How to create a financial forecast for a chess 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 chess club.
Putting together a chess 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 chess 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 chess club?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your chess club and ensure that it can be financially viable in the years to come.
A financial plan for a chess club 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 chess club 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 chess club'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 chess club financial forecast?
A chess 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 chess club.
If you are creating (or updating) the forecast of an existing chess 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 chess 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 chess 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 chess club's financial forecast.
The sales forecast for a chess club
From experience, it usually makes sense to start your chess club's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your chess club (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 chess club'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:
- The popularity of chess as a recreational activity in your local community. As more people become interested in chess, there may be an increase in the number of people joining your club and paying the monthly membership fee.
- The availability of other chess clubs in the area. If there are multiple options for chess clubs in your community, this may lead to competition and potentially impact your club's average price per month or number of monthly transactions.
- The success of your club's chess players in local and national tournaments. If your club's players are performing well in tournaments, this may attract more members and increase the average price per month as they may be willing to pay more for the opportunity to train with successful players.
- The economic climate in your area. If the economy is thriving, people may have more disposable income to spend on recreational activities, potentially leading to an increase in the average price per month or number of monthly transactions for your club.
- The availability of online chess resources and competitions. With the rise of online chess platforms and tournaments, some people may choose to participate in these instead of joining a physical chess club. This could potentially impact your club's average price per month or number of monthly transactions.
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.
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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 chess club
The next step is to estimate the expenses needed to run your chess club 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 chess club's operating expenses should include the following items at a minimum:
- Staff Salaries and Benefits: This includes the salaries and benefits for all staff members, such as coaches, tournament directors, and administrative staff.
- Accountancy Fees: In order to keep your club's finances in order and file taxes correctly, you may need to hire an accountant or pay for accounting software and services.
- Insurance Costs: To protect your club and its members, you may need to purchase insurance coverage for liability, property damage, and other potential risks.
- Software Licenses: Many chess clubs use specialized software for tournament management, online play, and other purposes. These licenses may require annual fees.
- Banking Fees: Maintaining a bank account for your club may come with fees for transactions, account maintenance, and other services.
- Rent or Mortgage: If your club has a physical location, you may need to budget for rent or mortgage payments.
- Utilities: Your club will likely need to pay for electricity, water, and other utilities for its physical location.
- Internet and Phone: In order to communicate with members and run online tournaments, you may need to pay for internet and phone services.
- Marketing and Advertising: To attract new members and promote your club, you may need to invest in marketing and advertising efforts, such as flyers, social media ads, and website development.
- Equipment and Supplies: This includes chess boards, pieces, clocks, and other necessary equipment for tournaments and club activities.
- Refreshments: If your club offers snacks or drinks to members during tournaments or meetings, you will need to budget for these expenses.
- Professional Memberships: To stay updated on the latest chess news and developments, you may want to join professional chess organizations or subscribe to magazines and journals.
- Maintenance and Repairs: This includes any repairs or maintenance needed for your club's physical location, equipment, or other assets.
- Legal Fees: In case of any legal issues or contracts, you may need to budget for legal fees or consultations.
- Travel Expenses: If your club participates in tournaments or travels for special events, you will need to budget for travel expenses such as airfare, lodging, and meals.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small chess club might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a chess club?
Your chess club 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 chess club, these could include:
- Chess Sets: As a chess club, you will need a sufficient number of high-quality chess sets for your members to use during club meetings and tournaments. These sets should be durable and of a standard design to ensure fair gameplay.
- Chess Clocks: A chess clock is an essential tool for timed chess matches. Investing in high-quality chess clocks will ensure fair and accurate timekeeping during tournaments and club matches.
- Chess Boards: In addition to chess sets, you will also need a sufficient number of chess boards for your club. These boards should be sturdy and of a standard size to accommodate tournament play.
- Furniture: To provide a comfortable and functional space for your members, you may need to invest in furniture such as tables, chairs, and storage units. These items will contribute to the overall atmosphere and functionality of your chess club.
- Technology: In today's digital age, it may be beneficial to invest in technology for your chess club, such as laptops or tablets for tournament management and recording game results. Additionally, you may want to consider purchasing a chess database software for your club's use.
Again, this list will need to be adjusted according to the size and ambitions of your chess 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 chess club
The next step in the creation of your financial forecast for your chess 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 chess club?
Now let's have a look at the main output tables of your chess club's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your chess club's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a chess 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 chess club's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- 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 projected cash flow statement
A projected cash flow statement for a chess club 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 chess club'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 chess club 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 chess club's financial forecast?
Creating your chess 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 chess 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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional chess club 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 chess club's financial forecast?
Creating an accurate and error-free chess club 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 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 chess 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
- Having a financial forecast enables you to visualise the expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial projections up-to-date is the only way to get a view on what your chess club future cash flows may look like.
- Using financial forecasting software is the mordern and easy way to create and maintain your forecasts.
This is the end of our guide on how to build the financial forecast for a chess club, we hope you found it useful. Don't hesitate to contact us if you want to share your feedback or have any questions.
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 forecast
- How to project revenues for a business?
- Example of financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
