How to create a financial forecast for a deliveroo driver?
Developing and maintaining an up-to-date financial forecast for your deliveroo driver 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 deliveroo driver 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 deliveroo driver?
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 deliveroo driver becomes handy.
Creating a deliveroo driver 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 deliveroo driver.
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 deliveroo driver 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 deliveroo driver'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 deliveroo driver financial forecast?
A deliveroo driver'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 deliveroo driver.
If you are creating (or updating) the forecast of an existing deliveroo driver, 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 deliveroo driver 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 deliveroo driver 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 deliveroo driver's financial forecast.
The sales forecast for a deliveroo driver
From experience, it usually makes sense to start your deliveroo driver's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your deliveroo driver (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 deliveroo driver'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 Trends: As a deliveroo driver, you may experience fluctuations in the number of monthly transactions depending on the time of year. For example, during the summer months, there may be an increase in orders as more people dine outside and order food to their homes. On the other hand, during the winter months, there may be a decrease in orders due to colder weather and people staying in more. Therefore, it's important to consider seasonal trends when creating your sales forecast.
- Competition: The average price and number of monthly transactions for a deliveroo driver can be affected by competition in the area. If there are other delivery services in your area, you may experience a decrease in orders or a decrease in the average price as customers have more options to choose from. It's important to keep an eye on the competition and adjust your prices and marketing strategies accordingly.
- Delivery Radius: The delivery radius you choose as a deliveroo driver can also impact your sales forecast. If you limit your delivery radius, you may have fewer orders and a lower average price. On the other hand, expanding your delivery radius may result in more orders and a higher average price, but it also comes with increased costs such as gas and time.
- Technology Updates: As a deliveroo driver, you may also be affected by technology updates and advancements. For example, if your customers start using a new delivery app that offers lower fees or better features, you may see a decrease in orders as they switch to the new platform. It's important to stay up-to-date with technology and adapt to changes in the industry to maintain a competitive edge.
- Customer Reviews: The reviews and ratings you receive as a deliveroo driver can also impact your average price and number of monthly transactions. Positive reviews can attract new customers and lead to repeat business, while negative reviews can deter potential customers. It's important to provide excellent customer service and address any negative reviews in a timely and professional manner to maintain a positive reputation and boost sales.
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 deliveroo driver
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your deliveroo driver 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 deliveroo driver will include some of the following items:
- Vehicle Expenses: As a deliveroo driver, you will need to cover the costs of maintaining and fueling your vehicle. This includes expenses such as gas, oil changes, and repairs.
- Insurance Costs: It is important to have insurance as a deliveroo driver to protect yourself and your vehicle in case of any accidents or damages. This expense includes both vehicle and liability insurance.
- Accountancy Fees: As a self-employed deliveroo driver, you may need to hire an accountant to help you with your taxes and other financial matters. These fees can add up, so it's important to budget for them.
- Software Licenses: Deliveroo drivers use various apps and software to manage their deliveries and track their earnings. Some of these may require a monthly or yearly subscription fee.
- Banking Fees: You will need to have a business bank account to manage your earnings as a deliveroo driver. This may come with monthly fees, transaction fees, and other charges.
- Phone Expenses: A reliable phone is essential for a deliveroo driver to stay connected with customers and the delivery platform. You will need to cover the costs of your phone plan and any repairs or replacements.
- Uniform and Equipment: Deliveroo drivers are required to wear a branded uniform and use insulated delivery bags. These items may need to be replaced periodically and should be factored into your expenses.
- Parking and Tolls: Depending on the area you deliver in, you may need to pay for parking or tolls. These costs can add up, so it's important to keep track of them.
- Marketing and Advertising: As a self-employed deliveroo driver, you are responsible for promoting your services and attracting new customers. This may include expenses such as flyers, branded merchandise, and online ads.
- Office Supplies: You may need to purchase office supplies such as paper, ink, and pens to manage your business as a deliveroo driver.
- Training and Development: To improve your skills and stay updated on industry trends, you may choose to attend training courses or conferences. These expenses should be included in your operating costs.
- Meals and Snacks: As a deliveroo driver, you may need to purchase meals and snacks while on the job. These costs can add up, so it's important to budget for them.
- Vehicle Registration and Taxes: You are responsible for registering your vehicle and paying any associated taxes as a deliveroo driver. These expenses should be factored into your operating costs.
- Health and Safety: It's important to prioritize your health and safety as a deliveroo driver. This may include expenses such as first aid kits, safety gear, and medical check-ups.
- Customer Service: Good customer service is essential for a successful deliveroo driver. You may need to cover expenses such as refunds or compensation for any issues that arise with customers.
This list will need to be tailored to the specificities of your deliveroo driver, but should offer a good starting point for your budget.
What investments are needed to start or grow a deliveroo driver?
Creating and expanding a deliveroo driver also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a deliveroo driver could include elements such as:
- Bicycle: As a deliveroo driver, you will need a reliable mode of transportation to make your deliveries. A good quality bicycle can be a significant capital expenditure, but it will be essential for you to efficiently and safely complete your deliveries.
- Smartphone: In today's digital age, a smartphone is a necessary tool for any deliveroo driver. You will need a smartphone to receive orders, navigate to your delivery locations, and communicate with customers. A high-quality smartphone with a good camera and long battery life will be a valuable investment for your delivery business.
- Insulated Delivery Bag: To ensure that your customers receive their food hot and fresh, you will need an insulated delivery bag. This bag will keep your deliveries at the right temperature and protect them from spills and accidents during transportation. A good quality insulated bag can be a vital asset for your deliveroo business.
- Helmet and Safety Gear: As a deliveroo driver, your safety should be a top priority. Investing in a good quality helmet and other safety gear, such as reflective clothing and lights, will not only protect you but also give your customers confidence in your professionalism and reliability.
- Portable Charger: Since you will be using your smartphone for navigation and communication, it is crucial to have a reliable power source. A portable charger will allow you to charge your phone on the go, ensuring that you never miss a delivery or get lost due to a dead battery.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your deliveroo driver.
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 deliveroo driver
The next step in the creation of your financial forecast for your deliveroo driver 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 deliveroo driver?
Now let's have a look at the main output tables of your deliveroo driver'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 deliveroo driver'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 deliveroo driver will look different than for a startup.
The projected balance sheet
The projected balance sheet gives an overview of your deliveroo driver'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 deliveroo driver. 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 deliveroo driver'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 deliveroo driver:
- 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 deliveroo driver'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 deliveroo driver'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 deliveroo driver's financial projections?
Building a deliveroo driver 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 deliveroo driver'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 deliveroo driver 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 deliveroo driver's financial forecast?
Creating an accurate and error-free deliveroo driver financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.
Most entrepreneurs lack the expertise required to create an accurate financial forecast using spreadsheet software like Excel or Google Sheets. As a result, it is unlikely anyone will trust your numbers.
The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.
This is why professional forecasters all use software. With the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and updating your forecast as the year progresses is manual, tedious, error-prone, and time-consuming. Whereas financial forecasting 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 deliveroo driver, 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 deliveroo driver.
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 deliveroo driver. 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 create a sales forecast for a business?
- Financial forecast for a business idea
Know someone who runs or wants to start a deliveroo driver? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
