How to create a financial forecast for a cartography and GIS company?
Developing and maintaining an up-to-date financial forecast for your cartography and GIS company is key in order to maintain visibility on your business’s future cash flows.
If you feel overwhelmed at the thought of putting together a cartography and GIS company financial forecast then don’t worry as this guide is here to help you.
We'll cover everything from: the main objectives of a financial forecast, the data you need to gather before starting, to the tables that compose it, and the tools that will help you create and maintain your forecast efficiently.
Let's get started!
Why create and maintain a financial forecast for a cartography and GIS company?
The financial projections for your cartography and GIS company 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 cartography and GIS company'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 cartography and GIS company financial forecast?
A cartography and GIS company'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 cartography and GIS company.
If you are creating (or updating) the forecast of an existing cartography and GIS company, 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 cartography and GIS company 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 cartography and GIS company 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 cartography and GIS company's financial forecast.
The sales forecast for a cartography and GIS company
From experience, it is usually best to start creating your cartography and GIS company financial forecast by your sales forecast.
To create an accurate sales forecast for your cartography and GIS company, you will have to rely on the data collected in your market research, or if you're running an existing cartography and GIS company, 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:
- Government regulations: As a cartography and GIS company, changes in government regulations related to mapping and geographic data can significantly impact your average price and number of monthly transactions. For example, if new regulations require all businesses to update their maps every year, your company may be able to charge higher prices for your services and see an increase in the number of transactions.
- Technological advancements: Advancements in GIS and mapping technology can also affect your business's average price and monthly transactions. If a new technology is introduced that allows for more accurate and efficient mapping, your company may be able to charge higher prices and attract more customers who are looking for the most advanced solutions.
- Economic conditions: Economic conditions, such as recessions or economic booms, can impact the demand for your cartography and GIS services. During a recession, businesses may be more hesitant to spend money on non-essential services like mapping, resulting in a decrease in your average price and number of transactions. Conversely, during an economic boom, businesses may be more willing to invest in advanced mapping services, leading to an increase in your average price and transactions.
- Competition: The level of competition in your industry can also affect your business's average price and monthly transactions. If there are many other cartography and GIS companies in your area, you may need to lower your prices to remain competitive, resulting in a decrease in your average price. On the other hand, if your company is one of the few in the market, you may be able to charge higher prices and attract more customers.
- Natural disasters: Natural disasters, such as hurricanes, floods, or wildfires, can have a significant impact on your business's average price and monthly transactions. If a natural disaster occurs in an area where you have a lot of business, you may need to charge higher prices to cover the additional costs of mapping in a damaged or changed landscape. Alternatively, if a natural disaster affects a large area, you may see an increase in the number of transactions as businesses and governments seek updated mapping services to aid in recovery efforts.
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 cartography and GIS company
The next step is to estimate the expenses needed to run your cartography and GIS company 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 cartography and GIS company's operating expenses should include the following items at a minimum:
- Staff costs: Including salaries, benefits, and any training or development expenses for employees working in roles such as GIS analysts, cartographers, and project managers.
- Accountancy fees: These may include fees for tax preparation, financial reporting, and other accounting services.
- Insurance costs: This may include general liability insurance, professional liability insurance, and worker's compensation insurance.
- Software licenses: As a cartography and GIS company, you will likely need to purchase licenses for mapping and GIS software such as ArcGIS, QGIS, or Mapbox.
- Banking fees: This may include fees for business banking accounts, credit card processing, and international transactions.
- Office rent: If you have a physical office space, this expense will include rent, utilities, and maintenance costs.
- Marketing and advertising: This may include expenses for creating marketing materials, attending conferences or trade shows, and running online ads.
- Travel expenses: If your company is involved in field work or has clients in different locations, you may need to budget for travel expenses such as flights, accommodations, and meals.
- Professional development: This may include expenses for attending conferences, workshops, or training courses to stay up-to-date with the latest cartography and GIS technologies.
- Equipment and supplies: This may include expenses for purchasing and maintaining computers, printers, and other office equipment, as well as supplies such as paper, ink, and toner.
- Legal fees: This may include expenses for consulting with a lawyer for contract reviews, intellectual property protection, and any other legal matters.
- Utilities: If you have a physical office space, you will need to budget for expenses such as electricity, water, and internet.
- Rent or lease of vehicles: If your company requires field work, you may need to budget for renting or leasing vehicles for transportation.
- Subscriptions and memberships: This may include expenses for professional memberships, industry publications, and online resources for cartography and GIS.
- Consulting fees: If your company needs to outsource certain projects or tasks, you may need to budget for consulting fees for experts in areas such as remote sensing or geospatial analysis.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small cartography and GIS company might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a cartography and GIS company?
Your cartography and GIS company financial forecast will also need to include the capital expenditures (aka investments in plain English) and initial working capital items required for the creation or development of your business.
For a cartography and GIS company, these could include:
- Hardware: This includes computers, servers, and other electronic equipment necessary for cartography and GIS work. This can also include specialized equipment such as high-resolution printers and scanners.
- Software: Cartography and GIS companies often require specialized software for data analysis, mapping, and creating visualizations. This can include GIS software such as ArcGIS or QGIS, as well as graphic design software like Adobe Illustrator or Inkscape.
- Data Collection Equipment: In order to gather accurate data for mapping and analysis, cartography and GIS companies may need to invest in GPS devices, drones, or other specialized equipment to collect data in the field.
- Office Space and Furniture: A physical office space is necessary for a cartography and GIS company to operate. This can include rent, utilities, and office furniture such as desks, chairs, and storage units.
- Training and Development: While this may not be an immediate capital expenditure, investing in training and development for employees is essential for the success of a cartography and GIS company. This can include attending workshops, conferences, or obtaining certifications to stay updated on industry advancements.
Again, this list will need to be adjusted according to the size and ambitions of your cartography and GIS company.
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 cartography and GIS company
The next step in the creation of your financial forecast for your cartography and GIS company 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 cartography and GIS company?
Now let's have a look at the main output tables of your cartography and GIS company'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 cartography and GIS company'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 cartography and GIS company will look different than for a startup.
The projected balance sheet
Your cartography and GIS company'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 cartography and GIS company'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 cartography and GIS company:
- 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 cartography and GIS company'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 cartography and GIS company'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 cartography and GIS company's financial forecast?
Using the right tool or solution will make the creation of your cartography and GIS company's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your cartography and GIS company'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 cartography and GIS company 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 cartography and GIS company's financial forecast?
Creating an accurate and error-free cartography and GIS company 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 cartography and GIS company, 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 cartography and GIS company
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 cartography and GIS company.
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 cartography and GIS company. 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 sales for a business?
- Financial forecast template for a business idea
Know someone who runs or wants to start a cartography and GIS company? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
