How to create a financial forecast for a boxing equipment shop?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your boxing equipment shop.
Putting together a boxing equipment shop 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 boxing equipment shop.
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 boxing equipment shop?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your boxing equipment shop and ensure that it can be financially viable in the years to come.
A financial plan for a boxing equipment shop enables you to look at your business in detail - from income to operating costs and investments - to evaluate its expected profitability and future cash flows.
This gives you the visibility needed to plan future investments and expansion with confidence.
And, when your trading environment gets tougher, having an up to date boxing equipment shop forecast enables you to detect potential upcoming financing shortfalls in advance, enabling you to make adjustments or secure financing before you run out of cash.
It’s also important to remember that your boxing equipment shop's financial forecast will be essential when looking for financing. You can be 100% certain that banks and investors will ask to see your numbers, so make sure they’re set out accurately and attractively.
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 boxing equipment shop financial forecast?
A boxing equipment shop'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 boxing equipment shop.
If you are creating (or updating) the forecast of an existing boxing equipment shop, 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 boxing equipment shop 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 boxing equipment shop 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 boxing equipment shop's financial forecast.
The sales forecast for a boxing equipment shop
From experience, it usually makes sense to start your boxing equipment shop's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your boxing equipment shop (which can be used as a starting point for existing businesses) and the data collected in your market research (which both new ventures and existing businesses need to project their sales forward).
Your boxing equipment shop's sales forecast can be broken down into two key estimates:
- The average price
- The number of monthly transactions
To assess these variables accurately, you will need to consider the following factors:
- Competition: The level of competition in the local area can greatly impact the average price of your products. If there are many other boxing equipment shops in the area, you may need to lower your prices to remain competitive and attract customers.
- Seasonal Demand: The demand for boxing equipment may vary throughout the year. For example, there may be a higher demand for equipment during the holiday season as people purchase gifts for their loved ones.
- Inflation: Inflation can affect the cost of materials and manufacturing, which can ultimately impact the average price of your products. Keep an eye on inflation rates and adjust your prices accordingly.
- Athlete Demographics: The demographic of your customer base can also affect your average price and number of transactions. For example, if your shop is located in a neighborhood with a high concentration of amateur boxers, you may be able to charge higher prices for specialized equipment.
- Trends in Boxing: The latest trends and styles in the boxing world can also impact your sales forecast. If there is a sudden surge in popularity for a certain type of boxing training or equipment, you may need to adjust your inventory and pricing to meet demand.
Once you have a sales forecast in place, the next step will be to work on your overhead budget. Let’s have a look at that now.
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 boxing equipment shop
The next step is to estimate the expenses needed to run your boxing equipment shop on a day-to-day basis.
These will vary based on the level of sales expected, and the location and size of your business.
But your boxing equipment shop's operating expenses should include the following items at a minimum:
- Staff costs: This includes salaries, benefits, and training costs for employees who work in the shop, such as retail associates and customer service staff.
- Rent or lease: This expense covers the cost of renting or leasing the physical space where the shop is located.
- Inventory: You need to budget for the cost of purchasing and restocking boxing equipment, such as gloves, punching bags, and protective gear.
- Utilities: This includes electricity, water, and gas bills for the shop. You may also need to budget for internet and phone services.
- Marketing and advertising: You need to promote your boxing equipment shop to attract customers. This may include expenses for online and offline advertising, as well as creating marketing materials.
- Accountancy fees: You may need to hire an accountant to help you manage your financial records and prepare tax returns for your business.
- Insurance costs: As a shop owner, it's important to have insurance to protect your business and its assets from unexpected events, such as theft or damage.
- Software licenses: You may need to purchase software to help you manage your inventory, sales, and customer data.
- Banking fees: You will need a business bank account to manage your finances, and there may be fees associated with this account, such as transaction fees and monthly maintenance fees.
- Equipment maintenance: Your boxing equipment will need regular maintenance and repairs to keep it in good working condition, and this will incur costs.
