How to create a financial forecast for a snack bar?
Developing and maintaining an up-to-date financial forecast for your snack bar 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 snack bar 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 snack bar?
The financial projections for your snack bar 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 snack bar'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 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 snack bar financial forecast?
A snack bar'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 snack bar.
If you are creating (or updating) the forecast of an existing snack bar, 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 snack bar 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 snack bar 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 snack bar's financial forecast.
The sales forecast for a snack bar
From experience, it is usually best to start creating your snack bar financial forecast by your sales forecast.
To create an accurate sales forecast for your snack bar, you will have to rely on the data collected in your market research, or if you're running an existing snack 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:
- Location: The location of your snack bar can greatly impact the average price and number of monthly transactions. If you are located in a busy tourist area, you may be able to charge higher prices and have more customers during peak season. However, if you are located in a less desirable location, you may have to lower your prices and have fewer customers.
- Seasonal Trends: Depending on the type of snacks you offer, there may be seasonal trends that affect your sales. For example, if you offer ice cream, you may see an increase in sales during the summer months but a decrease during the winter months. It's important to take these trends into consideration when forecasting your sales.
- Competition: The presence of competition in your area can also impact your average price and number of monthly transactions. If there are other snack bars nearby, you may need to adjust your prices to stay competitive and attract more customers. On the other hand, if you are the only snack bar in the area, you may be able to charge higher prices and have a higher number of transactions.
- Seasonal Events: Special events or holidays can also affect your sales. For example, if your snack bar is located near a popular event or festival, you may see an increase in customers and sales during that time. It's important to keep track of these events and plan accordingly in your sales forecast.
- Food Trends: The types of snacks you offer may also be influenced by food trends. For example, if there is a growing trend towards healthier snacks, you may need to adjust your menu to cater to this demand. This can also affect your average price as healthier options may be more expensive to source and offer to customers.
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.
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The operating expenses for a snack bar
The next step is to estimate the expenses needed to run your snack bar on a day-to-day basis.
These will vary based on the level of sales expected, and the location and size of your business.
But your snack bar's operating expenses should include the following items at a minimum:
- Staff Costs: This includes salaries and wages for your employees, as well as any benefits and bonuses.
- Ingredient and Supply Costs: This includes the cost of purchasing ingredients and supplies for your snack bar, such as food, beverages, and packaging materials.
- Rent: You will need to pay rent for the space where your snack bar is located.
- Utilities: This includes electricity, water, and gas expenses for your snack bar.
- Marketing and Advertising: You may need to spend money on marketing and advertising to promote your snack bar and attract customers.
- Accountancy Fees: You will need to hire an accountant or use accounting software to manage your finances and file taxes.
- Insurance Costs: You will need to purchase insurance to protect your snack bar and its assets.
- Software Licences: If you use any software to run your snack bar, you will need to pay for the necessary licenses.
- Banking Fees: This includes fees for maintaining a business bank account and processing transactions.
- Cleaning and Maintenance: You will need to keep your snack bar clean and maintained, which may require hiring a cleaning service or purchasing cleaning supplies.
- Repairs and Maintenance: You may need to budget for unexpected repairs and maintenance for equipment or the physical space of your snack bar.
- Licenses and Permits: Depending on your location, you may need to obtain certain licenses and permits to legally operate your snack bar.
- Professional Services: This includes fees for consulting services, legal advice, or other professional services that may be necessary for your snack bar.
- Inventory Management: You will need to keep track of inventory and may need to invest in inventory management software or services.
- Training and Development: You may need to invest in training and development for yourself and your staff to ensure the success of your snack bar.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small snack bar might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a snack bar?
Once you have an idea of how much sales you could achieve and what it will cost to run your snack bar, it is time to look into the equipment required to launch or expand the activity.
For a snack bar, capital expenditures and initial working capital items could include:
- Kitchen Equipment: This includes ovens, refrigerators, dishwashers, and other necessary equipment for food preparation and storage. These are essential for running a snack bar and should be of high quality to ensure efficiency and food safety.
- Furniture and Fixtures: This includes tables, chairs, counters, and other furnishings for the dining area. These items not only provide a comfortable and inviting atmosphere for customers but also contribute to the overall aesthetic of the snack bar.
- POS System: A Point of Sale (POS) system is crucial for tracking sales, managing inventory, and processing payments. It can also generate reports and provide valuable insights into the business's performance. Investing in a reliable POS system can greatly improve the efficiency and accuracy of your snack bar's operations.
- Renovations and Remodeling: Over time, your snack bar may need updates or renovations to keep up with changing trends or to accommodate the growing needs of your business. This could include things like repainting, replacing flooring, or updating the layout to improve flow and maximize space.
- Technology and Software: In today's digital age, having the right technology and software can greatly enhance your snack bar's operations. This may include things like a website, online ordering system, or digital menu boards. These investments can help attract and retain customers and improve overall efficiency.
Again, this list will need to be adjusted according to the specificities of your snack 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 snack bar
The next step in the creation of your financial forecast for your snack 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 snack bar?
Now let's have a look at the main output tables of your snack bar's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your snack bar is likely to be in the years to come.
For your snack bar 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 snack bars, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your snack bar'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 projected cash flow statement
A projected cash flow statement for a snack 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 snack 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 snack 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 snack bar's financial forecast?
Using the right tool or solution will make the creation of your snack bar's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your snack bar'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 snack 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 snack bar's financial forecast?
Creating an accurate and error-free snack bar 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 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 snack bar, 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
- 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 snack bar 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 snack bar, we hope you found it useful. Don't hesitate to contact us if you want to share your feedback or 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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