How to create a financial forecast for an educational 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 educational farm.
Putting together an educational 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 educational 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 an educational farm?
In order to prosper, your business needs to have visibility on what lies ahead and the right financial resources to grow. This is where having a financial forecast for your educational farm becomes handy.
Creating an educational farm financial forecast forces you to take stock of where your business stands and where you want it to go.
Once you have clarity on the destination, you will need to draw up a plan to get there and assess what it means in terms of future profitability and cash flows for your educational farm.
Having this clear plan in place will give you the confidence needed to move forward with your business’s development.
Having an up-to-date financial forecast for an educational farm is also useful if your trading environment worsens, as the forecast enables you to adjust to your new market conditions and anticipate any potential cash shortfall.
Finally, your educational farm's financial projections will also help you secure financing, as banks and investors alike will want to see accurate projections before agreeing to finance your business.
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 an educational farm financial forecast?
A educational 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 educational farm.
If you are creating (or updating) the forecast of an existing educational 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 educational 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 educational 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 educational farm's financial forecast.
The sales forecast for an educational farm
From experience, it is usually best to start creating your educational farm financial forecast by your sales forecast.
To create an accurate sales forecast for your educational farm, you will have to rely on the data collected in your market research, or if you're running an existing educational farm, the historical data of the business, to estimate two key variables:
- The average price
- The number of monthly transactions
To get there, you will need to consider the following factors:
- Number of school field trips: As an educational farm, the number of school field trips you host can greatly impact your average price. Schools often negotiate group rates and discounts for their students, which can decrease your average price. On the other hand, if you have a high demand for school field trips, you may be able to charge a premium price for your educational programs.
- Weather conditions: The weather can have a significant impact on the number of monthly transactions at your educational farm. If there is a lot of rain, for example, outdoor activities may be cancelled and result in a decrease in transactions. On the other hand, if the weather is pleasant, more people may be inclined to visit and participate in your farm activities, resulting in an increase in transactions.
- Availability of crops and produce: Your average price may also be affected by the availability of crops and produce on your farm. If you have a successful harvest, you may be able to charge higher prices for your produce, as it will be fresh and in high demand. However, if you experience a poor harvest, your prices may decrease due to limited supply.
- Local events and festivals: The timing and proximity of local events and festivals can impact your number of monthly transactions. If there is a popular event happening nearby, it may draw visitors away from your farm. However, if you are able to collaborate with these events and offer special packages or discounts, you may see an increase in transactions.
- Educational program offerings: The types of educational programs you offer can also affect your average price and number of transactions. If you have a diverse range of programs, you may attract a wider audience and see an increase in transactions. On the other hand, if you have limited or repetitive programs, you may see a decrease in transactions and potential loss of customers.
Once you have an idea of what your future sales will look like, it will be time to work on your overhead budget. Let’s see what this entails.
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 an educational farm
The next step is to estimate the costs you’ll have to incur to operate your educational farm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your educational farm's operating expenses should normally include the following items:
- Staff Costs: This includes salaries, wages, and benefits for all employees working on the farm, including farmers, educators, and support staff.
- Accountancy Fees: You may need to hire an accountant to help with financial management, tax preparation, and budgeting for your educational farm.
- Insurance Costs: As with any business, it's important to have insurance to protect your farm from potential risks and liabilities.
- Software Licenses: You may need to purchase software for record keeping, inventory management, and other administrative tasks.
- Banking Fees: You will likely have fees associated with bank accounts, credit card processing, and other financial transactions.
- Animal Feed and Supplies: If your educational farm includes animals, you will need to budget for their food, bedding, and other supplies.
- Seeds and Plants: For crop production, you will need to purchase seeds and plants, as well as any necessary fertilizers and pesticides.
- Equipment Maintenance: As with any farm, there will be ongoing maintenance costs for equipment such as tractors, tools, and irrigation systems.
- Building Maintenance: You will need to budget for regular maintenance and repairs for any buildings on your farm, including barns, classrooms, and offices.
- Utilities: This includes electricity, water, and other utility costs for running your farm and any buildings on the property.
- Marketing and Advertising: To attract visitors and promote your educational farm, you may need to budget for marketing and advertising expenses.
- Educational Materials: You will need to purchase materials for educational programs and activities, such as books, worksheets, and craft supplies.
- Transportation Costs: If you offer field trips or have off-site events, you will need to budget for transportation costs for participants and supplies.
- Permits and Licenses: Depending on your location and the activities on your farm, you may need to obtain permits and licenses, which may have associated fees.
- Professional Development: To stay up-to-date on best practices and new developments in farming and education, you may need to budget for professional development opportunities for yourself and your staff.
This list is not exhaustive by any means, and will need to be tailored to your educational farm's specific circumstances.
What investments are needed to start or grow an educational farm?
Your educational farm 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 educational farm, these could include:
- Livestock equipment: This includes items such as fencing, gates, feeders, and water troughs for your livestock. These are essential for keeping your animals safe and well-fed.
- Tractors and farm machinery: You will need equipment for tilling, planting, and harvesting crops. Tractors, tillers, seeders, and harvesters are all examples of farm machinery that you may need to purchase.
- Greenhouse or hoop house: If you plan on growing crops year-round, you may want to invest in a greenhouse or hoop house. These structures can help protect your crops from harsh weather conditions and extend your growing season.
- Irrigation system: Depending on the size of your farm and the climate, you may need to invest in an irrigation system to ensure your crops have enough water. This can include sprinklers, drip irrigation, or a well system.
- Farm vehicles: You may need to purchase a truck, ATV, or other farm vehicles to transport equipment, feed, and livestock around your farm. These vehicles can also be used for tasks such as hauling manure or hay.
Again, this list will need to be adjusted according to the size and ambitions of your educational 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 educational farm
The next step in the creation of your financial forecast for your educational 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 an educational farm?
Now let's have a look at the main output tables of your educational 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 educational 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 educational farm will look different than for a startup.
The projected balance sheet
Your educational 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 educational 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 educational 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 educational 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 educational 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 educational farm's financial projections?
Building an educational farm 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 educational farm'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.
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 educational 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 educational 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 educational 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 educational 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 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 educational 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 educational farm
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 educational farm 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 educational farm, 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
- Example of financial forecast
- How to project revenues for a business?
- Financial forecast for a business idea
Know someone who owns or is thinking of starting an educational farm? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
