How to Create a Cash Flow Forecast for a Gardening Business

If you’re starting a gardening business, you might be thinking about creating a cash flow forecast. 

You might even have a successful gardening business, but want to grow (pun not intended) and need a cash flow forecast to help you plan and navigate that growth.

If you fit into either of these buckets, then you’ve come to the right place!

In this article, we’re going to briefly breakdown what makes up a cash flow forecast into its basic elements – and then create a forecast step by step for a gardening business. 

If you’re completely new to gardening businesses, you can check out my complete guide to starting a gardening business from scratch here.

The 4 main ingredients of a cash flow forecast

We’ve covered this quite a lot on our blog, so I’m going to keep this brief.

The 4 main ingredients of any cash flow forecast are:

  1. The length of time you’ll forecast for
  2. How much your costs are
  3. How many sales you’ll make
  4. The timing of payments

So let’s break these down and link them up with our gardening business.

How long should my cash flow forecast for a gardening business be?

In general, you want a forecast to be long enough to base decisions about your business’ future on. 

If you’re pursuing funding, most banks and investors will require a 3 year forecast at minimum.

This is for good reason, very few startups will be profitable immediately, so you’ll need to prove that your business can recoup its costs and initial investments. More importantly, you’ll need to show how you’re going to go about doing this.

Now for a gardening business, you may not need to apply for funding, as most of these types of business can be started relatively cheaply. 

However, that doesn’t mean that a forecast is something you shouldn’t bother doing, you should absolutely still create a forecast to help you navigate the future, it also means that you should still look at forecasting for at least 3 years.

Creating a forecast for 3 years and breaking it down into months will give you a moderately accurate view of your business’ future whilst still remaining grounded and realistic in your assumptions. You can create a longer forecast if you’re looking for more strategic planning, but it will be less accurate.

If you want more granular detail in your forecast, you can break it down into weeks instead of months. 

Forecasting weekly gives you the benefit of knowing where your money is coming from and going to more closely, great if your business is up and running and you want to keep track of short term cash. 

With weekly forecasting, you lose the big picture and will struggle to make any informed decisions about your future from it. 

Planning the timing of asset purchases, loan repayments or staff hires is easier to do with the bigger picture in view.

Ultimately, it depends on whether your forecasting goals are strategic, long term decision making or management focussed, to ensure you’ve got the cash to survive the next few weeks.

What are the typical costs for a gardening business?

Most gardening businesses can be started for under £1000.

Because of this, you won’t necessarily need to enter any formal processes of applying for funding, such as approaching investors or banks.

The only considerable costs (i.e over £1000) you might need to consider is buying a van, and any custom branding you’d like on said van. 

In terms of general costs you should expect:

  • Petrol
  • Tools & equipment
  • Marketing & advertising
  • Insurance
  • Accounting costs

We covered what kinds of tools, equipment, advertising, and insurance you might need in my guide to starting a gardening business here.

It’s a good idea to have a van to house the tools and equipment you need to transport them to your client’s location. 

However, even if you do need to buy a van, you wouldn’t need to apply for formal business funding, you’d be financing it through a personal loan or PCP deal with a dealership.

Here’s a list of costs for a hypothetical gardening business:

  • Insurance = £17.53pcm
  • Print & Social Media Adverts = £75pcm
  • Van = £7500 spread monthly over 36 months
  • Lawn Mower = £500 (paid outright)

We’ll pop these into our cash flow later.

Costs of Sales for a gardening business

Costs of sales, for the unfamiliar, are the costs that you have to incur in order to make your sales. 

In a gardening business this could be: 

  • Petrol, for traveling to and from jobs
  • Treatments, i.e pesticides etc.
  • Any plants or flowers you plant, if you decide to offer that service.

Keep these costs written down, and keep them separate from your other costs, like marketing, accounting, loans and so on.

For my hypothetical gardening business it costs me £3 per hour that I work.

I’ll park these costs and return to them later in this article.

How to forecast your gardening business sales

There are two sides to this section:

  1. How many sales are you likely to make
  2. When are you likely to be paid for those sales

Let’s tackle the first side, how to actually estimate your sales.

This can be pretty challenging, how on earth are you meant to predict how your business is going to perform? 

You might be tempted to skip this part, but it is probably the most important section of your forecast – this is because your cash flow is built upon your sales forecast – remember, cash flow is the movement of cash in and out of the business!

The trick here is to be realistic. 

