Financial Projections for Your Food Truck Business

This area of your business plan shows how you predict your sales will grow over the first three years of your food truck business’s life. Without knowing how much cash will come in, you’ll have a difficult time determining how much you can spend.

In your mobile food business, sales are what determine whether you’re able to make it through your first year of operation. Forecasting your future sales is a critical step in ensuring that your food truck is profitable. Prospective investors want to know whether your projected sales will support your business needs.

Although no set-in-stone formula can project your sales for your truck, making a well-informed guess is critical to planning your future funding. Pulling numbers out of thin air does nothing for you or investors.

You need to show your sales forecast for the first three years in your business plan. Then show your sales growth for the next two years.

Salaries, food costs, food truck costs, business taxes, commercial kitchen and office rent, equipment leases, phone bills, postage — the expenses associated with running a food truck may seem to never end. However, your ability to get a firm grasp on these cash outflows can play an important role in your business’s success or failure.

An expense forecast is vital for you and your sales goals; it keeps you on track and helps keep costs down.

You need to show all expenses in your business plan. Not only will they help investors determine whether you’ve made the proper assumptions, but they’ll also assist you in determining what you’ll be spending to operate your business.

You can easily generate the data you need by taking your weekly sales forecast and multiplying it by the number of weeks in each month. If you want a complete snapshot of your expenses, produce two more reports in which you use your high and low data.

Doing so helps you see how different monthly expenditures can ebb and flow. To prevent any confusion by possible investors, keep these additional reports out of your business plan.

If you’ve accurately forecasted your sales and expenses, producing a break-even analysis for your business plan is a simple matter of math. Add your projected monthly expenses to create the Monthly Expenses line in the break-even analysis. Separate the cost of food and beverages (cost of goods sold, or COGS) from your fixed costs.

Separating these items allows you to see how changes in rent or your negotiated food and beverage purchase agreements affect your bottom line. Adding the Monthly Expenses to the Monthly COGS gives you a figure to determine the amount of sales your food truck needs to break even (see the line about required revenue).

Your company will show a break-even point when your total sales are equal to your total expenses. At the break-even point, no profit has been made, nor have any losses been incurred. This calculation is critical because it helps you adjust your sales numbers or expenses as needed.

The income statement shows your revenues, expenses, and profit for a particular period of time. It’s a snapshot of your business that shows whether your business is profitable at that point in time. Remember this formula: Revenue – expenses = profit/loss.

Cash flow is, well, the cash that flows through a company over a specific period of time after all cash expenses have been taken out. Cash flow represents the actual amount of cash that your business has left from its operations that can be used to pursue expansion or increase its value.

The balance sheet is a portion of your financial data that investors use to determine the financial strength or weakness of your business at a specific moment in time. The balance sheet is broken down into three categories: assets, liabilities, and equity.