How to create a financial forecast for a sugar beet seed farm?
Developing and maintaining an up-to-date financial forecast for your sugar beet seed farm 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 sugar beet seed farm 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 sugar beet seed farm?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your sugar beet seed farm and ensure that it can be financially viable in the years to come.
A financial plan for a sugar beet seed farm 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 sugar beet seed farm 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 sugar beet seed farm'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 sugar beet seed farm financial forecast?
A sugar beet seed 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 sugar beet seed 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 sugar beet seed 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 sugar beet seed 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 sugar beet seed farm's financial forecast.
The sales forecast for a sugar beet seed farm
From experience, it usually makes sense to start your sugar beet seed farm's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your sugar beet seed farm (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 sugar beet seed farm'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:
- Climate conditions: The average price of your sugar beet seeds may be affected by the weather. Unfavorable weather conditions such as drought or excessive rainfall can lead to a decrease in yield, resulting in a higher demand for seeds and potentially increasing your average price.
- Competition: The number of monthly transactions for your sugar beet seeds may be impacted by the competition in the market. If there are new entrants or existing competitors offering similar products at lower prices, it may lead to a decrease in your sales and average price.
- Government policies: Changes in government policies related to agriculture or seed production can affect your business. For example, if there are subsidies or incentives offered for sugar beet seed farmers, it may lead to an increase in demand and potentially increase your average price.
- Crop diseases: The occurrence of crop diseases can have a significant impact on the demand for your sugar beet seeds. In the event of a widespread disease affecting sugar beet crops, the demand for resistant seeds may increase, leading to a potential increase in your average price.
- Market trends: Keeping track of market trends and consumer preferences is crucial for your business. For instance, if there is a growing demand for organic sugar beet seeds, you may need to adjust your production methods and pricing to cater to this trend and maintain your market share.
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 sugar beet seed farm
The next step is to estimate the expenses needed to run your sugar beet seed farm 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 sugar beet seed farm's operating expenses should include the following items at a minimum:
- Labor costs: This includes wages, salaries, and benefits for all employees working on the farm, including farm managers, field workers, and office staff.
- Seed costs: This includes the cost of purchasing sugar beet seeds from suppliers.
- Fertilizer and pesticide costs: Sugar beet farms require fertilizers and pesticides to ensure the growth and health of the crops.
- Machinery and equipment expenses: This includes the cost of purchasing, maintaining, and repairing farm machinery and equipment, such as tractors, harvesters, and irrigation systems.
- Fuel and energy costs: Running farm machinery and equipment, as well as powering buildings and irrigation systems, requires fuel and energy, which can be a significant expense for a sugar beet farm.
- Water costs: Irrigating sugar beet crops requires a large amount of water, which can be a significant expense for the farm.
- Land rent or mortgage payments: If you do not own the land your farm is on, you will need to pay rent or mortgage payments to the landowner.
- Storage and transportation costs: These expenses include the cost of storing and transporting harvested sugar beets to processing facilities.
- Accounting and bookkeeping fees: Hiring a professional accountant or bookkeeper to manage your farm's finances and taxes can save you time and ensure accuracy.
- Insurance costs: Protecting your farm and its assets with insurance is essential to mitigate the financial risks of unforeseen events, such as natural disasters or accidents.
- Software licenses: Utilizing software programs for tasks such as record-keeping, crop management, and financial tracking may require purchasing licenses.
- Banking fees: Maintaining a business bank account and processing transactions may come with fees that need to be accounted for in your farm's budget.
- Marketing and advertising expenses: Promoting your farm and its products through marketing and advertising efforts can help attract customers and increase sales.
- Training and education costs: Investing in ongoing training and education for yourself and your employees can improve the efficiency and productivity of your farm.
- Office supplies and expenses: Running an office on the farm may require purchasing supplies, such as paper, ink, and printer maintenance, as well as covering utility costs.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small sugar beet seed farm might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a sugar beet seed farm?
Creating and expanding a sugar beet seed farm also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a sugar beet seed farm could include elements such as:
- Seed Cleaning and Grading Equipment: This equipment is essential for preparing the sugar beet seeds for planting. It includes machinery such as seed cleaners, graders, and separators.
- Tractors and Farm Equipment: Tractors are used for plowing, planting, and harvesting sugar beets. Other farm equipment, such as planters, sprayers, and harvesters, are also necessary for efficient sugar beet seed production.
- Storage Facilities: Sugar beet seeds need to be stored in a climate-controlled environment to maintain their quality. This may include building or purchasing storage facilities such as seed barns or silos.
- Irrigation System: Sugar beets require a consistent and adequate water supply for optimal growth. Installing an irrigation system, such as sprinklers or drip lines, is a crucial investment for a sugar beet seed farm.
- Processing and Packaging Equipment: Once the sugar beet seeds are harvested, they need to be processed and packaged for sale. This may include purchasing a seed cleaning line, bagging equipment, and labeling machines.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your sugar beet seed 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 sugar beet seed farm
The next step in the creation of your financial forecast for your sugar beet seed 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 sugar beet seed farm?
Now let's have a look at the main output tables of your sugar beet seed farm's financial forecast.
The forecasted profit & loss statement
The profit & loss forecast gives you a clear picture of your business’ expected growth over the first three to five years, and whether it’s likely to be profitable or not.
A healthy sugar beet seed farm's P&L statement should show:
- Sales growing at (minimum) or above (better) inflation
- Stable (minimum) or expanding (better) profit margins
- A healthy level of net profitability
This will of course depend on the stage of your business: numbers for an established sugar beet seed farm will look different than for a startup.
The projected balance sheet
Your sugar beet seed farm'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 cash flow projection
The cash flow forecast of your sugar beet seed farm will show how much cash the business is expected to generate or consume over the next three to five years.
There are multiple ways of presenting a cash flow forecast but from experience, it is better to organise it by nature in order to clearly show these elements:
- Operating cash flow: how much cash is generated by the sugar beet seed farm's operations
- Investing cash flow: what is the business investing to expand or maintain its equipment
- Financing cash flow: is the business raising additional funds or repaying financiers (debt repayment, dividends)
Your cash flow forecast is the most important element of your overall financial projection and that’s where you should focus your attention to ensure that your sugar beet seed farm is adequately funded.
Note: if you are preparing a financial forecast in order to try to secure funding, you will need to include both a yearly and monthly cash flow forecast in your sugar beet seed farm's financial plan.
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 sugar beet seed farm's financial forecast?
Creating your sugar beet seed 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 projection software to build your sugar beet seed farm's forecast
The modern and easiest way to build a forecast is to use professional financial projection 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 sugar beet seed farm 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 sugar beet seed farm'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 sugar beet seed farm 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 sugar beet seed farm'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 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 sugar beet seed 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 sugar beet seed 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 sugar beet seed 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 create a sales forecast for a business?
- Example of financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
