How to create a financial forecast for a marine fishing company?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your marine fishing company.
Putting together a marine fishing company 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 marine fishing company.
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 marine fishing company?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your marine fishing company and ensure that it can be financially viable in the years to come.
A financial plan for a marine fishing company 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 marine fishing company 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 marine fishing company'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 marine fishing company financial forecast?
A marine fishing company'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 marine fishing company.
If you are creating (or updating) the forecast of an existing marine fishing company, 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 marine fishing company 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 marine fishing company 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 marine fishing company's financial forecast.
The sales forecast for a marine fishing company
From experience, it usually makes sense to start your marine fishing company's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your marine fishing company (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 marine fishing company'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: As a marine fishing company, your business is heavily dependent on the weather conditions. Adverse weather such as storms, hurricanes, or heavy rains can affect your ability to go out and fish, resulting in a decrease in the number of monthly transactions.
- Fish population: The availability of fish in the ocean is another important driver that can affect your average price and number of monthly transactions. A decrease in fish population due to overfishing or environmental factors can lead to an increase in prices and a decrease in the number of fish caught, resulting in a decrease in transactions.
- Government regulations: Government regulations on fishing quotas, seasons, and licensing can also have a significant impact on your business. Changes in these regulations can affect the number of fish you are allowed to catch, the areas you can fish in, and the price of your catch.
- Demand for seafood: The demand for seafood, particularly in the restaurant and hospitality industry, can also affect your average price and number of monthly transactions. An increase in demand can lead to higher prices and more transactions, while a decrease in demand can lead to lower prices and fewer transactions.
- Competitor activity: The actions of your competitors can also affect your business's average price and number of monthly transactions. For example, if a competitor introduces a new, popular type of fish to the market, it may affect the price and demand for the type of fish you typically catch.
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 marine fishing company
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your marine fishing company 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 marine fishing company will include some of the following items:
- Fuel Costs: As a marine fishing company, you will have significant expenses related to fuel for your fishing vessels. This can include both diesel and gasoline for your boats.
- Staff Costs: You will need to pay salaries and wages to your crew members, including captains, deckhands, and other support staff. This can also include expenses such as training and benefits.
- Boat Maintenance and Repair: Your vessels will require regular maintenance and occasional repairs to ensure they are safe and functioning properly. This can include expenses for parts, labor, and dock fees.
- Fishing Gear and Supplies: You will need to purchase and replace various fishing gear and supplies, such as nets, hooks, lines, and bait.
- Port Fees: Whenever your boats dock at a port, you will likely have to pay fees for mooring, loading and unloading, and other services.
- Insurance Costs: It is important to have insurance coverage for your vessels, crew members, and any potential liabilities that may arise from your fishing operations.
- Accounting and Bookkeeping Fees: You may need to hire an accountant or bookkeeper to help manage your financial records and ensure compliance with tax laws and regulations.
- Marketing and Advertising Expenses: To attract buyers for your catch, you may need to spend money on marketing and advertising efforts, such as creating a website or attending industry events.
- Software Licenses: You may need to purchase software licenses for programs that help manage your business operations, such as accounting software or electronic logbooks.
- Shipping and Transport Costs: If you sell your catch to buyers outside of your local area, you may incur expenses for shipping and transporting your fish to their destination.
- Dock and Storage Fees: If you need to store your catch or equipment at a port, you may have to pay fees for using dock space or storage facilities.
- Permits and Licensing Fees: Depending on where you operate, you may need to obtain permits and licenses for your fishing activities, which can come with associated fees.
- Safety Equipment and Training: To ensure the safety of your crew, you may need to purchase and maintain safety equipment, as well as provide training on how to use it.
- Banking Fees: You may have expenses related to maintaining bank accounts for your business, including fees for wire transfers, foreign currency exchange, and credit card processing.
- Taxes and Duties: You will have to pay taxes on your business income and may also have to pay additional duties on imported equipment or products.
This list will need to be tailored to the specificities of your marine fishing company, but should offer a good starting point for your budget.
What investments are needed to start or grow a marine fishing company?
Once you have an idea of how much sales you could achieve and what it will cost to run your marine fishing company, it is time to look into the equipment required to launch or expand the activity.
For a marine fishing company, capital expenditures and initial working capital items could include:
- Fishing Vessels: This is one of the most important capital expenditures for a marine fishing company. You will need to purchase or lease vessels that are suitable for the type of fishing you will be doing, such as trawlers, longliners, or gillnetters. These vessels can be costly, but they are essential for your business.
- Fishing Gear and Equipment: In addition to vessels, you will also need to invest in fishing gear and equipment. This includes items like nets, traps, lines, and hooks. The type of gear you will need will depend on the type of fish you are targeting and the fishing method you will be using.
- Processing and Storage Facilities: Once you have caught the fish, you will need a place to process and store them. This can include building or renting a processing plant, purchasing refrigeration units, and other equipment necessary for preserving the catch.
- Navigation and Communication Systems: As a marine fishing company, it is crucial to have reliable navigation and communication systems on your vessels. This includes GPS, sonar, radios, and other equipment that will help you navigate and communicate with other vessels and shore-based facilities.
- Maintenance and Repair: Your vessels and equipment will require regular maintenance and repair to ensure they are in good working condition. This can include expenses for spare parts, labor, and other costs associated with keeping your assets operational.
Again, this list will need to be adjusted according to the specificities of your marine fishing company.
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 marine fishing company
The next step in the creation of your financial forecast for your marine fishing company 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 marine fishing company?
Now let's have a look at the main output tables of your marine fishing company's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your marine fishing company's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a marine fishing company 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 marine fishing company'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 marine fishing company'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 marine fishing company:
- 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 marine fishing company'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 marine fishing company'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 marine fishing company's financial forecast?
Using the right tool or solution will make the creation of your marine fishing company's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your marine fishing company'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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional marine fishing company 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 marine fishing company'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 marine fishing company 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 marine fishing company'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 marine fishing company, 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 marine fishing company
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 marine fishing company 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 marine fishing company, 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 project revenues for a business?
- Sample financial forecast for business idea
Know someone who owns or is thinking of starting a marine fishing company? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
