How to create a financial forecast for a smoothie bar?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your smoothie bar.
Putting together a smoothie bar 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 smoothie bar.
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 smoothie bar?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your smoothie bar and ensure that it can be financially viable in the years to come.
A financial plan for a smoothie bar 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 smoothie bar 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 smoothie bar'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 smoothie bar financial forecast?
A smoothie bar'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 smoothie bar, 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 smoothie bar 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 smoothie bar 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 smoothie bar's financial forecast.
The sales forecast for a smoothie bar
From experience, it is usually best to start creating your smoothie bar financial forecast by your sales forecast.
To create an accurate sales forecast for your smoothie bar, you will have to rely on the data collected in your market research, or if you're running an existing smoothie bar, 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:
- Seasonal demand for fresh fruits and vegetables: You may see a decrease in your average price and number of monthly transactions during the winter months when fresh produce is not as readily available.
- Trends in health and wellness: As more people become health-conscious, your smoothie bar may see an increase in your average price as customers are willing to pay more for nutritious options.
- Competition from other smoothie bars: If there are other smoothie bars in your area, you may need to adjust your prices or offer unique flavors to stay competitive and maintain your customer base.
- Changes in local demographics: If there is a shift in the demographics of your area, you may need to adapt your menu and pricing to appeal to your new target market.
- Availability of seasonal ingredients: Your average price may fluctuate depending on the availability and cost of certain seasonal ingredients, such as berries or tropical fruits.
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 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.
The operating expenses for a smoothie bar
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your smoothie bar 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 smoothie bar will include some of the following items:
- Staff costs: This includes wages, salaries, and benefits for all employees working at the smoothie bar, such as smoothie makers, cashiers, and managers.
- Rent: The cost of renting the space for the smoothie bar, including utilities like electricity and water.
- Ingredients: The cost of purchasing fresh fruits, vegetables, and other ingredients to make smoothies.
- Packaging: The cost of cups, lids, straws, and other packaging materials for the smoothies.
- Marketing and advertising: The cost of promoting the smoothie bar, such as flyers, social media ads, and collaborations with other businesses.
- Accountancy fees: The cost of hiring an accountant to handle financial and tax matters for the smoothie bar.
- Insurance costs: The cost of insuring the smoothie bar against potential risks, such as liability and property damage.
- Software licenses: The cost of using software for tasks such as inventory management and point-of-sale systems.
- Banking fees: The cost of bank charges, such as transaction fees and monthly account maintenance fees.
- Cleaning and maintenance: The cost of keeping the smoothie bar clean and in good condition, including equipment maintenance and hiring a cleaning service.
- Training and development: The cost of providing training to employees, such as customer service and food safety training.
- Utilities: The cost of utilities used in the smoothie bar, such as gas, electricity, and water.
- Licenses and permits: The cost of obtaining necessary licenses and permits to operate a smoothie bar, such as a food service permit and business license.
- Office supplies: The cost of purchasing office supplies, such as paper, pens, and printer ink.
- Credit card processing fees: The cost of processing credit and debit card payments for smoothie purchases.
This list will need to be tailored to the specificities of your smoothie bar, but should offer a good starting point for your budget.
What investments are needed to start or grow a smoothie bar?
Once you have an idea of how much sales you could achieve and what it will cost to run your smoothie bar, it is time to look into the equipment required to launch or expand the activity.
For a smoothie bar, capital expenditures and initial working capital items could include:
- Equipment: This includes items such as blenders, juicers, refrigerators, freezers, and other necessary equipment for making and storing smoothies.
- Furniture and Fixtures: This includes items such as tables, chairs, shelves, and display cases for the smoothie bar area.
- POS System: A point-of-sale (POS) system is essential for tracking sales, managing inventory, and processing payments. This includes hardware such as cash registers, credit card readers, and software for inventory management and sales reporting.
- Renovations: Depending on the location and condition of the space, renovations may be necessary to create a functional and inviting smoothie bar. This can include flooring, walls, lighting, and plumbing.
- Signage: A well-designed and eye-catching sign is important for attracting customers and communicating the brand of your smoothie bar. This can include exterior and interior signage, as well as menu boards.
Again, this list will need to be adjusted according to the specificities of your smoothie bar.
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 smoothie bar
The next step in the creation of your financial forecast for your smoothie bar 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 smoothie bar?
Now let's have a look at the main output tables of your smoothie bar's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your smoothie bar's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a smoothie bar 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 smoothie bar's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- 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 projected cash flow statement
A projected cash flow statement for a smoothie bar 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 smoothie bar'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 smoothie bar 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 smoothie bar's financial forecast?
Creating your smoothie bar's financial forecast may sound fairly daunting, but the good news is that there are several ways to go about it.
Using online financial forecasting software to build your smoothie bar'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 smoothie bar 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 smoothie bar'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 smoothie bar 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 smoothie bar'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 smoothie bar, 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 smoothie bar
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your smoothie bar.
- 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 smoothie bar. 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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