How to create a financial forecast for a basketball club?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your basketball club.
Putting together a basketball club 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 basketball club.
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 a basketball club?
The financial projections for your basketball club act as a financial blueprint to guide its growth with confidence and ensure its long-term financial viability.
To create them, you will need to look at your business in detail - from sales to operating costs and investments - to assess how much profit it can generate in the years to come and what will be the associated cash flows.
During challenging market conditions, maintaining an up-to-date financial forecast enables early detection of potential financial shortfalls, allowing for timely adjustments or securing financing before facing a cash crisis.
Your basketball club's financial forecast will also prove invaluable when seeking financing. Banks and investors will undoubtedly request a thorough examination of your financial figures, making precision and presentation essential.
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 a basketball club financial forecast?
A basketball club'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 basketball club.
If you are creating (or updating) the forecast of an existing basketball club, 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 basketball club 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 basketball club 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 basketball club's financial forecast.
The sales forecast for a basketball club
The sales forecast, also called topline projection, is normally where you will start when building your basketball club financial forecast.
Creating a coherent sales projection boils down to estimating two key drivers:
- The average price
- The number of monthly transactions
To do this, you will need to rely on historical data (for an existing business), market research data (for both new and existing basketball clubs), and consider the elements below:
- Player performance: As the owner of a basketball club, you know that the performance of your players has a direct impact on the average price of tickets and the number of monthly transactions. If your team is performing well and winning games, fans are more likely to attend games and be willing to pay higher prices for tickets. On the other hand, if your team is not performing well, ticket sales may decrease and prices may need to be lowered to attract fans.
- Injuries: Injuries to key players can also affect your club's sales forecast. If a star player is injured and unable to play, fans may be less inclined to attend games and may be less willing to pay high prices for tickets. This can result in a decrease in both the average price and number of monthly transactions for your club.
- Team popularity: The popularity of your team can also impact your sales forecast. If your team has a strong fan base and is well-known in the basketball community, you may see an increase in both the average price and number of monthly transactions. On the other hand, if your team is not well-known or has a small fan base, ticket sales may be lower and prices may need to be adjusted accordingly.
- Competition: The level of competition in your league can also affect your club's sales forecast. If your team is facing tough opponents or has a challenging schedule, fans may be more motivated to attend games and pay higher prices for tickets. However, if your team is consistently facing weaker opponents, ticket sales may decrease and prices may need to be lowered to attract fans.
- Player acquisitions: The addition of new players to your team can also impact your sales forecast. If your club acquires a popular or highly skilled player, fans may be more excited and interested in attending games, resulting in an increase in both the average price and number of monthly transactions. On the other hand, if your team does not make any notable player acquisitions, ticket sales may remain stagnant or even decrease.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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 basketball club
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your basketball club 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 a basketball club will include some of the following items:
- Staff costs: This includes salaries, benefits, and wages for coaches, trainers, and other staff members.
- Accountancy fees: You will need to hire an accountant to manage your club's financial records and prepare taxes.
- Insurance costs: As a basketball club, you will need to have insurance to cover liability and protect your assets.
- Software licenses: You may need to purchase licenses for software programs used for scheduling, tracking player statistics, and managing finances.
- Banking fees: You will have to pay fees for maintaining a business bank account and processing transactions.
- Uniforms and equipment: Your club will need to purchase uniforms, basketballs, and other necessary equipment for practices and games.
- League fees: If your club is part of a league, you will have to pay registration and participation fees.
- Facility rental: You may need to rent a gym or other facility for practices and games.
- Travel expenses: If your team participates in away games or tournaments, you will need to budget for transportation, lodging, and meals.
- Marketing and advertising: To attract players and promote your club, you may need to invest in marketing and advertising efforts.
- Utilities: You will have to pay for utilities such as electricity, water, and internet for your club's facility.
- Office supplies: You will need to purchase office supplies such as paper, pens, and printer ink for administrative tasks.
- Training and development: To improve your team's skills, you may need to invest in training and development programs or workshops.
- Medical expenses: Injuries can happen in basketball, so you should budget for medical expenses such as first aid supplies and potential medical treatment.
- Miscellaneous expenses: This includes any other unforeseen or occasional expenses that may arise, such as team celebrations or awards.
This list will need to be tailored to the specificities of your basketball club, but should offer a good starting point for your budget.
What investments are needed to start or grow a basketball club?
Once you have an idea of how much sales you could achieve and what it will cost to run your basketball club, it is time to look into the equipment required to launch or expand the activity.
For a basketball club, capital expenditures and initial working capital items could include:
- Basketball court construction: This includes the cost of building or renovating a basketball court, including materials, labor, and any necessary permits. This is a crucial expenditure for a basketball club, as it is the main venue for games and practices.
- Scoreboard and shot clock: A basketball club must have a functional scoreboard and shot clock in order to keep track of game time and scores accurately. These items can be expensive, especially if they are electronic, but are necessary for a professional and organized club.
- Team uniforms and equipment: Basketball clubs need to provide their players with uniforms, shoes, and other necessary equipment. This can be a significant expense, especially for larger clubs with multiple teams.
- Gymnasium rental fees: If a basketball club does not have its own dedicated facility, it will need to rent gymnasium space for practices and games. These fees can add up, especially if the club has a busy schedule with multiple teams and games.
- Transportation costs: For away games and tournaments, a basketball club may need to cover the cost of transportation for players and coaches. This can include bus or van rental fees, gas, and other related expenses.
Again, this list will need to be adjusted according to the specificities of your basketball club.
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 basketball club
The next step in the creation of your financial forecast for your basketball club 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 basketball club?
Now let's have a look at the main output tables of your basketball club's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your basketball club's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a basketball club 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 basketball club'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 forecast
Your basketball club's cash flow forecast shows how much cash your business is expected to consume or generate in the years to come.
It is best practice to organise the cash flow forecast by nature to better explain where cash is used or generated by the basketball club:
- Operating cash flow: shows how much cash is generated by the operating activities
- Investing cash flow: shows how much will be invested in capital expenditure to maintain or expand the business
- Financing cash flow: shows if the business is raising new capital or repaying financiers (debt repayment, dividends)
Keeping an eye on (and regularly updating) your basketball club's cash flow forecast is key to ensuring that your business has sufficient liquidity to operate normally and to detect financing requirements as early as possible.
If you are trying to raise capital, you will normally be asked to provide a monthly cash flow forecast in your basketball club's financial plan - so that banks or investors can assess seasonal variation and ensure your business 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 basketball club's financial forecast?
Creating your basketball club's financial forecast may sound fairly daunting, but the good news is that there are several ways to go about it.
Using online financial forecasting software to build your basketball club's projections
The modern and easiest way is to use an online financial forecasting tool 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 projection software for free by signing up here.
Calling in a financial consultant or chartered accountant
Outsourcing the creation of your basketball club 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 basketball club's financial forecast?
Creating an accurate and error-free basketball club 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 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 basketball club, 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 basketball club.
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 basketball club. 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 project revenues for a business?
- Sample financial forecast for business idea
Know someone who runs or wants to start a basketball club? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
