How to create a financial forecast for a mangold farm?
Developing and maintaining an up-to-date financial forecast for your mangold 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 mangold 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 mangold farm?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your mangold farm and ensure that it can be financially viable in the years to come.
A financial plan for a mangold farm 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 mangold farm 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 mangold farm'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 mangold farm financial forecast?
A mangold farm'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 mangold farm.
If you are creating (or updating) the forecast of an existing mangold farm, 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 mangold farm 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 mangold farm 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 mangold farm's financial forecast.
The sales forecast for a mangold farm
The sales forecast, also called topline projection, is normally where you will start when building your mangold 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 mangold farms), and consider the elements below:
- Seasonal Changes: As a mangold farmer, you are well aware that the availability and demand for this crop vary throughout the year. Factors such as weather conditions, harvest times, and market trends can all affect the average price and number of monthly transactions for your mangolds.
- Competition: The number of other mangold farms in your area can also impact your sales forecast. If there are many competitors, this could drive down prices and potentially decrease the number of transactions for your farm.
- Crop Quality: The quality of your mangolds can greatly influence the average price and number of transactions for your business. Higher quality crops may command a higher price and attract more customers, while lower quality crops may result in lower prices and fewer transactions.
- Health Trends: With more people becoming health-conscious, there is a growing demand for fresh, organic produce. This could potentially drive up the average price for your mangolds and increase the number of transactions as consumers seek out healthier options.
- Trade Policies: Changes in trade policies, such as tariffs or import restrictions, can also affect the average price and number of transactions for your mangolds. For example, if there are increased tariffs on imported mangolds, this could lead to higher prices and more demand for locally grown crops like yours.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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 mangold farm
The next step is to estimate the costs you’ll have to incur to operate your mangold farm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your mangold farm's operating expenses should normally include the following items:
- Staff costs: This includes the salaries, bonuses, and benefits for your farm workers, including laborers, harvesters, and supervisors.
- Accountancy fees: As a business owner, you will need to hire an accountant to manage your financial records, taxes, and other financial matters.
- Insurance costs: Running a farm comes with risks, and it is important to protect your investment with insurance for your crops, equipment, and liability coverage.
- Software licenses: To keep track of your inventory, sales, and expenses, you may need to invest in software licenses for farm management, accounting, and inventory tracking.
- Banking fees: Managing your farm's finances will also incur banking fees, such as transaction fees, ATM fees, and wire transfer fees.
- Seed and fertilizer costs: These are essential supplies for growing mangolds, and their costs will vary depending on the size of your farm and the type of seeds and fertilizers you use.
- Equipment maintenance: Your farm equipment, such as tractors, plows, and irrigation systems, will require regular maintenance and repairs to keep them in good working condition.
- Fuel and utility expenses: Running a farm requires a lot of energy, from fuel for your machinery to electricity for lighting and irrigation systems.
- Pest control: As with any crop, mangolds are vulnerable to pests and diseases, and you may need to invest in pest control methods and products to protect your harvest.
- Marketing and advertising: To sell your mangolds, you will need to invest in marketing and advertising efforts, such as creating a website, attending farmers' markets, and placing ads in local publications.
- Packaging and labeling: Proper packaging and labeling are important for selling your mangolds, and you will need to budget for materials and printing costs.
- Transportation costs: Getting your mangolds from the farm to the market will require transportation, whether you have your own truck or need to hire a delivery service.
- Rent or mortgage: If you do not own the land you are farming on, you will need to budget for rent or mortgage payments.
- Water rights and irrigation fees: Depending on your location, you may need to pay for water rights and fees for irrigation systems to ensure a steady supply of water for your crops.
- Training and education: As a farmer, it is important to stay updated on the latest techniques and technologies in the industry, and you may need to invest in training and education programs.
This list is not exhaustive by any means, and will need to be tailored to your mangold farm's specific circumstances.
What investments are needed to start or grow a mangold farm?
Your mangold 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 mangold farm, these could include:
- Land: This includes the cost of purchasing or leasing the land for your mangold farm. You may also need to invest in land preparation such as removing rocks and debris, leveling the land, and installing irrigation systems.
- Farm Equipment: This includes tractors, plows, harvesters, and other machinery needed for planting, maintaining, and harvesting your mangold crops. You may also need to invest in equipment for soil testing, fertilizing, and pest control.
- Greenhouse or Shade Structures: Depending on your climate and location, you may need to invest in a greenhouse or shade structures to protect your mangold crops from extreme weather conditions. This can also help extend your growing season.
- Storage Facilities: You will need to invest in storage facilities for your harvested mangold crops. This can include refrigerated storage for fresh mangolds and dry storage for processed or dried mangolds.
- Irrigation System: A reliable irrigation system is essential for mangold farming. This includes pumps, pipes, and sprinklers or drip lines to provide water to your crops. You may also need to invest in a water source, such as a well or irrigation pond.
Again, this list will need to be adjusted according to the size and ambitions of your mangold 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 mangold farm
The next step in the creation of your financial forecast for your mangold 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 mangold farm?
Now let's have a look at the main output tables of your mangold farm's financial forecast.
The forecasted profit & loss statement
The profit & loss forecast gives you a clear picture of your business’ expected growth over the first three to five years, and whether it’s likely to be profitable or not.
A healthy mangold farm's P&L statement should show:
- Sales growing at (minimum) or above (better) inflation
- Stable (minimum) or expanding (better) profit margins
- A healthy level of net profitability
This will of course depend on the stage of your business: numbers for an established mangold farm will look different than for a startup.
The projected balance sheet
Your mangold farm'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 mangold 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 mangold 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 mangold 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 mangold 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 mangold farm's financial forecast?
Creating your mangold 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 projection software to build your mangold 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 mangold 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 mangold farm's financial forecast?
Creating an accurate and error-free mangold farm 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 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 mangold 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 mangold farm
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 mangold 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 mangold 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 turnover forecast for a business?
- Example of financial forecast for business idea
Know someone who owns or is thinking of starting a mangold farm? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
