How to create a financial forecast for an ice cream truck?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your ice cream truck.
Putting together an ice cream truck 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 ice cream truck.
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 ice cream truck?
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 ice cream truck becomes handy.
Creating an ice cream truck 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 ice cream truck.
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 ice cream truck 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 ice cream truck'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 ice cream truck financial forecast?
A ice cream truck'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 ice cream truck.
If you are creating (or updating) the forecast of an existing ice cream truck, 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 ice cream truck 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 ice cream truck 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 ice cream truck's financial forecast.
The sales forecast for an ice cream truck
From experience, it is usually best to start creating your ice cream truck financial forecast by your sales forecast.
To create an accurate sales forecast for your ice cream truck, you will have to rely on the data collected in your market research, or if you're running an existing ice cream truck, 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:
- Weather conditions: Unpredictable weather such as heavy rain or extreme heat can significantly impact the number of monthly transactions for your ice cream truck. During hotter months, you can expect an increase in sales, while during colder months, sales may decrease.
- Competition: The presence of other ice cream trucks or dessert shops in your area may affect the average price of your products and the number of monthly transactions. You may need to adjust your prices or offer unique flavors to stand out from your competitors.
- Location: The location of your ice cream truck can also play a significant role in your sales forecast. If you are parked in a busy tourist area or near a popular park or beach, you can expect higher sales compared to being in a remote or less frequented location.
- Seasonal demand: In addition to weather conditions, the time of year can also impact the demand for ice cream. For example, sales may be higher during summer vacation months when families are out and about, compared to during the school year when children are in school.
- Product variety: Offering a variety of ice cream flavors and toppings can attract more customers and potentially increase your average price and number of monthly transactions. Consider introducing new and unique flavors regularly to keep customers coming back for more.
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 ice cream truck
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your ice cream truck on a daily basis.
Expenses normally vary based on how much revenue you anticipate (which is why, from experience, it is always better to start your forecast with the topline projection), and where your business is based.
Operating expenses for an ice cream truck will include some of the following items:
- Fuel Costs: You will need to account for the cost of fuel for your ice cream truck, which will vary depending on the distance you travel and the price of gas in your area.
- Ice Cream Inventory: This includes the cost of purchasing ice cream and other treats to sell on your truck. It is important to regularly track and restock your inventory to ensure you have enough to meet demand.
- Staff Wages: If you have employees working on your ice cream truck, you will need to budget for their wages, including any overtime or holiday pay.
- Vehicle Maintenance: As with any vehicle, your ice cream truck will need regular maintenance and repairs. This can include oil changes, tire replacements, and other necessary upkeep.
- Supplies: You will need to purchase supplies such as cones, cups, spoons, napkins, and other essentials to serve ice cream to your customers.
- Rent/Lease: If you do not own your ice cream truck, you will need to factor in the cost of rent or lease payments for the vehicle.
- Insurance: It is important to have insurance coverage for your ice cream truck, including liability insurance in case of accidents or injuries.
- Accounting Fees: You may choose to hire an accountant to help with your bookkeeping and tax preparations, which will incur additional costs.
- Marketing and Advertising: To attract customers, you may need to invest in marketing and advertising efforts, such as flyers, social media ads, or sponsoring local events.
- Software Licenses: You may need to purchase software licenses for point-of-sale systems or other software to help manage your business operations.
- Banking Fees: When accepting payments from customers, you may incur transaction fees from your bank or payment processing services.
- Permits and Licenses: Depending on your location, you may need to obtain permits and licenses to operate your ice cream truck, which will come with associated fees.
- Utilities: You will need to account for the cost of utilities, such as electricity and water, to power and maintain your ice cream truck.
- Repairs and Maintenance: In addition to regular vehicle maintenance, you may also need to budget for unexpected repairs and maintenance on your ice cream truck.
- Credit Card Processing Fees: If you accept credit or debit card payments from customers, you will need to factor in the fees charged by credit card companies or payment processors.
This list will need to be tailored to the specificities of your ice cream truck, but should offer a good starting point for your budget.
What investments are needed to start or grow an ice cream truck?
Once you have an idea of how much sales you could achieve and what it will cost to run your ice cream truck, it is time to look into the equipment required to launch or expand the activity.
For an ice cream truck, capital expenditures and initial working capital items could include:
- Ice Cream Truck: This is the main capital expenditure for your ice cream truck business. It includes the cost of purchasing or leasing the truck itself, as well as any necessary repairs, maintenance, and modifications.
- Freezer and Refrigeration Equipment: In order to keep your ice cream products cold and fresh, you will need to invest in a high-quality freezer and refrigeration equipment. This could include a chest freezer, ice cream dipping cabinet, and/or a refrigerated display case.
- Generator: Since ice cream trucks often operate in outdoor locations, it's important to have a reliable source of power. A generator allows you to keep your freezer and refrigeration equipment running, as well as any other electrical equipment you may need, such as a cash register or music system.
- Point of Sale System: A point of sale (POS) system is essential for tracking your sales, managing inventory, and making transactions. This could include a cash register, credit card reader, and software for managing orders and customer data.
- Signage and Branding: In order to attract customers, you will need to invest in eye-catching signage and branding for your ice cream truck. This could include custom decals or wraps for your truck, as well as signs and banners to display at your location.
Again, this list will need to be adjusted according to the specificities of your ice cream truck.
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 ice cream truck
The next step in the creation of your financial forecast for your ice cream truck 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 ice cream truck?
Now let's have a look at the main output tables of your ice cream truck's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your ice cream truck's expected growth and profitability over the next three to five years.
A financially viable P&L statement for an ice cream truck should normally show:
- Sales growing above inflation
- Stable or expanding (ideally) profit margins
- A net profit
This will of course depend on the stage of your business: a new venture might be loss-making until it reaches its breakeven point in year 2 or 3, for example.
The projected balance sheet
Your ice cream truck'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 ice cream truck 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 ice cream truck'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 ice cream truck 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 ice cream truck'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 ice cream truck's financial forecast?
Using the right tool or solution will make the creation of your ice cream truck's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial projection software to build your ice cream truck'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 ice cream truck 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 ice cream truck'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 ice cream truck 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 ice cream truck'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 ice cream truck, 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 projection shows expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial forecast up-to-date is the only way to maintain visibility on future cash flows.
- Using financial forecasting software makes it easy to create and maintain up-to-date projections for your ice cream truck.
You have reached the end of our guide. We hope you now have a better understanding of how to create a financial forecast for an ice cream truck. Don't hesitate to contact our team if you have any questions or want to share your experience building forecasts!
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 projections
- How to create a sales forecast for a business?
- Sample financial forecast for business idea
Know someone who runs or wants to start an ice cream truck? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