Over-estimate your sales, and it’ll give you an unrealistic view of how your business will perform.

Under-estimate your sales and you might end up with extra cash that you haven’t planned for. 

Extra cash doesn’t sound like a bad thing, but ultimately you want to plan your investments into your business and know when you can grow. Cash just left sitting in the bank is wasted potential!

If you’re just starting up, a good way to approach your sales forecast is to consider the number of initial clients you can reach. If your plan is to start with friends and family and expand out from there you should be able to estimate how much guaranteed work you’ll have initially. 

Extrapolate the potential hours and price per hour you’ll be able to complete for these initial customers. This will give you a starting point for your sales forecast.

From there you need to estimate how many new clients you can capture through your marketing efforts.

If you’ve been up and running for a while you’ll mostly be focusing on your estimates around bringing on new clients. 

When you’ll be paid is equally important.

Will you have enough to cover your costs if a customer pays late? Or what if you receive your payments from all customers on a specific date of the month? Do you need to juggle your bills to ensure you can pay them? 

Understanding when you’ll be paid is necessary for understanding if you’ll need to source more cash to run your business whilst you’re waiting to be paid.

Read more: How to start planning your sales forecast

Creating your gardening business cash flow forecast

In this section, we’ll walk through creating our cash flow forecast step by step.

Now, I’ll be building a plan in Brixx – you can follow along by starting a free trial, (don’t worry, no credit cards!) or you can download any of our Excel & Google Sheets templates here.

Section 1: Setting up your plan

When I start a new plan in Brixx, I’m given this screen:

I’ve set my plan length to 3 years, I have VAT turned on (as of writing, only required for businesses with a turnover greater than £85k) and my currency is GBP.

It’s as simple as that – l now hit “create plan”.

This is what you’ll see after hitting the create plan button.

On the far left of the screen, you’ll see the list of groups – “Sales, operating costs, etc.” 

When you select one of these, it opens up a new list of components to the right. These can be seen on the screenshot “Sales group 1” and “Sales group 2”.

This is where you enter your business data, so in “Sales group 1”, I might enter “per hour garden maintenance”. 

We’ll go through adding these in the next section.

Section 2: Income

If you’re an existing business – you should have a good idea of what your average takings for a week might be.

You might start at 7am and finish at 4pm, totalling 6 or 7 hours of work, depending if you take lunch!

Now multiply that by your hourly rate, and then by the number of days you work, on average, in a month. You can use this as a basis for your income. 

With your cash flow forecast, it’s not enough to just enter your current earnings, you need to think about the future. What actions will you take to increase those earnings?

If you’re just starting out, not to worry, you won’t have years of past data to base your forecast off, but you can still estimate your sales effectively.

Take the number of hours you plan on working in a day, then think hard about how many customers you will realistically have in your first few months. In fact, we’ve written an entire article about this subject: How to create an effective financial forecast with no historical data.

Below is an example of how I would input my sales forecast into Brixx:

You can also enter your units in a table to vary them month on month.
You can also enter your units in a table to vary them month on month.

Break down your product offerings

When creating your forecast, you should break down your product offerings as much as possible – the goal of this being to identify which income stream is most profitable. That’s difficult to do if you lump all your income together!

Using just one component or cell, as in my example, works as a quick estimate, or if your business is super simple, but you will want to go into greater detail for the best insights. 

For example, you could break it down by clients, if you have a set of clients that you work for weekly, you can set up your income from them separately and have that recurring.

Or you may offer some different products, like a dedicated planting service.

The benefit of breaking down your products into different buckets is that it’ll allow you to make a more detailed analysis of which products are most profitable. Ultimately, it’ll show what works and what doesn’t in your business.

Putting in the effort now will save you time later on.

Costs of Sales

Write down every cost that occurs in making your sale, this could be petrol, pesticides etc. these are all your costs of sales.

You can use past bank statements to work out your cost of sales. If you did 100 hours of work one month and your petrol cost for that month was £150 you might estimate that your per hour cost of sales is £1.50 per hour. 

Remember that if you’re forecasting an increase in sales, your cost of sales will likely go up too! 

For a simple gardening business, you may not have too many costs of sales, here’s an example:

I have costs of sales at £3 per hour that I work, I get £25 per hour in revenue, but £22 in profit. 

Read more: Gross Profit vs Net Profit

Brixx will automatically calculate total costs of sales based on your sales forecast – so varying your sales forecast will automatically vary cost of sales at the same time.

