How to create a financial forecast for an agronomy consulting company?
Creating a financial forecast for your agronomy consulting company, 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 agronomy consulting company 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 an agronomy consulting company?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your agronomy consulting company and ensure that it can be financially viable in the years to come.
A financial plan for an agronomy consulting company 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 agronomy consulting company 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 agronomy consulting company'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 needed to build an agronomy consulting company 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 an agronomy consulting company, 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 agronomy consulting company 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 agronomy consulting company, 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 agronomy consulting company's financial forecast.
The sales forecast for an agronomy consulting company
From experience, it usually makes sense to start your agronomy consulting company's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your agronomy consulting company (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 agronomy consulting company'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 reputation and track record as a reliable and knowledgeable agronomy consulting company can attract more clients and justify a higher average price for your services.
- The overall economic climate and demand for agricultural products can affect the demand for your consulting services, resulting in fluctuations in the number of monthly transactions.
- The introduction of new technologies or advancements in the agriculture industry can increase the demand for your consulting services, leading to a potential increase in the average price for your services.
- The availability and price of raw materials and resources used in agriculture can impact the cost of your consulting services, which can then affect your average price and number of monthly transactions.
- The regulatory environment and government policies related to agriculture can have a direct impact on the demand for your consulting services and the average price you can charge for them.
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 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 an agronomy consulting company
The next step is to estimate the costs you’ll have to incur to operate your agronomy consulting company.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your agronomy consulting company's operating expenses should normally include the following items:
- Staff Costs: This includes salaries, benefits, and any other expenses related to your employees. This may also include training and development costs for your employees to ensure they have the necessary skills to provide high-quality consulting services.
- Accountancy Fees: You may need to hire an accountant or bookkeeper to manage your financial records and ensure compliance with tax laws. This can include fees for preparing financial statements, tax returns, and other accounting services.
- Insurance Costs: As an agronomy consulting company, you may need insurance to protect your business from potential risks and liabilities. This can include general liability insurance, professional liability insurance, and property insurance.
- Software Licenses: To efficiently manage your consulting business, you may need to invest in software licenses for project management, accounting, and other business operations.
- Banking Fees: You will likely have business bank accounts to manage your finances, and these accounts may come with fees for services such as wire transfers, account maintenance, and overdraft protection.
- Marketing and Advertising: To attract clients and promote your services, you may need to allocate funds for marketing and advertising efforts such as website development, social media advertising, and print materials.
- Travel Expenses: As an agronomy consulting company, you may need to travel to meet with clients or conduct field visits. This can include expenses for transportation, lodging, and meals.
- Office Rent: If you have a physical office for your consulting business, you will need to pay rent or lease fees. This can also include utilities and other office-related expenses.
- Professional Memberships: You may need to join professional organizations related to agronomy or consulting to stay updated on industry trends and network with potential clients and partners.
- Legal Fees: You may need to seek legal advice or services for contracts, intellectual property protection, or any other business-related legal matters.
- Training and Development: To stay updated on the latest industry developments and techniques, you may need to invest in personal and professional development courses and workshops.
- Office Supplies: To run your business efficiently, you will need to purchase office supplies such as stationery, printer ink, and other necessary materials.
- Telephone and Internet Expenses: You will need reliable communication services to stay connected with clients and employees. This can include expenses for phone plans, internet service, and other communication tools.
- Professional Services: Depending on your specific consulting services, you may need to hire outside experts or consultants to assist with certain projects or tasks.
- Travel and Business Insurance: In addition to general business insurance, you may also need specific types of insurance for traveling employees or liability related to business travel.
This list is not exhaustive by any means, and will need to be tailored to your agronomy consulting company's specific circumstances.
What investments are needed to start or grow an agronomy consulting company?
Your agronomy consulting company 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 an agronomy consulting company, these could include:
- Your office space - This can include the purchase or lease of office space, as well as any renovations or improvements needed to make the space suitable for your agronomy consulting company.
- Equipment and tools - You will likely need a variety of equipment and tools to provide your consulting services, such as soil testing kits, crop monitoring equipment, and GPS mapping tools.
- Vehicles - Depending on the size and scope of your consulting services, you may need to invest in one or more vehicles to travel to and from client sites.
- Software and technology - As an agronomy consulting company, you will need to invest in software and technology to manage your client data, create reports, and stay up-to-date on industry trends and research.
- Training and certifications - In order to provide high-quality consulting services, you may need to invest in training and certifications for yourself and your employees. This can include attending conferences, workshops, and specialized courses related to agronomy and consulting.
Again, this list will need to be adjusted according to the size and ambitions of your agronomy consulting company.
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 agronomy consulting company
The next step in the creation of your financial forecast for your agronomy consulting company 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 an agronomy consulting company?
Now let's have a look at the main output tables of your agronomy consulting company'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 agronomy consulting company'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 agronomy consulting company will look different than for a startup.
The projected balance sheet
Your agronomy consulting company'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 projection
The cash flow forecast of your agronomy consulting company 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 agronomy consulting company'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 agronomy consulting company 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 agronomy consulting company'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 agronomy consulting company's financial forecast?
Using the right tool or solution will make the creation of your agronomy consulting company's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your agronomy consulting company's projections
The modern and easiest way is to use an online financial forecasting tool 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 projection 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 agronomy consulting company 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 agronomy consulting company's financial forecast?
Creating an accurate and error-free agronomy consulting company 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 forecast templates for inspiration
The Business Plan Shop has dozens of financial forecast examples available.
Our templates contain both a financial forecast and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Our templates are a great source of inspiration, whether you just want to see what a complete business plan looks like, or are looking for concrete examples of how you should model financial elements in your own forecast.
Takeaways
- Having a financial forecast enables you to visualise the expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial projections up-to-date is the only way to get a view on what your agronomy consulting company future cash flows may look like.
- Using financial forecasting software is the mordern and easy way to create and maintain your forecasts.
This is the end of our guide on how to build the financial forecast for an agronomy consulting company, we hope you found it useful. Don't hesitate to contact us if you want to share your feedback or 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
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- Financial forecast for a business idea
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Founder & CEO at The Business Plan Shop Ltd
