How to create a financial forecast for a cricket equipment store?
Developing and maintaining an up-to-date financial forecast for your cricket equipment store 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 cricket equipment store 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 cricket equipment store?
The financial projections for your cricket equipment store 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 cricket equipment store'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 cricket equipment store financial forecast?
A cricket equipment store'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 cricket equipment store.
If you are creating (or updating) the forecast of an existing cricket equipment store, 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 cricket equipment store 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 cricket equipment store 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 cricket equipment store's financial forecast.
The sales forecast for a cricket equipment store
From experience, it is usually best to start creating your cricket equipment store financial forecast by your sales forecast.
To create an accurate sales forecast for your cricket equipment store, you will have to rely on the data collected in your market research, or if you're running an existing cricket equipment store, 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:
- Cricket Season: The timing and duration of the cricket season can greatly impact the average price and number of transactions at your store. During peak cricket season, demand for equipment is higher, which can allow you to charge higher prices and increase your number of transactions. On the other hand, during off-season months, you may need to lower prices and offer promotions to attract customers and maintain sales.
- Trends in Equipment Technology: The constantly evolving technology in cricket equipment can also affect your sales forecast. If new and improved equipment is introduced in the market, customers may be more willing to pay a higher price for them, resulting in an increase in your average price and number of transactions. However, if there are no significant advancements in technology, customers may be less inclined to purchase new equipment, causing a decrease in sales.
- Competitors: The presence of other cricket equipment stores in your area can also impact your sales forecast. If you have many competitors nearby, you may need to adjust your prices to remain competitive and attract customers. This can potentially decrease your average price, but it may also lead to an increase in the number of transactions as customers may choose your store over others due to lower prices.
- International Cricket Tournaments: The occurrence of international cricket tournaments can also influence your sales forecast. If your store is located in a country where cricket is popular and the national team is participating in a major tournament, there may be a surge in demand for equipment, resulting in an increase in your average price and number of transactions. However, if the national team is not performing well or does not qualify for the tournament, this may have a negative impact on your sales.
- Weather Conditions: The weather can also play a role in your sales forecast. If the weather is favorable for playing cricket, such as warm and sunny days, there may be an increase in demand for equipment, leading to a higher average price and number of transactions. On the other hand, if the weather is poor, such as cold and rainy days, there may be a decrease in demand for equipment, resulting in a lower average price and number of transactions.
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 cricket equipment store
The next step is to estimate the expenses needed to run your cricket equipment store 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 cricket equipment store's operating expenses should include the following items at a minimum:
- Staff costs: This includes salaries, wages, and benefits for all employees working in the store, such as sales associates, cashiers, and store managers.
- Rent: You will need to pay rent for your store space. This can vary depending on the location and size of your store.
- Utilities: You will need to pay for electricity, water, and other utilities to keep your store running.
- Inventory: You will need to purchase and maintain inventory, including cricket equipment, apparel, and accessories.
- Marketing and advertising: To attract customers, you will need to invest in marketing and advertising efforts, such as flyers, social media ads, and promotions.
- Accountancy fees: You may choose to hire an accountant to manage your books and file taxes for your store.
- Insurance costs: It is important to have insurance to protect your store from any unforeseen events, such as theft or damage.
- Software licenses: You may need to purchase software licenses for your store, such as point-of-sale systems, inventory management software, and accounting software.
- Banking fees: You will need to pay fees for banking services, such as credit card processing and ATM usage.
- Maintenance and repairs: You will need to budget for maintenance and repairs for your store equipment, such as cash registers, shelving, and displays.
- Professional fees: You may need to hire professionals, such as lawyers or consultants, for specific services related to your store.
- Training and development: It is important to invest in training and development for your employees to ensure they have the necessary skills to provide excellent customer service and product knowledge.
- Office supplies: You will need to purchase office supplies, such as pens, paper, and printer ink, to keep your store running smoothly.
- Taxes and licenses: You will need to pay taxes and obtain necessary licenses to operate your store.
- Shipping and delivery: If you offer online sales or delivery services, you will need to budget for shipping and delivery costs.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small cricket equipment store might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a cricket equipment store?
Your cricket equipment store 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 cricket equipment store, these could include:
- Cricket Bats: As a cricket equipment store owner, you will need to invest in a variety of high-quality cricket bats to cater to the needs of different players. These bats will be a significant capital expenditure for your store, but they are essential for attracting customers and generating revenue.
- Cricket Balls: Another crucial capital expenditure for your cricket equipment store will be purchasing a range of cricket balls. These balls come in various sizes and materials, and you will need to have a diverse selection in your store to cater to different players' preferences.
- Cricket Protective Gear: As a responsible cricket equipment store owner, it is your responsibility to provide your customers with quality protective gear to ensure their safety while playing. This may include helmets, pads, gloves, and other protective equipment, which will require a significant capital investment.
- Cricket Nets: To provide your customers with a complete cricket experience, you will need to invest in cricket nets for your store. These nets are essential for players to practice their batting and bowling skills, and they will be a significant capital expenditure for your store.
- Cricket Field Equipment: Lastly, your cricket equipment store will also need to invest in field equipment such as stumps, bails, and boundary markers. These items are essential for setting up a professional cricket match and will require a significant capital investment.
Again, this list will need to be adjusted according to the size and ambitions of your cricket equipment store.
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 cricket equipment store
The next step in the creation of your financial forecast for your cricket equipment store 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 cricket equipment store?
Now let's have a look at the main output tables of your cricket equipment store's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your cricket equipment store is likely to be in the years to come.
For your cricket equipment store to be financially viable, your projected P&L should ideally show:
- Sales growing above inflation (the higher the better)
- Profit margins which are stable or expanding (the higher the better)
- A net profit at the end of each financial year (the higher the better)
This is for established cricket equipment stores, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
The projected balance sheet gives an overview of your cricket equipment store'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 cricket equipment store. 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 cash flow forecast
Your cricket equipment store'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 cricket equipment store:
- 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 cricket equipment store'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 cricket equipment store'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 cricket equipment store's financial projections?
Building a cricket equipment store 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 cricket equipment store'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
Outsourcing the creation of your cricket equipment store 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 cricket equipment store'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 cricket equipment store 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 cricket equipment store'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 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 cricket equipment store, 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 cricket equipment store
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 cricket equipment store 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 cricket equipment store, 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 sales for a business?
- Sample financial forecast for business idea
Know someone who owns or is thinking of starting a cricket equipment store? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
