How to create a financial forecast for an egg and egg products wholesaler?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your egg and egg products wholesaler.
Putting together an egg and egg products wholesaler 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 egg and egg products wholesaler.
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 egg and egg products wholesaler?
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 egg and egg products wholesaler becomes handy.
Creating an egg and egg products wholesaler 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 egg and egg products wholesaler.
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 egg and egg products wholesaler 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 egg and egg products wholesaler'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 egg and egg products wholesaler financial forecast?
A egg and egg products wholesaler's financial forecast is only as good as the inputs used to build it.
If you are creating (or updating) the forecast of an existing egg and egg products wholesaler, then you mostly need your accounting information, key historical operating non-financial data, and your team’s input on what to expect for the coming years.
If you are building financial projections for an egg and egg products wholesaler startup, you will need to have done your research and have a clear picture of your competitive environment and go-to-market strategy so that you can forecast sales accurately.
For a new venture, you will also need a precise list of the resources needed to keep the egg and egg products wholesaler running on a day-to-day basis and a list of the equipment and expenditures required to start the business (more on that later).
Let's now take a closer look at the elements that make up your egg and egg products wholesaler's financial forecast.
The sales forecast for an egg and egg products wholesaler
The sales forecast, also called topline projection, is normally where you will start when building your egg and egg products wholesaler 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 egg and egg products wholesalers), and consider the elements below:
- Fluctuations in the cost of feed: As an egg and egg products wholesaler, you are aware that the cost of feed directly affects the price of eggs. Any increase in the cost of feed will result in a higher average price for your products, as you pass on the cost to your customers.
- Changes in consumer demand for organic eggs: With the increasing trend towards healthy and sustainable food choices, the demand for organic eggs is on the rise. This can impact your average price, as organic eggs typically sell for a higher price than conventional ones.
- Weather conditions: The weather can have a significant impact on the egg industry. Extreme temperatures, whether too hot or too cold, can affect egg production and quality. This can lead to a decrease in the number of monthly transactions, as well as an increase in the average price due to a decrease in supply.
- Changes in regulations and standards: As a wholesaler of eggs and egg products, you must adhere to strict regulations and standards set by food safety authorities. Any changes or updates to these regulations can result in additional costs for compliance, which may affect your average price.
- Competition from alternative protein sources: With the growing popularity of plant-based protein sources, such as tofu and plant-based egg substitutes, the demand for traditional eggs may decrease. This can lead to a decrease in the number of monthly transactions and a potential decrease in average price as you may need to adjust your pricing to remain competitive.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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 egg and egg products wholesaler
The next step is to estimate the expenses needed to run your egg and egg products wholesaler 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 egg and egg products wholesaler's operating expenses should include the following items at a minimum:
- Staff Costs: This includes salaries, wages, benefits, and payroll taxes for all employees, including warehouse staff, delivery drivers, and administrative staff.
- Accountancy Fees: You will need to hire an accountant to manage your financial records, prepare tax returns, and provide financial advice for your business.
- Insurance Costs: As an egg and egg products wholesaler, you will need to purchase insurance coverage for your inventory, equipment, vehicles, and liability.
- Software Licences: You may need to purchase software licenses for inventory management, accounting, and other business operations.
- Banking Fees: You will incur fees for maintaining a business bank account and for processing transactions, such as wire transfers and credit card payments.
- Rent/Lease: If you do not own your warehouse or office space, you will need to pay rent or lease fees.
- Utilities: This includes electricity, water, and gas for your warehouse and office space.
- Vehicle Expenses: If you have delivery vehicles, you will need to cover fuel, maintenance, and insurance costs.
- Marketing and Advertising: You may need to allocate a budget for marketing and advertising efforts, such as creating a website, placing ads, and attending trade shows.
- Inventory: You will need to purchase inventory from suppliers to sell to your customers. This includes eggs, egg products, and packaging materials.
- Shipping and Freight: You may incur costs for shipping and freight services to transport your products to customers.
- Repairs and Maintenance: You may need to cover costs for repairing and maintaining equipment, vehicles, and facilities.
- Office Supplies: This includes items such as paper, ink, pens, and other office supplies needed for daily operations.
- Professional Memberships: You may need to pay fees for professional memberships, such as trade associations or networking groups.
