How to create a financial forecast for a mango farm?
Creating a financial forecast for your mango 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 mango 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 mango farm?
In order to prosper, your business needs to have visibility on what lies ahead and the right financial resources to grow. This is where having a financial forecast for your mango farm becomes handy.
Creating a mango farm financial forecast forces you to take stock of where your business stands and where you want it to go.
Once you have clarity on the destination, you will need to draw up a plan to get there and assess what it means in terms of future profitability and cash flows for your mango farm.
Having this clear plan in place will give you the confidence needed to move forward with your business’s development.
Having an up-to-date financial forecast for a mango farm is also useful if your trading environment worsens, as the forecast enables you to adjust to your new market conditions and anticipate any potential cash shortfall.
Finally, your mango farm's financial projections will also help you secure financing, as banks and investors alike will want to see accurate projections before agreeing to finance your business.
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 mango farm financial forecast?
A mango 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 mango 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 mango 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 mango 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 mango farm's financial forecast.
The sales forecast for a mango farm
From experience, it usually makes sense to start your mango farm's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your mango 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 mango 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:
- Weather conditions: The weather can greatly affect the quality and quantity of mangoes produced. Droughts, floods, and other extreme weather events can lead to a decrease in production, resulting in a higher average price for the mangoes and potentially fewer monthly transactions.
- Pest infestations: Pests such as fruit flies and mango weevils can cause significant damage to mango crops. This can lead to a decrease in production and an increase in production costs, ultimately affecting the average price of mangoes and the number of monthly transactions.
- Competition: If there are other mango farms in the area, the competition can drive down the average price of mangoes as customers have more options to choose from. This can also lead to a decrease in monthly transactions as customers may choose to purchase from other farms.
- Transportation costs: The cost of transporting mangoes from the farm to the market can greatly impact the average price of mangoes. If transportation costs increase, the farm may need to increase the average price of mangoes to cover these expenses, potentially leading to a decrease in monthly transactions.
- Harvest season: The timing of the harvest season can also affect the average price of mangoes and the number of monthly transactions. Mangoes are typically harvested during the summer months, so if the farm experiences a longer or shorter harvest season due to weather or other factors, it can impact the supply and demand of mangoes, ultimately affecting the average price and number of 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 mango farm
The next step is to estimate the costs you’ll have to incur to operate your mango farm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your mango farm's operating expenses should normally include the following items:
- Staff Costs: This includes the salaries and wages of all employees involved in the day-to-day operations of the mango farm, such as farm workers, supervisors, and administrative staff.
- Accountancy Fees: As a mango farmer, you may need to hire an accountant to assist with financial record-keeping, tax filing, and financial analysis. These services come at a cost which should be included in your operating expenses.
- Insurance Costs: It is important to protect your mango farm from potential risks and accidents. This may include insurance for your property, equipment, and crops.
- Software Licenses: In today's digital age, many aspects of farming operations rely on software, such as inventory management and record-keeping. Be sure to include any software license fees in your operating expenses.
- Banking Fees: As a business owner, you will likely have banking fees associated with your business accounts, such as transaction fees and account maintenance fees.
- Fertilizers and Pesticides: To maintain healthy and productive mango trees, you will need to purchase fertilizers and pesticides. These costs should be included in your operating expenses.
- Fuel and Transportation: Whether it's for delivering your mangoes to market or maintaining farm equipment, fuel and transportation costs should be factored into your operating expenses.
- Packaging and Labeling: If you plan on selling your mangoes to consumers, you will need to invest in packaging materials and labels. These costs should be accounted for in your operating expenses.
- Rent or Mortgage: If you do not own the land your mango farm is located on, you will need to include rent or mortgage payments in your operating expenses.
- Utilities: This includes the costs of electricity, water, and other utilities needed to operate your mango farm.
- Marketing and Advertising: To attract customers and increase sales, you may need to invest in marketing and advertising efforts. This could include website development, social media ads, or print materials.
- Laboratory Testing: Depending on your location and regulations, you may need to conduct laboratory testing on your mangoes to ensure they meet safety and quality standards. This should be included in your operating expenses.
- Legal Fees: As a business owner, you may encounter legal issues or need legal advice. Be sure to account for any potential legal fees in your operating expenses.
- Maintenance and Repairs: Farm equipment and infrastructure will require regular maintenance and occasional repairs. These costs should be included in your operating expenses.
- Training and Education: To stay updated on best practices and new techniques in mango farming, you may need to invest in training and education for yourself and your employees. These costs should be factored into your operating expenses.
This list is not exhaustive by any means, and will need to be tailored to your mango farm's specific circumstances.
What investments are needed to start or grow a mango farm?
Creating and expanding a mango farm also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a mango farm could include elements such as:
- Land and Infrastructure: This includes purchasing or leasing land for your mango farm, as well as any necessary infrastructure such as irrigation systems, fences, and roads.
- Equipment and Machinery: As a mango farmer, you will need specialized equipment and machinery for tasks such as planting, pruning, harvesting, and processing. This may include tractors, sprayers, pruning shears, and fruit sorting machines.
- Storage Facilities: Mangoes are a perishable fruit and require proper storage to maintain their quality. This may include constructing or purchasing refrigerated storage facilities or investing in packaging materials to keep the fruit fresh during transportation.
- Greenhouse or Shade Structures: Depending on the climate and location of your mango farm, you may need to invest in a greenhouse or shade structures to protect the trees from extreme weather conditions or to extend the growing season.
- Vehicles: If your mango farm is large, you may need to purchase vehicles for transporting equipment, workers, and harvested fruit. This could include trucks, trailers, or utility vehicles.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your mango 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 mango farm
The next step in the creation of your financial forecast for your mango 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 mango farm?
Now let's have a look at the main output tables of your mango farm's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your mango farm's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a mango farm 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
The projected balance sheet gives an overview of your mango 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 mango 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 mango 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 mango 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 mango 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 mango 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 mango farm's financial forecast?
Using the right tool or solution will make the creation of your mango farm's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your mango 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
Outsourcing the creation of your mango farm financial forecast is another possible solution.
This will cost more than using software as you can expect as your price will have to cover the accountant’s time, software cost, and profit margin.
Price can vary greatly based on the complexity of your business. For a small business, from experience, a simple three-year financial forecast (including a balance sheet, income statement, and cash flow statement) will start at around £700 or $1,000.
Bear in mind that this is for forecasts produced at a single point in time, updating or tracking your forecast against actuals will cost extra.
If you decide to outsource your forecasting:
- Make sure the professional has direct experience in your industry and is able to challenge your assumptions constructively.
- Steer away from consultants using sectorial ratios to build their client’s financial forecasts (these projections are worthless for a small business).
Why not use a spreadsheet such as Excel or Google Sheets to build your mango farm's financial forecast?
Creating an accurate and error-free mango 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 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 mango farm, 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 mango 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 mango 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?
- Sample financial forecast for business idea
Know someone who owns or is thinking of starting a mango farm? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
