control measures, such as hiring a pest management company or purchasing traps and repellents.
- Safety Equipment: To ensure the safety of your employees and comply with regulations, you may need to purchase safety equipment, such as gloves, boots, and protective gear.
This list will need to be tailored to the specificities of your kiwi fruit farm, but should offer a good starting point for your budget.
What investments are needed to start or grow a kiwi fruit farm?
Creating and expanding a kiwi fruit farm also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a kiwi fruit farm could include elements such as:
- Land: As a kiwi fruit farmer, you will need to purchase or lease land to grow your crops. This is a significant capital expenditure and will depend on the location and size of your farm.
- Irrigation System: Kiwi fruit require consistent watering, and investing in a high-quality irrigation system is crucial for the success of your farm. This may include pumps, pipes, sprinklers, and other equipment.
- Fencing: Fencing is essential for protecting your kiwi fruit from animals and potential theft. This includes materials such as wire, posts, and gates.
- Storage Facilities: Kiwi fruit must be stored in a cool and dry environment to maintain their quality and prolong their shelf life. This may include building a storage shed or purchasing refrigerated containers.
- Equipment: As a kiwi fruit farmer, you will need various equipment to maintain your farm, such as tractors, harvesters, pruning tools, and other machinery. These are considered fixed assets and can be a significant capital expenditure.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your kiwi fruit 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 kiwi fruit farm
The next step in the creation of your financial forecast for your kiwi fruit 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 kiwi fruit farm?
Now let's have a look at the main output tables of your kiwi fruit farm's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your kiwi fruit farm is likely to be in the years to come.
For your kiwi fruit 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 kiwi fruit 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 kiwi fruit 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 projection
The cash flow forecast of your kiwi fruit 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 kiwi fruit 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 kiwi fruit 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 kiwi fruit 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 kiwi fruit farm's financial forecast?
Using the right tool or solution will make the creation of your kiwi fruit farm's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial projection software to build your kiwi fruit farm's forecast
The modern and easiest way to build a forecast is to use professional financial projection 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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional kiwi fruit 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 kiwi fruit farm'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 kiwi fruit farm 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 kiwi fruit farm'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 kiwi fruit farm, 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 kiwi fruit farm
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your kiwi fruit farm.
- 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 kiwi fruit farm. 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 project sales for a business?
- Sample financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
