How to create a financial forecast for a strawberry farm?
Creating a financial forecast for your strawberry farm, and ensuring it stays up to date, is the only way to maintain visibility on future cash flows.
This might sound complex, but with the right guidance and tools, creating an accurate financial forecast for your strawberry farm is not that hard.
In this guide, we'll cover everything from the main goal of a financial projection, the data you need as input, to the tables that compose it, and the tools that can help you build a forecast efficiently.
Without further ado, let us begin!
Why create and maintain a financial forecast for a strawberry farm?
The financial projections for your strawberry 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 strawberry 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 strawberry farm financial forecast?
A strawberry farm'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 strawberry farm, 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 strawberry farm 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 strawberry farm 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 strawberry farm's financial forecast.
The sales forecast for a strawberry farm
From experience, it is usually best to start creating your strawberry farm financial forecast by your sales forecast.
To create an accurate sales forecast for your strawberry farm, you will have to rely on the data collected in your market research, or if you're running an existing strawberry 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:
- Weather conditions: Adverse weather conditions can impact the quantity and quality of strawberries harvested, leading to fluctuations in supply and potentially affecting the average price of your strawberries. For example, heavy rainfall or hail can damage crops, while prolonged periods of heat or drought can result in smaller and lower quality berries.
- Competition: The presence of other strawberry farms in the area can affect your farm's average price and number of transactions. If there are many farms producing strawberries in your region, you may need to adjust your prices or offer promotions to stay competitive.
- Pests and diseases: Infestations and diseases can damage your crops and reduce the quantity and quality of strawberries available for sale. This can lead to higher prices and fewer transactions if customers are dissatisfied with the quality of your produce.
- Trends and preferences: Changes in consumer preferences and trends can also impact your farm's sales. For example, if there is a growing demand for organic produce, you may need to adjust your farming practices and potentially charge a higher price for your strawberries to meet this demand.
- Availability of labor: The availability of labor for harvesting and other farm tasks can affect your farm's productivity and, in turn, the average price and number of transactions. If labor is scarce or expensive, it may result in fewer strawberries being picked and sold, leading to higher prices and potentially lower sales.
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 strawberry farm
The next step is to estimate the costs you’ll have to incur to operate your strawberry farm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your strawberry farm's operating expenses should normally include the following items:
- Labor costs: This includes wages, benefits, and payroll taxes for your farm workers. You will need to hire seasonal workers during planting and harvesting seasons, as well as full-time employees for daily farm operations.
- Seed and plant costs: You will need to purchase high-quality strawberry seeds and plants each year to ensure a successful harvest. These costs can vary depending on the type and quantity of seeds and plants you need.
- Fertilizer and pesticide costs: To maintain healthy and productive strawberry plants, you will need to invest in fertilizers and pesticides. These costs should be budgeted for throughout the year.
- Water and irrigation costs: Strawberries require frequent watering, especially during hot and dry weather. You will need to factor in the cost of water and irrigation systems to keep your plants well hydrated.
- Fuel and equipment costs: Running a strawberry farm will require the use of tractors, harvesters, and other equipment. You will need to budget for fuel and maintenance costs for these machines.
- Packaging and labeling costs: Once your strawberries are harvested, you will need to package and label them for sale. This may include purchasing containers, labels, and other packaging materials.
- Transportation costs: If you sell your strawberries at a local farmer's market or to grocery stores, you will need to factor in the cost of transportation to deliver your produce.
- Marketing and advertising costs: To attract customers and promote your farm, you may need to invest in marketing and advertising efforts. This could include creating flyers, social media ads, or attending local events.
- Accounting and bookkeeping fees: Keeping track of your finances and taxes is crucial for any business. You may need to hire an accountant or bookkeeper to help you manage your farm's financial records.
- Insurance costs: As with any business, you will need to have insurance to protect your farm from potential risks and liabilities. This could include crop insurance, liability insurance, and property insurance.
- Software licenses: To streamline your farm operations, you may need to invest in software for tasks such as record keeping, inventory management, and customer data management.
- Banking fees: You will likely need to open a business bank account for your strawberry farm. This may include fees for account maintenance, transactions, and wire transfers.
- Rent or land costs: If you do not own the land your farm is located on, you will need to budget for rent or lease payments. This could also include property taxes and utilities.
- Training and education costs: As a strawberry farmer, it is important to stay updated on industry trends and techniques. You may need to invest in training and education programs to improve your farming skills.
- Legal fees: You may need to consult with a lawyer for legal advice or to draft contracts for your farm. These fees should be factored into your operating expenses.
This list is not exhaustive by any means, and will need to be tailored to your strawberry farm's specific circumstances.
What investments are needed to start or grow a strawberry farm?
Your strawberry farm financial forecast will also need to include the capital expenditures (aka investments in plain English) and initial working capital items required for the creation or development of your business.
For a strawberry farm, these could include:
- Land and Infrastructure: This includes the cost of purchasing or leasing land for your strawberry farm, as well as any necessary infrastructure such as irrigation systems, fencing, and storage facilities.
- Equipment and Machinery: As a strawberry farmer, you will need certain tools and machinery to maintain your farm and harvest your crops. This can include tractors, harvesters, sprayers, and other equipment specific to strawberry farming.
- Buildings and Structures: Depending on the size and scale of your strawberry farm, you may need to construct or renovate buildings and structures such as greenhouses, packing sheds, and cold storage facilities.
- Planting and Growing Supplies: These are the materials and resources needed to actually grow your strawberries, such as seeds, seedlings, fertilizers, and pesticides. You may also need to purchase mulch or plastic coverings for your crops.
- Transportation and Delivery: In order to get your strawberries to market, you will need a reliable mode of transportation. This could include purchasing a truck or van, or leasing one for delivery purposes.
Again, this list will need to be adjusted according to the size and ambitions of your strawberry 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 strawberry farm
The next step in the creation of your financial forecast for your strawberry 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 strawberry farm?
Now let's have a look at the main output tables of your strawberry farm's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your strawberry farm is likely to be in the years to come.
For your strawberry farm 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 strawberry farms, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your strawberry farm'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 strawberry farm'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 strawberry farm:
- 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 strawberry farm'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 strawberry farm's financial plan - so that banks or investors can assess seasonal variation and ensure your business 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 strawberry farm's financial forecast?
Creating your strawberry farm'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 strawberry farm'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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional strawberry farm financial projection.
As you can imagine, this solution is much more expensive than using software. From experience, the creation of a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to start around £700 or $1,000 excluding taxes.
The indicative estimate above, is for a small business, and a forecast done as a one-off. Using a financial consultant or accountant to track your actuals vs. forecast and to keep your financial forecast up to date on a monthly or quarterly basis will naturally cost a lot more.
If you choose this solution, make sure your service provider has first-hand experience in your industry, so that they may challenge your assumptions and offer insights (as opposed to just taking your figures at face value to create the forecast’s financial statements).
Why not use a spreadsheet such as Excel or Google Sheets to build your strawberry farm's financial forecast?
Creating an accurate and error-free strawberry farm 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 strawberry farm, 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 strawberry 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 strawberry 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 revenues for a business?
- Financial forecast for a business idea
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Founder & CEO at The Business Plan Shop Ltd
