How to create a financial forecast for a live animals wholesaler?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your live animals wholesaler.
Putting together a live animals wholesaler 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 live animals wholesaler.
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 live animals wholesaler?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your live animals wholesaler and ensure that it can be financially viable in the years to come.
A financial plan for a live animals wholesaler 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 live animals wholesaler 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 live animals wholesaler'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 used as input to build a live animals wholesaler financial forecast?
A live animals wholesaler'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 live animals wholesaler.
If you are creating (or updating) the forecast of an existing live animals wholesaler, 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 live animals wholesaler 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 live animals wholesaler 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 live animals wholesaler's financial forecast.
The sales forecast for a live animals wholesaler
From experience, it usually makes sense to start your live animals wholesaler's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your live animals wholesaler (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 live animals wholesaler'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:
- Animal health and disease outbreaks: As a live animals wholesaler, your business is heavily dependent on the health and well-being of the animals you sell. Any disease outbreaks or health issues among your inventory can greatly affect your average price and number of monthly transactions. In order to mitigate this risk, it is important to invest in proper animal care and have a contingency plan in place in case of any outbreaks.
- Changes in regulations: Government regulations and policies regarding the sale and transportation of live animals can greatly impact your business. Changes in regulations may require you to invest in new equipment or obtain additional permits, which can affect your average price. It can also limit the types of animals you can sell, thereby affecting your number of monthly transactions.
- Competition: The live animals wholesale industry is highly competitive, and the actions of your competitors can impact your business's average price and number of monthly transactions. For example, if a competitor lowers their prices, you may have to adjust your prices to remain competitive. Alternatively, if a competitor introduces a new, popular animal, it may affect the demand for the animals you currently sell.
- Natural disasters and weather conditions: Natural disasters such as hurricanes, floods, or wildfires can have a significant impact on the supply and demand for live animals. If your suppliers are affected by a natural disaster, it may lead to a decrease in supply, resulting in higher average prices. Additionally, harsh weather conditions can also affect the transportation of animals, leading to delays and potentially impacting your number of monthly transactions.
- Consumer trends and preferences: As with any business, it is important to stay up-to-date with consumer trends and preferences. Changes in consumer preferences for certain types of animals or breeds can affect your sales and average price. For example, if there is a growing trend for exotic pets, you may see an increase in demand for these types of animals, leading to potential changes in your average price and number of monthly transactions.
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 live animals wholesaler
The next step is to estimate the expenses needed to run your live animals wholesaler 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 live animals wholesaler's operating expenses should include the following items at a minimum:
- Staff costs: This includes the salaries, benefits, and training expenses for your employees. As a live animals wholesaler, you will need staff to handle tasks such as purchasing, shipping, sales, and customer service.
- Accountancy fees: You will need to hire an accountant or use accounting software to keep track of your financial transactions, prepare tax returns, and provide financial advice.
- Insurance costs: It is important to have insurance coverage for your business to protect against potential risks such as property damage, liability claims, and animal-related accidents.
- Software licenses: Depending on the size and complexity of your business, you may need to purchase software licenses for inventory management, customer relationship management, and other essential functions.
- Banking fees: As a wholesaler, you will likely have frequent banking transactions such as deposits, withdrawals, and wire transfers. These transactions may incur fees from your bank.
- Rent: If you operate out of a physical location, you will need to pay rent for your warehouse or office space.
- Utilities: You will incur expenses for electricity, water, and other utilities to keep your business running.
- Transportation costs: This includes the cost of shipping live animals from suppliers to your warehouse, and from your warehouse to your customers.
- Marketing and advertising: To attract new customers and promote your business, you may need to spend money on marketing campaigns, advertising, and attending trade shows.
- Office supplies: You will need basic office supplies such as paper, pens, and printer ink to keep your business operations running smoothly.
- Maintenance and repairs: As a wholesaler of live animals, you will need to maintain and repair equipment such as cages, tanks, and transport vehicles.
- Professional fees: This includes fees for legal services, consulting, and other professional services that may be necessary for your business.
- Taxes and licenses: You will need to pay taxes on your business income and obtain any necessary licenses or permits to operate as a live animals wholesaler.
- Travel expenses: If you need to travel for business purposes, you will need to budget for expenses such as airfare, hotel stays, and meals.
- Training and development: As your business grows, you may need to invest in training and development programs for your employees to keep up with industry trends and advancements.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small live animals wholesaler might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a live animals wholesaler?
Your live animals wholesaler 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 live animals wholesaler, these could include:
- Animal enclosures and equipment: This includes the cost of building or purchasing enclosures for your live animals, as well as any necessary equipment such as feeding troughs, waterers, and heating or cooling systems.
- Transportation vehicles: As a live animals wholesaler, you will need a reliable means of transporting your animals to and from your suppliers and customers. This may include the purchase or lease of trucks, trailers, or other specialized vehicles.
- Storage facilities: In order to maintain the health and safety of your live animals, you may need to invest in climate-controlled storage facilities. This could include refrigerated units for frozen animal products or heated areas for smaller animals.
- Processing equipment: Depending on the types of live animals you plan to sell, you may need to purchase specialized equipment for processing and packaging. This could include butchering equipment for meat products or packaging machines for smaller animals.
- Property improvements: If you plan to operate your live animals wholesaler business from a physical location, you may need to make improvements or renovations to the property. This could include building additional structures, upgrading utility systems, or installing security measures.
Again, this list will need to be adjusted according to the size and ambitions of your live animals wholesaler.
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 live animals wholesaler
The next step in the creation of your financial forecast for your live animals wholesaler 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 live animals wholesaler?
Now let's have a look at the main output tables of your live animals wholesaler's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your live animals wholesaler's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a live animals wholesaler 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 live animals wholesaler'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 cash flow forecast
Your live animals wholesaler'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 live animals wholesaler:
- 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 live animals wholesaler'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 live animals wholesaler'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 live animals wholesaler's financial forecast?
Using the right tool or solution will make the creation of your live animals wholesaler's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial projection software to build your live animals wholesaler'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 live animals wholesaler 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 live animals wholesaler's financial forecast?
Creating an accurate and error-free live animals wholesaler 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 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 live animals wholesaler, 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 live animals wholesaler
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 live animals wholesaler.
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 live animals wholesaler. 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 create a turnover forecast for a business?
- Financial forecast for a business idea
Know someone who runs or wants to start a live animals wholesaler? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