- Taxes: You will need to pay federal, state, and local taxes, including income tax, sales tax, and property tax.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small egg and egg products wholesaler might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow an egg and egg products wholesaler?
Creating and expanding an egg and egg products wholesaler also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for an egg and egg products wholesaler could include elements such as:
- Egg Sorting and Grading Machines: These machines are essential for an egg and egg products wholesaler as they help in sorting and grading the eggs according to their size, weight, and quality. This expenditure includes the cost of purchasing the machines, installation, and maintenance.
- Egg Storage and Transportation Equipment: As an egg and egg products wholesaler, you need proper equipment to store and transport the eggs to your clients. This can include refrigerated trucks, egg cases, and trays. These items are a one-time capital expenditure but are crucial for maintaining the quality and freshness of the eggs.
- Egg Packaging Machinery: Packaging is an essential aspect of selling eggs as it not only protects the eggs but also helps in branding and marketing. As a wholesaler, you may need to invest in packaging machinery, such as egg carton machines, to efficiently pack and seal your eggs.
- Warehouse and Cold Storage Facility: A warehouse and cold storage facility is a significant capital expenditure for an egg and egg products wholesaler. This facility provides a secure and temperature-controlled environment for storing large quantities of eggs before they are distributed to retailers or food manufacturers.
- Egg Washing and Sanitizing Equipment: To ensure food safety and meet industry regulations, an egg and egg products wholesaler may need to invest in egg washing and sanitizing equipment. This involves purchasing and installing machines that can clean and disinfect the eggs before they are packaged and sold.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your egg and egg products wholesaler.
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 egg and egg products wholesaler
The next step in the creation of your financial forecast for your egg and egg products wholesaler 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 egg and egg products wholesaler?
Now let's have a look at the main output tables of your egg and egg products wholesaler's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your egg and egg products wholesaler is likely to be in the years to come.
For your egg and egg products wholesaler 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 egg and egg products wholesalers, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
The projected balance sheet gives an overview of your egg and egg products wholesaler'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 egg and egg products wholesaler. 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 forecast
Your egg and egg products wholesaler's cash flow forecast shows how much cash your business is expected to consume or generate in the years to come.
It is best practice to organise the cash flow forecast by nature to better explain where cash is used or generated by the egg and egg products wholesaler:
- Operating cash flow: shows how much cash is generated by the operating activities
- Investing cash flow: shows how much will be invested in capital expenditure to maintain or expand the business
- Financing cash flow: shows if the business is raising new capital or repaying financiers (debt repayment, dividends)
Keeping an eye on (and regularly updating) your egg and egg products wholesaler's cash flow forecast is key to ensuring that your business has sufficient liquidity to operate normally and to detect financing requirements as early as possible.
If you are trying to raise capital, you will normally be asked to provide a monthly cash flow forecast in your egg and egg products wholesaler's financial plan - so that banks or investors can assess seasonal variation and ensure your business 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 egg and egg products wholesaler's financial forecast?
Creating your egg and egg products wholesaler's financial forecast may sound fairly daunting, but the good news is that there are several ways to go about it.
Using online financial projection software to build your egg and egg products wholesaler's forecast
The modern and easiest way to build a forecast is to use professional financial projection 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
Outsourcing the creation of your egg and egg products wholesaler financial forecast is another possible solution.
This will cost more than using software as you can expect as your price will have to cover the accountant’s time, software cost, and profit margin.
Price can vary greatly based on the complexity of your business. For a small business, from experience, a simple three-year financial forecast (including a balance sheet, income statement, and cash flow statement) will start at around £700 or $1,000.
Bear in mind that this is for forecasts produced at a single point in time, updating or tracking your forecast against actuals will cost extra.
If you decide to outsource your forecasting:
- Make sure the professional has direct experience in your industry and is able to challenge your assumptions constructively.
- Steer away from consultants using sectorial ratios to build their client’s financial forecasts (these projections are worthless for a small business).
Why not use a spreadsheet such as Excel or Google Sheets to build your egg and egg products wholesaler'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 egg and egg products wholesaler 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 egg and egg products wholesaler'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 egg and egg products wholesaler, 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 egg and egg products wholesaler.
- 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 an egg and egg products wholesaler. 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 project revenues for a business?
- Financial forecast for a business idea
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Founder & CEO at The Business Plan Shop Ltd
