How to Put Your Bar’s Financial Forecasts on Paper

By Ray Foley, Heather Dismore

At some point, your bar’s business plan ultimately comes down to numbers. The financials section explains how much money your venture will cost, how you’re going to spend the cash, and how you’re going to build upon it. This section also offers your investors some kind of return on their investment.

Every potential investor will look at this section of your business plan, even if they look at nothing else. In many ways, it’s the most important piece of the puzzle, and it’s usually the most daunting piece.

When you forecast your financials, you predict how much money you’ll take in or spend in a given period of time. In the same way a meteorologist makes predictions about the weather with some degree of accuracy, you can make predictions about your bar. Will your forecasts be 100 percent correct in every instance? Definitely not. But these forecasts are better than just making guesses.

Include three sets of numbers for each forecast in your business plan:

  • A low-end number that projects your worst-case scenario. Yes, Murphy and his Law make their way into bars now and again.

  • A best-case scenario number that shows all the potential you can imagine if everything goes your way. You’ll be retiring in no time!

  • The midrange number that takes into account when some things go your way and other things don’t. In real life, this is usually the most likely situation, even if you run your bar perfectly.

Use a calendar to actually count the number of days in your real operating months. Your bar will be open more days in some months than others (February, for example, is a short month). Both the income and some expenses will typically be higher for the months with more days. Utility bills will probably be higher for longer months, but rent will likely stay the same, for example.

Here are a few basic elements you should make sure to include in the financial section of your business plan:

  • Forecasted sales: This spreadsheet shows anyone reading your plan how you predict your sales will grow over a period of time. (Very handy when trying to persuade investors to give you greenbacks.)

  • Forecasted expenses: This prediction highlights how you expect to spend your money. It shows start-up expenses as well as daily expenses.

  • Forecasted cash flow: This document shows how you plan for money to come in and go out of your business.

  • Income statement: Sometimes called a profit and loss (or P&L) statement, this standard accounting tool helps you check the health of your business. It shows you how you’re making and losing money (or how you plan to, if you’re just getting started).

  • Balance sheet: This spreadsheet is a summary, comparing your business’s assets (cash, receivables, inventory, or anything valuable the business owns) and your business’s liabilities (money you owe). It’s basically a snapshot used to assess the health of your business at a specific point in time.

How to forecast your bar’s cash flow

In a nutshell, your cash flow projection shows you month by month where the money is coming in and going out. It sort of marries the sales and forecasts reports and shows you when you’ll have what money. It helps you manage your money on a timeline. Take a look at the spreadsheet for an example of a six-month cash flow projection.

You could actually create a week-by-week (or even day-by-day) report after you’re up and going, but for the business plan, you really only need this month-by-month version.

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How to generate you bar’s income statement

Your income statement is a tool that estimates your profit by taking your forecasted sales and subtracting your forecasted expenses.

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Some people call this tool a profit and loss statement or P&L. Whatever you call it, it works the same way.

How to create a balance sheet for your bar

A balance sheet is a summary of your business’s assets and liabilities on a given date. It takes into account all the business’s assets, including inventory on hand, your receivables (or money owed to the business), cash on hand or in any accounts, equipment, vehicles, and so on, and compares them to its liabilities (money the business owes to people like investors and creditors).

You use the balance sheet to assess the health of your business at a specific point in time. It helps you show investors or anyone else looking at your books that your business is worth as much as it owes. If you haven’t yet invested a single dollar in the business and you don’t owe anyone money, it will look like the blank form.

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