How to create a financial forecast for a cobbler and shoe repair shop?
Creating a financial forecast for your cobbler and shoe repair 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 cobbler and shoe repair 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 cobbler and shoe repair 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 cobbler and shoe repair shop becomes handy.
Creating a cobbler and shoe repair 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 cobbler and shoe repair 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 cobbler and shoe repair 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 cobbler and shoe repair 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 used as input to build a cobbler and shoe repair shop financial forecast?
A cobbler and shoe repair shop's financial forecast is only as good as the inputs used to build it.
If you are creating (or updating) the forecast of an existing cobbler and shoe repair shop, then you mostly need your accounting information, key historical operating non-financial data, and your team’s input on what to expect for the coming years.
If you are building financial projections for a cobbler and shoe repair shop startup, you will need to have done your research and have a clear picture of your competitive environment and go-to-market strategy so that you can forecast sales accurately.
For a new venture, you will also need a precise list of the resources needed to keep the cobbler and shoe repair shop running on a day-to-day basis and a list of the equipment and expenditures required to start the business (more on that later).
Let's now take a closer look at the elements that make up your cobbler and shoe repair shop's financial forecast.
The sales forecast for a cobbler and shoe repair shop
From experience, it usually makes sense to start your cobbler and shoe repair shop's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your cobbler and shoe repair 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 cobbler and shoe repair 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:
- Seasonal changes: As the owner of a cobbler and shoe repair shop, you may experience fluctuations in your average price and number of monthly transactions depending on the time of year. For example, during the winter months, customers may bring in more boots and heavy-duty shoes for repairs, leading to higher average prices and more transactions. On the other hand, during the summer months, customers may be more likely to buy new sandals or shoes instead of repairing their old ones, resulting in lower average prices and fewer transactions.
- Economic conditions: The state of the economy can also impact your average price and number of monthly transactions. During times of economic downturn, customers may be more likely to repair their shoes instead of buying new ones, leading to higher average prices and more transactions. Conversely, during times of economic prosperity, customers may be more willing to splurge on new shoes, resulting in lower average prices and fewer transactions for your repair shop.
- Competition: The presence of other cobbler and shoe repair shops in your area can also affect your sales forecast. If there are many competitors offering similar services, you may need to adjust your average prices and marketing strategies to stay competitive and attract customers. This could result in fluctuations in your average price and number of monthly transactions.
- Fashion trends: As a cobbler and shoe repair shop owner, you may also need to consider the current fashion trends when creating your sales forecast. If a certain style of shoe becomes popular, you may see an increase in customers wanting repairs on that particular style, leading to higher average prices and more transactions. On the other hand, if a style of shoe falls out of fashion, you may see a decrease in demand for repairs, resulting in lower average prices and fewer transactions.
- Customer demographics: The demographics of your local customer base can also play a role in your sales forecast. For example, if your shop is located in an area with a large elderly population, you may see a higher demand for shoe repairs due to their preference for comfortable and durable shoes. This could lead to higher average prices and more transactions. Alternatively, if your shop is located in a trendy, young neighborhood, you may see more customers opting for new shoes instead of repairs, resulting in lower average prices and fewer 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.
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 cobbler and shoe repair shop
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your cobbler and shoe repair shop 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 cobbler and shoe repair shop will include some of the following items:
- Staff Costs: This includes salaries, wages, benefits, and training for your employees. As a cobbler and shoe repair shop, you may need to hire skilled shoemakers and repair technicians to ensure quality work.
- Rent: Your shop's location is crucial for attracting customers, so the rent for your storefront or workshop is an important expense to consider.
- Utilities: You will need to pay for electricity, water, and other utilities to keep your shop running.
- Supplies and Materials: This includes leather, thread, glue, and other materials needed for repairing shoes. You may also need to purchase shoe polish, laces, and other shoe care products to sell to customers.
- Equipment Maintenance: As a cobbler and shoe repair shop, your equipment is vital to your business. Regular maintenance and repairs will ensure that your machinery and tools are always in good working condition.
