How to create a financial forecast for an emu 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 emu farm.
Putting together an emu 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 emu 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 emu farm?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your emu farm and ensure that it can be financially viable in the years to come.
A financial plan for an emu farm 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 emu farm 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 emu farm'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 used as input to build an emu farm financial forecast?
A emu 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 emu farm.
If you are creating (or updating) the forecast of an existing emu 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 emu 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 emu 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 emu farm's financial forecast.
The sales forecast for an emu farm
From experience, it usually makes sense to start your emu farm's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your emu farm (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 emu farm'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:
- Seasonal demand for emu products: You may experience a higher average price and number of monthly transactions during certain times of the year when demand for emu meat, eggs, or feathers is higher. For example, the holiday season or during festivals and events where exotic meats are popular.
- Availability of emu products in the market: If there is a shortage of emu products in the market due to weather conditions or other factors, you may be able to charge a higher average price and have more monthly transactions as customers seek out your farm for their emu product needs.
- Changes in regulations or laws: Changes in regulations or laws regarding the production, sale, or import/export of emu products can significantly impact your business. For instance, if there are stricter regulations on the farming and processing of emu meat, it may increase your costs and affect your average price and number of monthly transactions.
- Competition from other emu farms: The presence of other emu farms in your area or region can affect your average price and monthly transactions. If there is a high concentration of emu farms, it may lead to lower prices and reduced demand for your products.
- Changes in consumer preferences or trends: The demand for emu products can be influenced by changing consumer preferences or trends. For example, if there is a shift towards healthier and more sustainable food options, the demand for emu meat may increase, leading to higher average prices and monthly 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.
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 emu farm
The next step is to estimate the costs you’ll have to incur to operate your emu farm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your emu farm's operating expenses should normally include the following items:
- Staff Costs: This includes salaries, wages, and benefits for your emu farm employees, such as farmhands, veterinarians, and administrative staff.
- Accountancy Fees: You may need to hire an accountant to manage your farm's financial records, file taxes, and provide financial advice.
- Insurance Costs: As with any business, it's important to have insurance to protect your emu farm from potential risks, such as property damage, liability claims, and worker injuries.
- Software Licenses: You may need to purchase software licenses for programs that help you manage your farm's finances, track inventory, or monitor animal health.
- Banking Fees: As you conduct financial transactions for your emu farm, you may incur fees for services such as wire transfers, check processing, and account maintenance.
- Feed and Supplements: Emus require a specific diet to maintain their health and productivity. This includes feed, supplements, and possibly specialized equipment for feeding.
- Medication and Vaccines: To keep your emus healthy, you may need to purchase medication and vaccines to prevent or treat common illnesses or diseases.
- Bedding and Litter: Emus need a clean and comfortable living space, so you may need to purchase bedding and litter materials, such as straw or wood shavings.
- Equipment Maintenance: As with any farming operation, your equipment will need regular maintenance to keep it functioning properly. This may include repairs, replacements, or routine servicing.
- Utilities: You will need to cover the costs of utilities for your emu farm, including electricity, water, and possibly gas or propane for heating.
- Marketing and Advertising: To attract customers and promote your emu farm, you may need to invest in marketing and advertising strategies, such as creating a website or attending trade shows.
- Travel Expenses: If you need to travel for business purposes, such as attending conferences or purchasing new equipment, you will need to cover travel expenses, such as transportation, lodging, and meals.
- Permits and Licenses: Depending on your location and the regulations in your area, you may need to obtain permits or licenses for your emu farm. These may include business licenses, animal health permits, or environmental permits.
- Legal Fees: As a business owner, you may need to seek legal advice or representation for various matters, such as contracts, employment issues, or disputes.
- Taxes: You will need to pay various taxes related to your emu farm, including income tax, property tax, and sales tax on products sold.
This list is not exhaustive by any means, and will need to be tailored to your emu farm's specific circumstances.
What investments are needed to start or grow an emu farm?
Your emu 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 emu farm, these could include:
- Land and Infrastructure: This includes the cost of purchasing or leasing land for the emu farm, as well as any necessary infrastructure such as fencing, irrigation systems, and buildings for housing the emus.
- Emu Enclosures: Emus require specific types of enclosures that are large, secure, and provide shelter from the elements. This can include the cost of building or purchasing appropriate enclosures, as well as any necessary equipment such as feeders and waterers.
- Breeding Stock: The initial cost of purchasing breeding stock for the emu farm is a significant capital expenditure. This includes not only the cost of the emus themselves, but also any transportation fees and quarantine expenses.
- Equipment and Machinery: Running an emu farm requires specialized equipment and machinery such as incubators, egg turners, and emu handling equipment. These items can be costly but are necessary for the day-to-day operations of the farm.
- Processing Facilities: If the emu farm plans to process and sell emu products such as meat and oil, a processing facility will need to be built or purchased. This can include equipment such as butchering tools, refrigeration units, and packaging materials.
Again, this list will need to be adjusted according to the size and ambitions of your emu 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 emu farm
The next step in the creation of your financial forecast for your emu 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 emu farm?
Now let's have a look at the main output tables of your emu 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 emu 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 emu farm will look different than for a startup.
The projected balance sheet
The projected balance sheet gives an overview of your emu farm'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 emu farm. 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 emu farm'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 emu farm:
- 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 emu farm'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 emu farm'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 emu farm's financial projections?
Building an emu 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 projection software to build your emu farm'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 emu farm 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 emu 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 emu 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 emu 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 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
- A financial forecast shows expected growth, profitability, and cash generation metrics for your emu farm.
- 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 emu farm. 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