Section 3: Operational Costs

Operational costs are, thankfully, pretty easy to predict. This is because they tend to be fixed costs and are either monthly or annual costs.

These costs can be anything that keeps your business running, like insurance, marketing costs, licenses, training etc.

Again, if you’re estimating your sales to increase, you need to be thinking about how you will increase those sales.

The most likely way you’ll increase sales, is by upping your marketing spend, especially if you’ve got a good return on investment.

Read more: How to measure the success of your marketing campaigns

You’ll (hopefully!) reach a point where you’re working at your maximum capacity, where the demand is outstripping your ability to supply. 

This is where you’ll need to think about an extra pair of hands. Hiring a new member of staff is a big cost, so you need to ensure you can afford to do so, remember it’s not just the salary you need to pay, it’s all the extra equipment too!

Ensure you check your renewal prices of memberships, insurance and put a cap on any marketing spend, to ensure you don’t get hit with a big bill that you’re not expecting!

If you’re a startup, here’s an example of some costs to get you started.

Insurance = £17.53 (monthly cost)

In terms of marketing, you can do some local and online advertising.

This might consist of adverts in your local magazine and newspaper, as well as running a small social media campaign to boost the awareness of my business, Facebook is a good option.

You should expect print adverts to cost around £50 a month. Social media spend can be capped, for example, £25 a month.

Here’s an example of how a cash flow forecast might look after adding in income, cost of sales, asset purchases, and operational costs.

Section 4: Assets

If you’re forecasting growth in your business, you’ll need the tools to take on more work. This normally means more staff – but you’ll need equipment for those staff. 

In your forecast, you’ll need to factor these large, potentially upfront costs into your growth, will you be able to afford them? Or will you need to take out a loan to do so?

You also need to be aware that a lot of your assets in your gardening business are essential for you to be able to carry out your job.

What happens if your mower breaks down? Can you afford to fix or replace it? 

Identify these key assets and ensure you know the likely costs to fix or replace them.

It’s pretty essential to factor this into your forecast, ensuring you’re not running too close to the wire with your cash. 

If your assets are critical to doing your job and they break, then your income stops too!

If you’re a new business, then you’ll likely need to buy all the necessary equipment up-front. This might end up being relatively expensive, depending on how grand your scope is when starting.

You’ll need to buy things like:

  • Strimmers
  • Secateurs, trowels etc.
  • Van(s)
  • Mowers

Most people won’t be able to afford this upfront, so you’ll likely need to take a small loan out, remember to put the repayments into your cash flow forecast as a monthly cost.

Here’s an example of how I might put this into Brixx:

  • Van = £7500 spread monthly over 36 months
  • Lawn Mower = £500 (paid outright)

Remember your assets will decrease in value each year due to depreciation.

You can read more about depreciation and how it affects your assets here.

Getting Funding for your Gardening Business

You’ve got your list of assets, but how will you afford them all?

Funding is often the make or break point for startups or even existing businesses.

If you’re lucky, then you might be able to afford some or even all of these assets yourself.

If you’re not so lucky, you will likely need some form of funding to get your business off the ground or to grow your business. 

Investment in your business can come from a number of sources, if it’s a small amount, a small loan might be the way to go, or if you only need to finance a vehicle, then you can do that through a car dealership.

In Brixx you can add loan components that allow you to try out different amounts, interest rates, and repayment terms. This allows you to see the impact of payments on your cash flow to ensure you choose a loan that you can afford to pay back.

If you need lots of cash, then you might need to approach the bank or investors. 

We wrote an entire article about funding a startup with investors, which you can check out here.

Final steps

You might now have completed your forecast, but that’s just the creation of it. 

You shouldn’t treat your forecast as a box-ticking exercise, it’s a living breathing representation of your business’ future.

It’s important to return to your forecast regularly and at least input your actual performance as the months go by.

You can use your forecast to make estimates about when you can grow, or perhaps you find that you just simply won’t be profitable and might need to up prices, or even change your business model.

Try testing out different scenarios and see how this will affect your business, some of these questions are great to model:

  • What happens if your costs rise?
  • When can you hire that extra staff member?
  • What happens if your mower breaks down?
  • What happens if you lose one of your main clients?

A forecast can give you access to a wealth of knowledge – so return, update, and analyse!

If you need help utilising your forecast then check out these articles:

Your cash flow forecast might be hiding your true profitability

Cash flow statement example – a simple analysis

6 cash flow analysis examples for exploring key business scenarios

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