How to create a financial forecast for a Nepalese restaurant?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your Nepalese restaurant.
Putting together a Nepalese restaurant 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 Nepalese restaurant.
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 Nepalese restaurant?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your Nepalese restaurant and ensure that it can be financially viable in the years to come.
A financial plan for a Nepalese restaurant 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 Nepalese restaurant 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 Nepalese restaurant'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 Nepalese restaurant financial forecast?
A Nepalese restaurant'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 Nepalese restaurant.
If you are creating (or updating) the forecast of an existing Nepalese restaurant, 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 Nepalese restaurant 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 Nepalese restaurant 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 Nepalese restaurant's financial forecast.
The sales forecast for a Nepalese restaurant
From experience, it usually makes sense to start your Nepalese restaurant's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your Nepalese restaurant (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 Nepalese restaurant'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:
- Tourism: As a Nepalese restaurant, your business may be heavily influenced by the number of tourists visiting your location. If there is an increase in tourism in your area, you may see a higher number of monthly transactions as more people are looking to try new cuisines and experience different cultures. On the other hand, a decrease in tourism may result in a lower average price as you may need to offer discounts or promotions to attract customers.
- Local Events: Events such as festivals, concerts, or conferences can also impact your sales forecast. If your restaurant is located near a popular event venue, you may see a surge in traffic during these events, resulting in a higher number of monthly transactions. However, be aware that during these times, customers may be more price-sensitive, and you may need to adjust your prices accordingly to remain competitive.
- Availability of Ingredients: As a Nepalese restaurant, you may rely on specific ingredients to create authentic dishes. Any changes in the availability or cost of these ingredients can affect your average price. For example, if there is a shortage of a key ingredient, you may need to find alternative suppliers, which could result in a higher cost for your dishes. This, in turn, may lead to a higher average price for your menu items.
- Competition: The presence of other Nepalese restaurants in your area may also impact your sales forecast. If there are few or no competitors, you may have the advantage of setting higher prices for your dishes. However, if there are many other Nepalese restaurants in your vicinity, you may need to adjust your prices to remain competitive and attract customers.
- Seasonal Demand: Certain dishes in Nepalese cuisine may be more popular during specific seasons. For example, warm, hearty dishes may be more in demand during the colder months, while lighter, refreshing dishes may be preferred during the summer. This can affect your average price as you may need to adjust prices for certain dishes accordingly. Additionally, seasonal demand can also impact the number of monthly transactions as customers may be more drawn to certain dishes at different times of the year.
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 Nepalese restaurant
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your Nepalese restaurant 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 Nepalese restaurant will include some of the following items:
- Staff Costs: This includes salaries, wages, and benefits for all of your employees, including chefs, servers, and kitchen staff.
- Food and Beverage Costs: This is the cost of purchasing ingredients and supplies for your menu items, including spices, meats, and vegetables.
- Rent: This is the cost of leasing or renting your restaurant space.
- Utilities: This includes electricity, gas, water, and other utilities necessary for running your restaurant.
- Equipment Maintenance: This covers the costs of repairing and maintaining your kitchen equipment, such as ovens, refrigerators, and stoves.
- Marketing and Advertising: This includes the cost of promoting your restaurant through various channels, such as social media, print ads, and flyers.
- Accountancy Fees: You may need to hire an accountant to help you manage your finances and file taxes.
- Insurance Costs: This includes liability insurance and property insurance to protect your business and employees.
- Software Licenses: You may need to purchase software for managing reservations, inventory, and payroll.
- Banking Fees: This covers the cost of processing credit and debit card transactions and maintaining a business bank account.
- Cleaning and Maintenance: This includes the cost of hiring a cleaning service and maintaining the overall cleanliness of your restaurant.
- Uniforms and Supplies: This covers the cost of purchasing uniforms for your staff and other supplies, such as napkins and cleaning products.
- Licenses and Permits: You may need to obtain various licenses and permits from the government to operate your restaurant.
- Training and Development: This includes the cost of training new employees and providing ongoing development opportunities for your staff.
- Waste Management: This covers the cost of waste disposal and recycling for your restaurant.
This list will need to be tailored to the specificities of your Nepalese restaurant, but should offer a good starting point for your budget.
What investments are needed to start or grow a Nepalese restaurant?
Once you have an idea of how much sales you could achieve and what it will cost to run your Nepalese restaurant, it is time to look into the equipment required to launch or expand the activity.
For a Nepalese restaurant, capital expenditures and initial working capital items could include:
- Restaurant Equipment: This includes all the necessary equipment for running a Nepalese restaurant, such as tandoor ovens, clay pots, grills, and other cooking equipment specific to Nepalese cuisine.
- Furniture and Decor: This includes tables, chairs, decorations, and other furnishings that create the atmosphere and ambiance of a Nepalese restaurant. This may also include traditional Nepalese artwork and cultural elements to enhance the dining experience.
- Kitchen Supplies and Utensils: In order to prepare and serve authentic Nepalese dishes, you will need specialized utensils and supplies such as copper bowls, masala dabba, and other tools specific to Nepalese cooking.
- POS System: A point of sale (POS) system is essential for tracking sales and inventory, processing payments, and managing customer orders. Look for a system that is compatible with Nepalese currency and has features such as menu customization for different languages.
- Renovations and Improvements: Depending on the location of your Nepalese restaurant, you may need to make renovations or improvements to the space. This could include things like installing a tandoor oven or creating a traditional dining area for guests.
Again, this list will need to be adjusted according to the specificities of your Nepalese restaurant.
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 Nepalese restaurant
The next step in the creation of your financial forecast for your Nepalese restaurant 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 Nepalese restaurant?
Now let's have a look at the main output tables of your Nepalese restaurant's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your Nepalese restaurant's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a Nepalese restaurant 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 Nepalese restaurant'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 Nepalese restaurant. 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 projected cash flow statement
A projected cash flow statement for a Nepalese restaurant is used to show how much cash the business is generating or consuming.
The cash flow forecast is usually organised by nature to show three key metrics:
- The operating cash flow: do the core business activities generate or consume cash?
- The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
- The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?
Cash is king and keeping an eye on future cash flows is imperative for running a successful business. Therefore, you should pay close attention to your Nepalese restaurant's cash flow forecast.
If you are trying to secure financing, note that it is customary to provide both yearly and monthly cash flow forecasts in a financial plan - so that the reader can analyze seasonal variation and ensure the Nepalese restaurant 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 Nepalese restaurant's financial projections?
Building a Nepalese restaurant 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 Nepalese restaurant's projections
The modern and easiest way is to use professional online financial forecasting 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.
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 Nepalese restaurant 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 Nepalese restaurant's financial forecast?
Creating an accurate and error-free Nepalese restaurant 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 forecast templates for inspiration
The Business Plan Shop has dozens of financial forecast examples available.
Our templates contain both a financial forecast and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Our templates are a great source of inspiration, whether you just want to see what a complete business plan looks like, or are looking for concrete examples of how you should model financial elements in your own forecast.
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 Nepalese restaurant 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 Nepalese restaurant, 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 sales for a business?
- Financial forecast for a business idea
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Founder & CEO at The Business Plan Shop Ltd
