How to create a financial forecast for a turkey farm?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your turkey farm.
Putting together a turkey farm 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 turkey farm.
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 turkey farm?
The financial projections for your turkey 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 turkey 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 turkey farm financial forecast?
A turkey farm'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 turkey farm.
If you are creating (or updating) the forecast of an existing turkey farm, 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 turkey farm 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 turkey farm 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 turkey farm's financial forecast.
The sales forecast for a turkey farm
The sales forecast, also called topline projection, is normally where you will start when building your turkey farm financial forecast.
Creating a coherent sales projection boils down to estimating two key drivers:
- The average price
- The number of monthly transactions
To do this, you will need to rely on historical data (for an existing business), market research data (for both new and existing turkey farms), and consider the elements below:
- Weather conditions: Adverse weather conditions, such as heavy rainfall or extreme temperatures, can affect the price of turkeys due to increased production costs and potential loss of turkeys.
- Disease outbreaks: Outbreaks of diseases such as avian influenza can significantly impact the number of transactions as consumers may avoid purchasing turkey products due to safety concerns.
- Consumer preferences: Changes in consumer preferences, such as a shift towards plant-based diets or ethical considerations, can lead to a decrease in demand for turkey products and a decline in average price.
- Government regulations: Changes in government regulations, such as stricter animal welfare laws, may result in increased production costs and potentially higher prices for turkeys.
- Competition: The presence of other turkey farms in the area can impact the number of transactions and average price as consumers have more options to choose from.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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The operating expenses for a turkey farm
The next step is to estimate the costs you’ll have to incur to operate your turkey farm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your turkey farm's operating expenses should normally include the following items:
- Staff Costs: This includes wages, salaries, and benefits for your farm workers. These costs can vary depending on the number of staff you have and their experience level.
- Feed: Turkey feed is one of the biggest expenses for a turkey farm. You will need to budget for purchasing feed in bulk and potentially supplementing with specialty feed for specific stages of growth.
- Veterinary Care: Keeping your turkeys healthy is crucial for your farm's success. You will need to budget for routine check-ups, vaccinations, and potential emergency care for your turkeys.
- Housing and Equipment: Your turkeys will need suitable housing and equipment for their comfort and safety. This can include turkey coops, feeders, waterers, and heat lamps.
- Utilities: Running a turkey farm requires electricity and water. You will need to budget for these ongoing expenses.
- Marketing and Advertising: To attract customers and promote your farm, you may need to invest in marketing and advertising efforts such as flyers, social media ads, or attending trade shows.
- Transportation: Whether you are transporting turkeys to market or purchasing supplies for your farm, you will need to factor in transportation costs.
- Accountancy Fees: As a business owner, you will likely need to hire an accountant to help with tax preparation, bookkeeping, and other financial tasks.
- Insurance Costs: Protecting your farm and its assets is crucial. You will need to budget for insurance coverage for your property, equipment, and potentially liability insurance.
- Software Licenses: Depending on the size and complexity of your farm, you may need to invest in software programs for bookkeeping, record-keeping, or farm management.
- Banking Fees: Managing your farm's finances may come with fees such as transaction fees, overdraft fees, and monthly account maintenance fees. These should be factored into your budget.
- Pest Control: Keeping pests at bay is essential for the health of your turkeys and the success of your farm. You may need to budget for pest control services or supplies.
- Repairs and Maintenance: As with any property and equipment, there may be unexpected repairs or maintenance needed on your farm. It is important to budget for these expenses.
- Legal Fees: As a business owner, you may encounter legal fees for contracts, permits, or other legal matters. It is important to have a budget for these potential expenses.
- Taxes: As a business owner, you will need to pay taxes on your farm's income. It is important to budget for these expenses and potentially consult with an accountant for tax planning strategies.
This list is not exhaustive by any means, and will need to be tailored to your turkey farm's specific circumstances.
What investments are needed to start or grow a turkey farm?
Creating and expanding a turkey farm also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a turkey farm could include elements such as:
- Land: You will need to purchase or lease land for your turkey farm. This includes the cost of buying or renting the land, as well as any initial land improvements such as fencing, irrigation systems, and soil preparation.
- Buildings and Structures: You will need to construct or purchase buildings and structures for your turkey farm. This includes the cost of building or buying a turkey coop, storage buildings, and any other necessary structures.
- Equipment: You will need to purchase equipment for your turkey farm. This includes items such as feeders, waterers, incubators, and other farming equipment. You may also need to purchase vehicles for transportation and maintenance of the farm.
- Breeding Stock: You will need to purchase breeding stock for your turkey farm. This includes the cost of purchasing breeding turkeys, as well as any transportation and quarantine expenses.
- Infrastructure: You may need to invest in infrastructure for your turkey farm, such as electricity, water supply, and waste management systems. These costs may include installation, maintenance, and operation fees.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your turkey 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 turkey farm
The next step in the creation of your financial forecast for your turkey 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 turkey farm?
Now let's have a look at the main output tables of your turkey farm's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your turkey farm is likely to be in the years to come.
For your turkey 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 turkey 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 turkey 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 projected cash flow statement
A projected cash flow statement for a turkey farm 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 turkey farm'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 turkey farm 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 turkey farm's financial forecast?
Using the right tool or solution will make the creation of your turkey farm's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your turkey 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 turkey 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 turkey farm's financial forecast?
Creating an accurate and error-free turkey farm 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 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 turkey farm, 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 turkey farm
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your turkey 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 turkey 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?
- Financial forecast template for a business idea
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Founder & CEO at The Business Plan Shop Ltd
