How to create a financial forecast for a vodka bar?
Creating a financial forecast for your vodka bar, 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 vodka bar 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 vodka bar?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your vodka bar and ensure that it can be financially viable in the years to come.
A financial plan for a vodka 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 vodka 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 vodka 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 needed to build a vodka bar financial forecast?
The quality of your inputs is key when it comes to financial modelling: no matter how good the model is, if your inputs are off, so will the forecast.
If you are building a financial plan to start a vodka bar, you will need to have done your market research and have a clear picture of your sales and marketing strategies so that you can project revenues with confidence.
You will also need to have a clear idea of what resources will be required to operate the vodka bar on a daily basis, and to have done your research with regard to the equipment needed to launch your venture (see further down this guide).
If you are creating a financial forecast of an existing vodka bar, things are usually simpler as you will be able to use your historical accounting data as a budgeting base, and complement that with your team’s view on what lies ahead for the years to come.
Let's now zoom in on what will go in your vodka bar's financial forecast.
The sales forecast for a vodka bar
From experience, it usually makes sense to start your vodka bar's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your vodka bar (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 vodka bar'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:
- Your location can greatly affect the average price of your vodka drinks. If you are located in a high-end neighborhood, you can charge a higher price for your drinks compared to being located in a more affordable area.
- The quality of your vodka can also impact your average price. If you offer high-quality, premium vodka, you can charge a higher price compared to offering lower-quality vodka.
- The popularity of vodka as a drink can affect the number of monthly transactions at your bar. If vodka is currently a popular trend, you can expect an increase in sales, but if it falls out of favor, you may see a decrease in transactions.
- The seasonality of your business can also play a role in your sales forecast. Vodka is often associated with summertime and outdoor activities, so you may see an increase in sales during warmer months compared to colder months.
- The competition in your area can also impact your sales forecast. If you have a lot of other vodka bars nearby, you may need to adjust your prices or offer unique promotions to attract customers and maintain your average price and number of transactions.
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.
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The operating expenses for a vodka bar
The next step is to estimate the expenses needed to run your vodka 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 vodka bar's operating expenses should include the following items at a minimum:
- Staff costs: This includes salaries, wages, and benefits for your bartenders, servers, and other staff members.
- Accountancy fees: You will need to hire an accountant to help you keep track of your finances and file taxes.
- Insurance costs: This includes general liability insurance, liquor liability insurance, and workers' compensation insurance.
- Software licences: You will need to purchase software licences for your point-of-sale system, inventory management system, and other business tools.
- Banking fees: This includes fees for maintaining a business bank account, processing credit card payments, and other banking services.
- Rent and utilities: You will need to pay for your lease or rent, as well as utilities such as electricity, water, and gas.
- Inventory costs: This includes the cost of purchasing vodka, mixers, garnishes, and other ingredients for your drinks.
- Marketing expenses: You will need to promote your vodka bar through advertising, social media, and other marketing efforts.
- Cleaning supplies: You will need to purchase cleaning supplies to keep your bar clean and sanitary.
- Liquor license fees: You will need to pay for a liquor license to legally sell alcohol at your bar.
- Equipment maintenance: This includes the cost of maintaining and repairing your bar equipment, such as blenders, ice machines, and refrigerators.
- Music and entertainment: You may choose to have live music or other forms of entertainment at your vodka bar, which will incur costs.
- Training and development: It is important to continuously train and develop your staff to provide excellent service and maintain a high level of expertise.
- Legal fees: You may need to consult with a lawyer for legal advice or to handle any legal issues that may arise.
- Credit card processing fees: When customers pay with credit cards, you will incur processing fees from your merchant services provider.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small vodka bar might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a vodka bar?
Once you have an idea of how much sales you could achieve and what it will cost to run your vodka bar, it is time to look into the equipment required to launch or expand the activity.
For a vodka bar, capital expenditures and initial working capital items could include:
- Bar Equipment: This includes items such as a commercial freezer, ice machines, blenders, shakers, and other equipment necessary for making and serving vodka drinks.
- Furniture and Fixtures: This can include bar stools, tables, chairs, and other furniture needed to create a comfortable and inviting atmosphere for customers to enjoy their vodka drinks.
- POS System: A point-of-sale (POS) system is essential for tracking sales, inventory, and managing transactions. This is especially important for a vodka bar that may have a large variety of drinks and ingredients.
- Security System: Protecting your business and your customers is crucial, so investing in a security system that includes cameras, alarms, and other measures is a necessary expenditure for a vodka bar.
- Glassware and Utensils: Proper glassware and utensils are essential for serving drinks and creating a professional and polished image for your vodka bar. This can include high-quality martini glasses, shot glasses, and other utensils specific to vodka drinks.
Again, this list will need to be adjusted according to the specificities of your vodka 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 vodka bar
The next step in the creation of your financial forecast for your vodka 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 vodka bar?
Now let's have a look at the main output tables of your vodka bar's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your vodka bar's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a vodka 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
The projected balance sheet gives an overview of your vodka bar's financial structure at the end of the financial year.
It is composed of three categories of items: assets, liabilities and equity:
- Assets: are what the business possesses and uses to produce cash flows. It includes resources such as cash, buildings, equipment, and accounts receivable (money owed by clients).
- Liabilities: are the debts of your vodka bar. They include accounts payable (money owed to suppliers), taxes due and bank loans.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits 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 vodka bar 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 vodka bar'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 vodka bar 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 vodka bar's financial plan.
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 vodka bar's financial projections?
Building a vodka bar financial forecast is not difficult provided that you use the right tool for the job. Let’s see what options are available below.
Using online financial forecasting software to build your vodka 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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional vodka bar 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 vodka bar's financial forecast?
Creating an accurate and error-free vodka bar 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 vodka 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
- A financial forecast shows expected growth, profitability, and cash generation metrics for your vodka 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 vodka 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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