How to create a financial forecast for a maté farm?
Developing and maintaining an up-to-date financial forecast for your maté 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 maté 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 maté farm?
The financial projections for your maté 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 maté 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 maté farm financial forecast?
A maté 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 maté farm.
If you are creating (or updating) the forecast of an existing maté 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 maté 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 maté 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 maté farm's financial forecast.
The sales forecast for a maté farm
From experience, it is usually best to start creating your maté farm financial forecast by your sales forecast.
To create an accurate sales forecast for your maté farm, you will have to rely on the data collected in your market research, or if you're running an existing maté farm, the historical data of the business, to estimate two key variables:
- The average price
- The number of monthly transactions
To get there, you will need to consider the following factors:
- Your location: The average price of mats can vary significantly depending on where you are located. For example, if your farm is located in an area with high demand for mats, you may be able to charge a higher price compared to a farm in an area with low demand.
- Seasonal demand: Mats may be more in demand during certain times of the year, such as during the holiday season or wedding season. This can affect the number of monthly transactions and the average price you can charge.
- Competition: The presence of other mat farms in your area can also impact your average price and number of monthly transactions. If there are many competitors, you may need to lower your price to stay competitive and attract customers.
- Quality of mats: If you are known for producing high-quality mats, you may be able to charge a premium price compared to farms that produce lower quality mats.
- Consumer preferences: Consumer preferences can also affect your sales forecast. For example, if there is a trend towards eco-friendly products, you may see an increase in demand for mats made from sustainable materials, which could impact your average price and number of monthly transactions.
Once you have an idea of what your future sales will look like, it will be time to work on your overhead budget. Let’s see what this entails.
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 maté farm
The next step is to estimate the costs you’ll have to incur to operate your maté farm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your maté farm's operating expenses should normally include the following items:
- Staff Costs: This includes the salaries, wages, and benefits for all employees working on the mat farm, including farm hands, managers, and administrative staff.
- Accountancy Fees: As a mat farm owner, you will need to hire an accountant to help you with bookkeeping, taxes, and financial planning. This will incur a regular fee for their services.
- Insurance Costs: Running a mat farm comes with its own set of risks, such as injuries to workers or damage to equipment. It is important to have insurance coverage to protect your assets and cover any potential liabilities.
- Software Licences: In this digital age, most businesses rely on software for various operations, and a mat farm is no exception. You may need to purchase licenses for farm management software, accounting software, or other tools to help you run your farm efficiently.
- Banking Fees: As a mat farm owner, you will need to open a business bank account to manage your finances. This may incur fees for transactions, wire transfers, or other banking services.
- Seed and Fertilizer: One of the main expenses for a mat farm is purchasing seeds and fertilizer to grow healthy and high-quality mats. The cost of these inputs may vary depending on the type and quantity needed.
- Water and Electricity: Running a mat farm requires a significant amount of water for irrigation and electricity for lighting, ventilation, and other operations. These utility costs should be factored into your operating expenses.
- Equipment Maintenance: Your mat farm will likely require various equipment, such as tractors, harvesters, and irrigation systems. Regular maintenance and repairs are necessary to keep these equipment in good working condition.
- Packaging and Shipping: After harvesting your mats, you will need to package and ship them to your customers. This may involve costs such as packaging materials, shipping fees, and transportation costs.
- Marketing and Advertising: To attract new customers and promote your mat farm, you may need to invest in marketing and advertising efforts. This could include creating a website, attending trade shows, or running social media campaigns.
- Rent or Land Lease: If you do not own the land where your mat farm is located, you will need to pay rent or a land lease agreement to use the property for farming.
- Pest Control: Mats can be susceptible to pests and diseases, which can damage your crop and reduce your yield. Investing in pest control measures, such as pesticides and natural predators, can help protect your mats and increase your profits.
- Training and Education: As a mat farm owner, it is important to stay updated on the latest farming techniques and best practices. This may involve attending workshops, conferences, or enrolling in training courses, which may incur fees.
- Legal and Permit Fees: Running a mat farm may require obtaining various permits and licenses, such as a business license or environmental permits. These often come with associated fees that should be included in your operating expenses.
- Taxes: As a business owner, you are responsible for paying taxes on your mat farm's profits. Make sure to factor in the appropriate tax rates and deadlines when forecasting your operating expenses.
This list is not exhaustive by any means, and will need to be tailored to your maté farm's specific circumstances.
What investments are needed to start or grow a maté farm?
Creating and expanding a maté farm also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a maté farm could include elements such as:
- Greenhouse construction: Building or purchasing a greenhouse to grow the mats in a controlled environment, including materials, labor, and equipment costs.
- Irrigation system: Installing a system to provide water to the mats, including pipes, pumps, and other necessary equipment.
- Harvesting equipment: Purchasing or leasing equipment such as mowers, trimmers, and balers to harvest the mats.
- Drying and processing equipment: Investing in equipment to dry and process the harvested mats, including dryers, presses, and packaging materials.
- Storage facility: Building or renting a storage facility to store the harvested and processed mats before they are sold.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your maté 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 maté farm
The next step in the creation of your financial forecast for your maté 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 maté farm?
Now let's have a look at the main output tables of your maté farm's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your maté farm's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a maté 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 maté 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 maté 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 maté 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 maté 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 maté 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 maté 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 maté farm's financial projections?
Building a maté farm financial forecast is not difficult provided that you use the right tool for the job. Let’s see what options are available below.
Using online financial forecasting software to build your maté 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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional maté farm 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 maté farm's financial forecast?
Creating an accurate and error-free maté 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 maté 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 maté farm
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your maté 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 maté 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?
- Financial forecast for a business idea
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Founder & CEO at The Business Plan Shop Ltd