- Professional fees: This may include fees for legal advice, consulting services, or other professional services that you may need for your business.
- Office supplies: You will need to purchase supplies such as paper, pens, and printer ink to manage your administrative tasks.
- Shipping and handling: If you sell your boxing equipment online, you will need to budget for shipping and handling costs to fulfill orders.
- Taxes and licenses: You will need to pay taxes on your business income and may also need to obtain licenses or permits to operate your shop.
- Credit card processing fees: If you accept credit card payments, there will be fees associated with each transaction that you will need to budget for.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small boxing equipment shop might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a boxing equipment shop?
Creating and expanding a boxing equipment shop also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a boxing equipment shop could include elements such as:
- Inventory: This includes purchasing boxing equipment, such as gloves, punching bags, and protective gear, to stock your shop.
- Store Fixtures and Furniture: You will need to purchase shelving, display racks, and other furniture to showcase your boxing equipment in an organized and attractive manner.
- POS System: A point-of-sale system is essential for processing transactions and tracking inventory. This includes purchasing a cash register, barcode scanner, and software.
- Security System: To protect your valuable inventory, you may want to invest in a security system that includes cameras, alarms, and other security measures.
- Store Renovations: Depending on the condition of your store, you may need to make renovations or repairs to create a welcoming and functional space for your customers.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your boxing equipment 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 boxing equipment shop
The next step in the creation of your financial forecast for your boxing equipment 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 boxing equipment shop?
Now let's have a look at the main output tables of your boxing equipment shop's financial forecast.
The forecasted profit & loss statement
The profit & loss forecast gives you a clear picture of your business’ expected growth over the first three to five years, and whether it’s likely to be profitable or not.
A healthy boxing equipment shop's P&L statement should show:
- Sales growing at (minimum) or above (better) inflation
- Stable (minimum) or expanding (better) profit margins
- A healthy level of net profitability
This will of course depend on the stage of your business: numbers for an established boxing equipment shop will look different than for a startup.
The projected balance sheet
Your boxing equipment shop'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 boxing equipment shop'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 boxing equipment shop:
- 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 boxing equipment shop'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 boxing equipment shop'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 boxing equipment shop's financial forecast?
Using the right tool or solution will make the creation of your boxing equipment shop's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your boxing equipment shop'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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional boxing equipment shop financial forecast.
The downside of this solution is its cost. From experience, obtaining a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to cost a minimum of £700 or $1,000.
The indicative cost above, is for a small business, and a forecast is done as a one-shot exercise. Using a consultant or accountant to track your actuals vs. forecast and to keep your financial projections up to date on a monthly or quarterly basis will cost a lot more.
If you opt for this solution, make sure your accountant has in-depth knowledge of your industry, so that they may challenge your figures and offer insights (as opposed to just taking your assumptions at face value to create the forecast).
Why not use a spreadsheet such as Excel or Google Sheets to build your boxing equipment shop's financial forecast?
Creating an accurate and error-free boxing equipment shop financial forecast with a spreadsheet is very technical and requires a deep knowledge of accounting and an understanding of financial modelling.
Very few business owners are financially savvy enough to be able to build a forecast themselves on Excel without making mistakes.
Lenders and investors know this, which is why forecasts created on Excel by the business owner are often frowned upon.
Having numbers one can trust is key when it comes to financial forecasting and to that end using software is much safer.
Using financial forecasting software is also faster than using a spreadsheet, and, with the rise of artificial intelligence, software is also becoming smarter at helping us analyse the numbers to make smarter decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and keeping your projections up to date as the year progresses is manual, tedious, and error-prone. Whereas financial projection 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 boxing equipment shop, looking at our financial forecast template is a good way to:
- Understand what a complete business plan should look like
- Understand how you should model financial items for your boxing equipment 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 boxing equipment 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 boxing equipment 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 sales forecast for a business?
- Example of financial forecast for business idea
Know someone who runs or wants to start a boxing equipment shop? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
