How to create a financial forecast for a Romanian restaurant?
Developing and maintaining an up-to-date financial forecast for your Romanian restaurant 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 Romanian restaurant 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 Romanian restaurant?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your Romanian restaurant and ensure that it can be financially viable in the years to come.
A financial plan for a Romanian 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 Romanian 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 Romanian 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 solid financial forecast?
The Business Plan Shop does the maths for you. Simply enter your revenues, costs and investments. Click save and our online tool builds a three-way forecast for you instantly.
What information is used as input to build a Romanian restaurant financial forecast?
A Romanian restaurant'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 Romanian restaurant, 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 Romanian restaurant 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 Romanian restaurant 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 Romanian restaurant's financial forecast.
The sales forecast for a Romanian restaurant
From experience, it usually makes sense to start your Romanian restaurant's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your Romanian 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 Romanian 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:
- Seasonal Ingredients: As a Romanian restaurant, you may rely on certain seasonal ingredients that are only available during certain times of the year. This can affect your average price as well as the number of transactions, as customers may be willing to pay more for these seasonal dishes.
- Tourism: Depending on the location of your restaurant, tourism can greatly impact your sales forecast. For example, if your restaurant is in a popular tourist destination, you may see a peak in sales during peak tourist season, and a decrease during off-season.
- Special Events: The hosting of special events such as weddings, birthdays, or corporate events can greatly impact your average price and number of transactions. These events often require a larger budget and may result in higher priced orders and larger groups of customers.
- Competition: The presence of other Romanian restaurants in your area can also affect your sales forecast. If you are in a highly competitive market, you may need to adjust your prices or offer unique dishes to attract customers and stand out from your competitors.
- Economic Conditions: The overall economic conditions of your country or region can also play a role in your sales forecast. For example, during times of economic downturn, customers may be more price-sensitive and opt for more affordable dining options, while during times of economic growth, they may be willing to spend more on dining out.
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.
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The operating expenses for a Romanian restaurant
The next step is to estimate the costs you’ll have to incur to operate your Romanian restaurant.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your Romanian restaurant's operating expenses should normally include the following items:
- Staff Costs: This includes wages, salaries, and benefits for all employees, such as cooks, servers, and cleaners. You may also need to budget for training and development programs to ensure your staff are knowledgeable and skilled in Romanian cuisine.
- Food and Beverage Costs: This includes the cost of ingredients and supplies needed to prepare traditional Romanian dishes, as well as the cost of purchasing beverages such as wine, beer, and traditional Romanian spirits.
- Rent: You will need to budget for the monthly rent of your restaurant space, which will vary depending on the location and size of your restaurant.
- Utilities: This includes electricity, gas, water, and other utility costs for your restaurant, such as internet and phone services.
- Marketing and Advertising: You will need to budget for promoting your restaurant and attracting customers, which may include costs for designing menus, creating advertisements, and running social media campaigns.
- Accountancy Fees: You may choose to hire an accountant to help you manage your finances and file taxes for your restaurant.
- Insurance Costs: It is important to have insurance to protect your restaurant from potential risks, such as liability claims or property damage.
- Software Licenses: You may need to purchase software licenses for point-of-sale systems, online ordering platforms, or reservation systems to help run your restaurant smoothly.
- Cleaning and Maintenance: You will need to budget for cleaning supplies and maintenance costs to keep your restaurant clean and well-maintained.
- Kitchen Equipment and Supplies: This includes the cost of purchasing and maintaining kitchen equipment, such as ovens, refrigerators, and cooking utensils.
- Inventory: You will need to budget for the cost of purchasing and storing ingredients and supplies for your restaurant's menu items.
- Uniforms: If you require your staff to wear uniforms, you will need to budget for the cost of purchasing and maintaining them.
- Banking Fees: You may need to pay fees for banking services, such as processing credit card payments or managing your business accounts.
- Permits and Licenses: You will need to budget for the cost of obtaining necessary permits and licenses to operate your restaurant, such as a food service permit and alcohol license.
- Taxes: You will need to set aside a portion of your revenue for taxes, including income tax, sales tax, and property tax.
This list is not exhaustive by any means, and will need to be tailored to your Romanian restaurant's specific circumstances.
What investments are needed to start or grow a Romanian restaurant?
Once you have an idea of how much sales you could achieve and what it will cost to run your Romanian restaurant, it is time to look into the equipment required to launch or expand the activity.
For a Romanian restaurant, capital expenditures and initial working capital items could include:
- Kitchen equipment: This includes items such as stoves, ovens, refrigerators, and other appliances and tools necessary for food preparation and storage in a Romanian restaurant.
- Furniture and decor: These are the fixed assets that make up the interior of the restaurant, such as tables, chairs, lighting fixtures, and decorative elements that reflect the Romanian culture and atmosphere.
- POS system: A point-of-sale system is essential for tracking sales, managing inventory, and processing payments in a Romanian restaurant. This includes hardware such as cash registers, computers, and tablets, as well as software for managing sales and inventory.
- Restaurant renovations: If you are opening a new Romanian restaurant or revamping an existing one, you may need to make renovations to the physical space. This could include things like painting, flooring, and other updates to create an inviting and authentic atmosphere.
- Outdoor seating area: Many Romanian restaurants offer outdoor seating for customers, especially during the warmer months. This may require purchasing outdoor furniture, umbrellas, and heaters to create a comfortable and enjoyable dining experience.
Again, this list will need to be adjusted according to the specificities of your Romanian 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 Romanian restaurant
The next step in the creation of your financial forecast for your Romanian 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 Romanian restaurant?
Now let's have a look at the main output tables of your Romanian restaurant's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your Romanian restaurant is likely to be in the years to come.
For your Romanian restaurant to be financially viable, your projected P&L should ideally show:
- Sales growing above inflation (the higher the better)
- Profit margins which are stable or expanding (the higher the better)
- A net profit at the end of each financial year (the higher the better)
This is for established Romanian restaurants, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your Romanian restaurant'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 Romanian restaurant'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 Romanian restaurant:
- 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 Romanian restaurant'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 Romanian restaurant's financial plan - so that banks or investors can assess seasonal variation and ensure your business is appropriately capitalised.
Need a solid financial forecast?
The Business Plan Shop does the maths for you. Simply enter your revenues, costs and investments. Click save and our online tool builds a three-way forecast for you instantly.
Which tool should you use to create your Romanian restaurant's financial projections?
Building a Romanian 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 Romanian restaurant'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 Romanian 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 Romanian restaurant's financial forecast?
Creating an accurate and error-free Romanian restaurant 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 Romanian restaurant, 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
- A financial forecast shows expected growth, profitability, and cash generation metrics for your Romanian restaurant.
- 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 Romanian restaurant. Don't hesitate to contact us if you have any questions!
Need inspiration for your business plan?
The Business Plan Shop has dozens of business plan templates that you can use to get a clear idea of what a complete business plan looks like.
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