How to create a financial forecast for a 3D printing shop?
Creating a financial forecast for your 3D printing shop, and ensuring it stays up to date, is the only way to maintain visibility on future cash flows.
This might sound complex, but with the right guidance and tools, creating an accurate financial forecast for your 3D printing shop is not that hard.
In this guide, we'll cover everything from the main goal of a financial projection, the data you need as input, to the tables that compose it, and the tools that can help you build a forecast efficiently.
Without further ado, let us begin!
Why create and maintain a financial forecast for a 3D printing shop?
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 3D printing shop becomes handy.
Creating a 3D printing shop 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 3D printing shop.
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 a 3D printing shop 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 3D printing shop'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 needed to build a 3D printing shop financial forecast?
The quality of your inputs is key when it comes to financial modelling: no matter how good the model is, if your inputs are off, so will the forecast.
If you are building a financial plan to start a 3D printing shop, you will need to have done your market research and have a clear picture of your sales and marketing strategies so that you can project revenues with confidence.
You will also need to have a clear idea of what resources will be required to operate the 3D printing shop on a daily basis, and to have done your research with regard to the equipment needed to launch your venture (see further down this guide).
If you are creating a financial forecast of an existing 3D printing shop, things are usually simpler as you will be able to use your historical accounting data as a budgeting base, and complement that with your team’s view on what lies ahead for the years to come.
Let's now zoom in on what will go in your 3D printing shop's financial forecast.
The sales forecast for a 3D printing shop
From experience, it is usually best to start creating your 3D printing shop financial forecast by your sales forecast.
To create an accurate sales forecast for your 3D printing shop, you will have to rely on the data collected in your market research, or if you're running an existing 3D printing shop, 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:
- Shift in consumer preferences: Changes in consumer preferences for specific types of 3D printed products, such as customized phone cases or home decor items, can affect the average price and number of transactions for your shop. Keep an eye on industry trends and adapt your offerings accordingly.
- New technologies: The introduction of new 3D printing technologies can impact the average price and number of transactions for your business. For example, if a new technology allows for faster and more precise printing, you may be able to charge higher prices and complete more transactions in a month.
- Competition: The presence of other 3D printing shops in your area can affect your average price and number of transactions. If there is a high level of competition, you may need to adjust your prices or offer unique products to attract customers and maintain a steady flow of transactions.
- Economic conditions: Economic conditions, such as a recession or a booming economy, can impact the average price and number of transactions for your business. During tough economic times, customers may be more price-sensitive and you may need to lower your prices to stay competitive.
- Changes in materials and supplies: The cost of materials and supplies for 3D printing can fluctuate, which can affect your average price and number of transactions. Keep track of these costs and adjust your prices accordingly to maintain profitability.
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 a 3D printing shop
The next step is to estimate the cost you’ll have to incur to operate your 3D printing shop.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your 3D printing shop's operating expenses should normally include the following items:
- Staff Costs: These include salaries, wages, and benefits for all employees working in your 3D printing shop. This may also include bonuses, commissions, and overtime pay.
- Rent and Utilities: This expense covers the cost of renting your shop space, as well as utilities such as electricity, water, and internet.
- Raw Materials: This includes the cost of purchasing materials such as plastic filaments, resins, and metals for your 3D printing projects.
- Maintenance and Repairs: As with any equipment, your 3D printers will require regular maintenance and occasional repairs. This expense covers the cost of servicing, repairs, and replacement parts.
- Marketing and Advertising: To attract customers and promote your services, you may need to invest in marketing and advertising efforts such as social media ads, flyers, and print advertisements.
- Accountancy Fees: As a business owner, you will need to hire an accountant to manage your finances, prepare tax returns, and advise on financial matters. This expense covers the cost of their services.
- Insurance Costs: To protect your business from unforeseen events, you will need to purchase insurance. This may include property insurance, liability insurance, and workers' compensation insurance.
- Software Licences: In order to design and print 3D models, you will need to invest in software licenses for CAD programs, slicing software, and other tools.
- Banking Fees: This includes the fees associated with maintaining a business bank account, such as monthly maintenance fees, transaction fees, and wire transfer fees.
- Office Supplies: This expense covers the cost of purchasing office supplies such as paper, ink, pens, and other supplies needed for daily operations.
- Training and Development: In order to stay up-to-date with the latest 3D printing technologies and techniques, you may need to invest in training and development programs for yourself and your employees.
- Professional Memberships: To network and stay informed about industry trends and developments, you may need to pay for professional memberships in organizations related to 3D printing.