- Marketing and Advertising: You will need to promote your business to attract customers. This may include creating a website, printing business cards, and running social media ads.
- Accountancy Fees: You may need to hire an accountant to help you manage your finances and file taxes.
- Insurance Costs: It is important to protect your business with insurance coverage for liability, property damage, and worker's compensation.
- Software Licenses: You may need to purchase software for managing inventory, scheduling appointments, and other business tasks.
- Banking Fees: Your business will need a bank account for managing your finances, and there may be fees associated with transactions and services.
- Professional Memberships: Joining professional associations and trade organizations can provide valuable resources and networking opportunities, but may require membership fees.
- Office Supplies: This includes paper, pens, and other supplies needed for administrative tasks and customer communication.
- Training and Development: To stay updated on new techniques and trends in the shoe repair industry, you may need to invest in training and development for yourself and your employees.
- Legal Fees: You may need to consult with a lawyer for legal advice and assistance with contracts, leases, and other legal matters.
- Taxes: As a business owner, you will need to pay various taxes, including income tax, sales tax, and property tax.
This list will need to be tailored to the specificities of your cobbler and shoe repair shop, but should offer a good starting point for your budget.
What investments are needed to start or grow a cobbler and shoe repair shop?
Creating and expanding a cobbler and shoe repair shop also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a cobbler and shoe repair shop could include elements such as:
- You will need to purchase a commercial-grade sewing machine for repairing and altering shoes and other leather goods.
- A shoe stretcher is an essential tool for a cobbler and shoe repair shop, as it is used to expand the size of a shoe to fit a customer's foot comfortably.
- To properly clean and polish shoes, you will need to invest in a shoe shine machine.
- Shoe lasts are specialized molds used to shape and repair shoes. These are a necessary piece of equipment for a cobbler and shoe repair shop.
- Investing in a shoe repair kit, which includes various tools and supplies such as leather patches, thread, needles, and adhesives, will be necessary for conducting repairs on a wide range of shoes and other leather goods.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your cobbler and shoe repair 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 cobbler and shoe repair shop
The next step in the creation of your financial forecast for your cobbler and shoe repair 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 cobbler and shoe repair shop?
Now let's have a look at the main output tables of your cobbler and shoe repair 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 cobbler and shoe repair 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 cobbler and shoe repair shop will look different than for a startup.
The projected balance sheet
Your cobbler and shoe repair shop'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 cash flow forecast
Your cobbler and shoe repair 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 cobbler and shoe repair 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 cobbler and shoe repair 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 cobbler and shoe repair 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 cobbler and shoe repair shop's financial projections?
Building a cobbler and shoe repair 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 cobbler and shoe repair 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.
Calling in a financial consultant or chartered accountant
Outsourcing the creation of your cobbler and shoe repair shop 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 cobbler and shoe repair shop's financial forecast?
You and your financial partners need numbers you can trust. Unless you have studied finance or accounting, creating a trustworthy and error-free cobbler and shoe repair shop financial forecast on a spreadsheet is likely to prove challenging.
Financial modelling is very technical by nature and requires a solid grasp of accounting principles to be done without errors. This means that using spreadsheet software like Excel or Google Sheets to create accurate financial forecasts is out of reach for most business owners.
Creating forecasts in Excel is also inefficient nowadays:
- Software has advanced to the point where forecasting can be done much faster and more accurately than manually on a spreadsheet.
- With artificial intelligence, the software is capable of detecting mistakes and helping decision-making.
Spreadsheets are versatile tools but they are not tailor-made for reporting. Importing your cobbler and shoe repair shop's accounting data in Excel to track actual vs. forecast is incredibly manual and tedious (and so is keeping forecasts up to date). It is much faster to use dedicated financial planning tools like The Business Plan Shop which are built specially 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 cobbler and shoe repair shop, 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 cobbler and shoe repair 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 cobbler and shoe repair 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 projection
- How to write a cobbler and shoe repair shop business plan
- How to create a turnover forecast for a business?
- Financial forecast for a business idea
Know someone who runs or wants to start a cobbler and shoe repair shop? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
