How to create a financial forecast for a copy-typing company?
Developing and maintaining an up-to-date financial forecast for your copy-typing 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 copy-typing 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 copy-typing company?
The financial projections for your copy-typing 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 copy-typing 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 copy-typing company financial forecast?
A copy-typing company'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 copy-typing company, 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 copy-typing company 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 copy-typing company 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 copy-typing company's financial forecast.
The sales forecast for a copy-typing company
The sales forecast, also called topline projection, is normally where you will start when building your copy-typing company 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 copy-typing companies), and consider the elements below:
- Economic conditions: A strong economy with low unemployment rates can drive up demand for copy-typing services, resulting in an increase in average price and number of monthly transactions for your business. On the other hand, a struggling economy with high unemployment rates may lead to a decrease in demand, causing a drop in both average price and number of transactions.
- Technology advancements: The advent of new software and tools for document creation and editing can affect your business's average price and number of transactions. As more individuals and businesses adopt these technologies, they may opt to do their own typing and editing, reducing the demand for your services. However, some clients may still prefer the accuracy and efficiency of professional copy-typing, resulting in a potential increase in average price.
- Competition: The presence of other copy-typing companies in your area can impact your average price and number of transactions. If there are many competitors offering similar services at lower prices, you may need to adjust your prices to remain competitive and attract clients. This could result in a decrease in average price, but potentially an increase in the number of monthly transactions if you are able to attract more clients.
- Industry trends: Changes in the demand for specific types of documents or industries that require copy-typing can affect your business's average price and number of monthly transactions. For example, if there is a surge in demand for legal documents, you may be able to charge a higher average price due to the specialized nature of these documents. On the other hand, a decline in demand for medical transcription services may result in a decrease in both average price and number of transactions.
- Client demographics: The demographics of your target market can also influence your average price and number of monthly transactions. For instance, if your business primarily caters to older individuals who may prefer paper documents over digital ones, you may be able to charge a higher average price. However, if your target market is mostly tech-savvy individuals who prefer digital documents, you may need to adjust your prices to remain competitive and attract clients.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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The operating expenses for a copy-typing company
The next step is to estimate the expenses needed to run your copy-typing 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 copy-typing company's operating expenses should include the following items at a minimum:
- Staff Costs: As a copy-typing company, your employees are your most valuable asset. This includes salaries, benefits, and any additional costs such as training and recruitment.
- Accountancy Fees: Keeping your finances in order is crucial for any business. You will need to hire an accountant to help you with tax filings, bookkeeping, and other financial tasks.
- Insurance Costs: Running a copy-typing company comes with certain risks, so it's important to have the right insurance coverage. This may include general liability insurance, professional liability insurance, and workers' compensation insurance.
- Software Licences: To efficiently run your copy-typing business, you will need to invest in software licenses for programs such as Microsoft Office, Adobe Acrobat, and other productivity tools.
- Banking Fees: Your copy-typing company will have various banking needs, such as setting up a business account, processing payments, and potentially taking out loans. These services often come with fees that should be accounted for in your operating expenses.
- Office Rent: Unless you plan on working from home, you will need to budget for office space. This may include rent, utilities, and other related expenses.
- Marketing and Advertising: In order to attract clients and grow your business, you will need to invest in marketing and advertising. This may include creating a website, printing business cards, and attending networking events.
- Office Supplies: As a copy-typing company, you will need to purchase office supplies such as paper, toner, printer ink, and other essentials to keep your business running smoothly.
- Travel Expenses: If your copy-typing company offers on-site services, you may need to budget for travel expenses such as gas, tolls, and accommodations.
- Professional Memberships: To stay up-to-date on industry trends and network with other professionals, you may want to join professional organizations or attend conferences. Keep in mind that these memberships often come with annual fees.
- Legal Fees: Consulting with a lawyer may be necessary for various legal matters, such as drafting contracts or protecting your intellectual property.
- Telephone and Internet Expenses: As a copy-typing company, you will need reliable phone and internet services to communicate with clients and complete projects. These expenses should be factored into your operating costs.
- Training and Development: In order to provide high-quality services, you may need to invest in ongoing training and development for yourself and your employees.
- Office Maintenance: Your office space will require regular maintenance and repairs, so be sure to include this in your operating expenses.
- Taxes and Licenses: As a business, you will need to pay various taxes and obtain necessary licenses to operate legally. Be sure to budget for these expenses accordingly.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small copy-typing company might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a copy-typing company?
Your copy-typing 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 copy-typing company, these could include:
- Computer and IT equipment: This includes purchasing computers, printers, scanners, and other necessary equipment for your copy-typing business. These are essential for completing projects efficiently and accurately.
- Office furniture and supplies: In order to create a professional and comfortable work environment, you may need to invest in desks, chairs, filing cabinets, and other office supplies. These items can improve productivity and organization.
- Software and subscriptions: As a copy-typing company, you will likely need to invest in software programs and subscriptions that are specifically designed for this type of work. This may include word processing programs, document management systems, and other tools to help you complete projects efficiently.
- Training and development: While this is not an operating expense, investing in training and development for yourself and your employees can greatly benefit your copy-typing business. This may include courses on typing speed and accuracy, as well as training on using new software or technology.
- Office space: Depending on the size of your business, you may need to rent or purchase office space to accommodate your employees and equipment. This can be a significant capital expenditure, but having a dedicated workspace can greatly improve the efficiency and professionalism of your business.
Again, this list will need to be adjusted according to the size and ambitions of your copy-typing 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 copy-typing company
The next step in the creation of your financial forecast for your copy-typing 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 copy-typing company?
Now let's have a look at the main output tables of your copy-typing company's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your copy-typing company's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a copy-typing company 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
The projected balance sheet gives an overview of your copy-typing company's financial structure at the end of the financial year.
It is composed of three categories of items: assets, liabilities and equity:
- Assets: are what the business possesses and uses to produce cash flows. It includes resources such as cash, buildings, equipment, and accounts receivable (money owed by clients).
- Liabilities: are the debts of your copy-typing company. They include accounts payable (money owed to suppliers), taxes due and bank loans.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits 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 copy-typing company 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 copy-typing company'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 copy-typing company 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 copy-typing company's financial forecast?
Using the right tool or solution will make the creation of your copy-typing company's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your copy-typing company'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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional copy-typing 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 copy-typing company's financial forecast?
Creating an accurate and error-free copy-typing 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 copy-typing 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 copy-typing company
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 copy-typing company 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 copy-typing company, 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 create a turnover forecast for a business?
- Sample financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