- Legal Fees: As a business owner, you may encounter legal issues, such as contract disputes or intellectual property concerns. This expense covers the cost of hiring a lawyer to handle these matters.
- Taxes: As a business owner, you are responsible for paying various taxes, such as income tax, sales tax, and property tax.
- Shipping and Delivery Costs: If you offer shipping or delivery services for your 3D printed products, this expense covers the cost of packaging materials, postage, and other related costs.
This list is not exhaustive by any means, and will need to be tailored to your 3D printing shop's specific circumstances.
What investments are needed to start or grow a 3D printing shop?
Creating and expanding a 3D printing shop also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a 3D printing shop could include elements such as:
- 3D Printers: These are the main equipment needed for your 3D printing shop. You will need to purchase multiple 3D printers to be able to fulfill different orders and increase your production capacity. The cost of 3D printers can vary depending on their size, features, and brand.
- Filament and Resin: These are the materials used for 3D printing. You will need to purchase a variety of filament and resin types to be able to print different types of objects in different colors and materials. The cost of these materials can add up quickly, so it's important to include them in your expenditure forecast.
- Software and Licenses: To operate your 3D printing shop, you will need to invest in 3D design software and obtain necessary licenses. This software will allow you to create and edit 3D models that will be used for printing. The cost of software and licenses can vary depending on the type and level of functionality you need.
- Workstations and Tools: In addition to the 3D printers, you will also need workstations and tools for post-processing, finishing, and assembling the printed objects. This can include sanding tools, paint brushes, glue, and other equipment. The cost of workstations and tools will depend on the size of your shop and the types of services you offer.
- Packaging and Shipping Supplies: If you plan on offering shipping services for your 3D printed objects, you will need to invest in packaging materials such as boxes, bubble wrap, and labels. The cost of these supplies should also be included in your expenditure forecast.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your 3D printing shop.
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 3D printing shop
The next step in the creation of your financial forecast for your 3D printing shop 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 a 3D printing shop?
Now let's have a look at the main output tables of your 3D printing shop's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your 3D printing shop's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a 3D printing shop 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
The projected balance sheet gives an overview of your 3D printing shop'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 3D printing shop. 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 projected cash flow statement
A projected cash flow statement for a 3D printing shop is used to show how much cash the business is generating or consuming.
The cash flow forecast is usually organised by nature to show three key metrics:
- The operating cash flow: do the core business activities generate or consume cash?
- The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
- The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?
Cash is king and keeping an eye on future cash flows is imperative for running a successful business. Therefore, you should pay close attention to your 3D printing shop's cash flow forecast.
If you are trying to secure financing, note that it is customary to provide both yearly and monthly cash flow forecasts in a financial plan - so that the reader can analyze seasonal variation and ensure the 3D printing shop 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 3D printing shop's financial projections?
Building a 3D printing shop 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 forecasting software to build your 3D printing shop's projections
The modern and easiest way is to use professional online financial forecasting 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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional 3D printing shop financial projection.
As you can imagine, this solution is much more expensive than using software. From experience, the creation of a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to start around £700 or $1,000 excluding taxes.
The indicative estimate above, is for a small business, and a forecast done as a one-off. Using a financial consultant or accountant to track your actuals vs. forecast and to keep your financial forecast up to date on a monthly or quarterly basis will naturally cost a lot more.
If you choose this solution, make sure your service provider has first-hand experience in your industry, so that they may challenge your assumptions and offer insights (as opposed to just taking your figures at face value to create the forecast’s financial statements).
Why not use a spreadsheet such as Excel or Google Sheets to build your 3D printing shop's financial forecast?
Creating an accurate and error-free 3D printing shop financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.
Most entrepreneurs lack the expertise required to create an accurate financial forecast using spreadsheet software like Excel or Google Sheets. As a result, it is unlikely anyone will trust your numbers.
The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.
This is why professional forecasters all use software. With the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and updating your forecast as the year progresses is manual, tedious, error-prone, and time-consuming. Whereas financial forecasting software like The Business Plan Shop is built 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 forecast templates available.
Our examples contain a complete business plan with a financial forecast and a written presentation of the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own 3D printing shop, looking at our financial forecast template is a good way to:
- Understand what a complete business plan for a 3D printing shop should look like
- Understand how you should model financial items for your 3D printing shop
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 3D printing shop.
You have reached the end of our guide. We hope you now have a better understanding of how to create a financial forecast for a 3D printing shop. 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 turnover forecast for a business?
- Financial forecast for a business idea
Know someone who runs or wants to start a 3D printing shop? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
