How to create a financial forecast for a wine bar?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your wine bar.
Putting together a wine bar 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 wine bar.
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 wine bar?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your wine bar and ensure that it can be financially viable in the years to come.
A financial plan for a wine 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 wine 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 wine 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 wine 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 wine 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 wine 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 wine 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 wine bar's financial forecast.
The sales forecast for a wine bar
The sales forecast, also called topline projection, is normally where you will start when building your wine bar 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 wine bars), and consider the elements below:
- Seasonal trends: As a wine bar owner, you know that your business experiences fluctuations in average price and number of monthly transactions based on the time of year. For example, sales may be higher during the holiday season, while they may slow down during the summer months.
- Menu changes: The types of wines and food items offered on your menu can significantly impact your average price and number of monthly transactions. For instance, introducing new, high-end wines can increase your average price, while offering a variety of small plates can attract more customers and increase your number of monthly transactions.
- Economic conditions: Economic factors such as inflation, interest rates, and consumer spending can affect the average price and number of monthly transactions at your wine bar. During times of economic downturn, customers may be more cautious with their spending, leading to a decrease in both average price and number of transactions.
- Customer demographics: The demographics of your customer base can also impact your sales forecast. For example, if your wine bar is located in an area with a high concentration of affluent individuals, you may be able to charge higher prices and attract more high-end customers, resulting in a higher average price and number of monthly transactions.
- Seasonal events: Special events such as wine tastings, live music nights, or holiday parties can have a significant impact on your average price and number of monthly transactions. These events can attract new customers, increase sales, and create a buzz around your wine bar, leading to a boost in both average price and number of transactions.
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 wine bar
The next step is to estimate the costs you’ll have to incur to operate your wine bar.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your wine bar's operating expenses should normally include the following items:
- Staff costs: This includes wages, salaries, and benefits for your employees, such as bartenders, servers, and kitchen staff.
- Accountancy fees: You may need to hire an accountant to handle your finances, including tax preparation and bookkeeping.
- Insurance costs: It is important to have insurance coverage for your wine bar, including general liability, property, and liquor liability insurance.
- Software licenses: You may need to purchase software licenses for point-of-sale systems, inventory management, and accounting software.
- Banking fees: This includes charges for credit card processing, ATM fees, and other banking services.
- Rent: You will need to pay rent for your wine bar space, whether it is a stand-alone building or part of a larger complex.
- Utilities: This includes electricity, gas, water, and other utility expenses for your wine bar.
- Inventory: You will need to purchase wine, beer, and other beverages to stock your bar, as well as food items for your menu.
- Marketing and advertising: It is important to promote your wine bar through various channels, such as social media, print ads, and events.
- Maintenance and repairs: You will need to budget for regular maintenance and repairs for your bar equipment, furniture, and fixtures.
- Licenses and permits: You will need to obtain various licenses and permits to operate your wine bar, such as a liquor license and health permits.
- Cleaning and janitorial services: It is important to keep your wine bar clean and tidy, so you may need to hire a cleaning service.
- Professional fees: This includes fees for legal services, consulting, and other professional services that you may need for your wine bar.
- Training and development: It is important to invest in training and development for your staff, such as wine education and customer service training.
- Music and entertainment: If you plan to have live music or other forms of entertainment at your wine bar, you will need to budget for these expenses.
This list is not exhaustive by any means, and will need to be tailored to your wine bar's specific circumstances.
What investments are needed to start or grow a wine bar?
Once you have an idea of how much sales you could achieve and what it will cost to run your wine bar, it is time to look into the equipment required to launch or expand the activity.
For a wine bar, capital expenditures and initial working capital items could include:
- Wine Inventory: This includes the initial purchase of wine bottles, as well as ongoing replenishment of stock. This is a crucial expense for a wine bar, as it directly affects the quality and variety of wines offered to customers.
- Bar Equipment: This refers to the purchase of essential equipment for the bar, such as wine glasses, decanters, corkscrews, and bottle openers. These items are necessary for serving and enjoying wine, and should be of high quality to enhance the customer experience.
- Furniture and Decor: A wine bar should have a cozy and inviting atmosphere, which can be achieved through carefully selected furniture and decor. This may include tables, chairs, lighting, artwork, and other aesthetic elements that create a unique and appealing ambiance for customers.
- Wine Cellar: Depending on the size and concept of your wine bar, you may need to invest in a wine cellar to properly store and age your wines. This can range from a small, temperature-controlled cabinet to a larger, custom-built cellar. Proper storage is crucial for maintaining the quality of your wines.
- POS System: A point-of-sale (POS) system is essential for any business, including a wine bar. This technology allows you to track sales, manage inventory, and process payments efficiently. Investing in a reliable and user-friendly POS system can save you time and money in the long run.
Again, this list will need to be adjusted according to the specificities of your wine 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 wine bar
The next step in the creation of your financial forecast for your wine 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 wine bar?
Now let's have a look at the main output tables of your wine bar's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your wine bar is likely to be in the years to come.
For your wine 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 wine 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 wine 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 wine 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 wine 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 wine 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 wine bar's financial forecast?
Creating your wine bar'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 wine 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 wine 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 wine bar'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 wine bar 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 wine bar'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 wine 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 wine 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 wine 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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