How to create a financial forecast for a dental chair manufacturer?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your dental chair manufacturing business.
Putting together a dental chair manufacturing business 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 dental chair manufacturing business.
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 dental chair manufacturing business?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your dental chair manufacturing business and ensure that it can be financially viable in the years to come.
A financial plan for a dental chair manufacturing business 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 dental chair manufacturing business 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 dental chair manufacturing business'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 needed to build a dental chair manufacturing business financial forecast?
The quality of your inputs is key when it comes to financial modelling: no matter how good the model is, if your inputs are off, so will the forecast.
If you are building a financial plan to start a dental chair manufacturing business, you will need to have done your market research and have a clear picture of your sales and marketing strategies so that you can project revenues with confidence.
You will also need to have a clear idea of what resources will be required to operate the dental chair manufacturing business on a daily basis, and to have done your research with regard to the equipment needed to launch your venture (see further down this guide).
If you are creating a financial forecast of an existing dental chair manufacturing business, things are usually simpler as you will be able to use your historical accounting data as a budgeting base, and complement that with your team’s view on what lies ahead for the years to come.
Let's now zoom in on what will go in your dental chair manufacturing business's financial forecast.
The sales forecast for a dental chair manufacturing business
The sales forecast, also called topline projection, is normally where you will start when building your dental chair manufacturing business 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 dental chair manufacturers), and consider the elements below:
- Economic conditions: Changes in the economy, such as a recession or boom, can significantly impact the demand for dental chairs. During a recession, dentists may delay purchasing new equipment, resulting in lower sales and prices. On the other hand, during a booming economy, there may be an increased demand for dental services, leading to higher sales and prices for dental chairs.
- Technological advancements: The dental industry is constantly evolving, and new technologies are being introduced to improve patient care and efficiency. As a dental chair manufacturer, you need to stay up-to-date with these advancements and incorporate them into your products to remain competitive. Failure to do so may result in a decrease in sales and prices as dentists may opt for newer, more advanced chairs from your competitors.
- Government regulations: The dental industry is heavily regulated, and any changes in regulations can have a significant impact on your business. For example, if the government mandates that all dental chairs must meet certain safety standards, you may need to invest in upgrades or modifications to your existing chairs. This can increase your costs and potentially affect your prices. Additionally, changes in insurance coverage for dental procedures can also affect the demand for dental chairs.
- Demographics: The demographics of the population can also affect the demand for dental chairs. As the population ages, there may be an increased demand for dental services, resulting in higher sales and prices for dental chairs. Additionally, changes in population growth or migration patterns can also impact the demand for dental chairs in certain regions.
- Competitor actions: Your competitors' actions can also affect your business's sales and prices. For example, if a competitor introduces a new, innovative dental chair at a lower price, you may need to adjust your prices or offer additional features to remain competitive. On the other hand, if your competitors increase their prices, you may be able to do the same without affecting your sales, resulting in higher profits.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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 dental chair manufacturing business
The next step is to estimate the costs you’ll have to incur to operate your dental chair manufacturing business.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your dental chair manufacturing business's operating expenses should normally include the following items:
- Staff Costs: This includes the salaries, benefits, and taxes for all employees, including factory workers, assembly line workers, engineers, and office staff.
- Raw Materials: As a dental chair manufacturing business, you will need to purchase various materials such as metals, plastics, and upholstery for your chairs.
- Equipment Maintenance: This expense covers the regular maintenance and repairs of machinery and equipment used in the manufacturing process.
- Rent: If you do not own your manufacturing facility, you will need to pay rent for the space used to produce your dental chairs.
- Utilities: This includes electricity, water, and gas used in the manufacturing process and in the office.
- Marketing and Advertising: To attract customers and promote your brand, you will need to invest in marketing and advertising efforts, such as creating a website, attending trade shows, and running online ads.
- Accountancy Fees: As a business owner, you will need to hire an accountant to help you with tax preparation, bookkeeping, and financial planning.
- Insurance Costs: You will need to have insurance coverage for your manufacturing facility, equipment, and employees to protect against any potential risks or accidents.
- Software Licenses: To streamline your operations, you may need to invest in software programs for inventory management, accounting, and customer relationship management.
- Banking Fees: As a business, you will have to pay fees for processing transactions, wire transfers, and maintaining bank accounts.
- Packaging Materials: To ship your dental chairs to customers, you will need to buy packaging materials such as boxes, bubble wrap, and tape.
- Travel Expenses: If you need to travel for business purposes, such as attending trade shows or meeting with suppliers, you will need to budget for transportation, lodging, and meals.
- Professional Fees: You may need to pay for consulting services, legal advice, or other professional services to help with various aspects of your business.
- Office Supplies: To run your office efficiently, you will need to purchase supplies such as paper, ink, and toner for printers, as well as pens, folders, and other stationery items.
- Taxes: As a business, you will need to pay various taxes, including income tax, sales tax, and property tax.
This list is not exhaustive by any means, and will need to be tailored to your dental chair manufacturing business's specific circumstances.
What investments are needed to start or grow a dental chair manufacturing business?
Your dental chair manufacturing business 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 dental chair manufacturing business, these could include:
- Dental Chair Units: These are the main assets of a dental chair manufacturing business. They are used to provide dental treatments to patients and are an essential part of the business. These units can range from basic to advanced models, with various features and customization options.
- X-Ray Machines: X-ray machines are another important capital expenditure for a dental chair manufacturing business. They are used to capture images of patients' teeth and are essential for diagnosing dental issues and creating treatment plans. These machines can vary in size, type, and features, and can be a significant investment for the business.
- Dental Tools and Instruments: Dental tools and instruments are essential for performing dental procedures and treatments. These include items such as drills, probes, and forceps, and are necessary for providing quality care to patients. These tools need to be replaced regularly, making them a recurring capital expenditure for the business.
- Computer Systems and Software: In today's digital age, computer systems and software are crucial for managing a dental chair manufacturing business efficiently. These systems are used for various tasks such as inventory management, accounting, and customer relationship management. They also include specialized software for designing and customizing dental chair units.
- Office Equipment and Furniture: Office equipment and furniture are necessary for running a dental chair manufacturing business smoothly. These include items such as desks, chairs, filing cabinets, and printers. While these may seem like small expenses, they can add up over time, and it's essential to budget for them in the expenditure forecast.
Again, this list will need to be adjusted according to the size and ambitions of your dental chair manufacturing 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.
The financing plan of your dental chair manufacturing business
The next step in the creation of your financial forecast for your dental chair manufacturing business 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 dental chair manufacturing business?
Now let's have a look at the main output tables of your dental chair manufacturing business'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 dental chair manufacturing business'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 dental chair manufacturing business will look different than for a startup.
The projected balance sheet
Your dental chair manufacturing business'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 projection
The cash flow forecast of your dental chair manufacturing business will show how much cash the business is expected to generate or consume over the next three to five years.
There are multiple ways of presenting a cash flow forecast but from experience, it is better to organise it by nature in order to clearly show these elements:
- Operating cash flow: how much cash is generated by the dental chair manufacturing business's operations
- Investing cash flow: what is the business investing to expand or maintain its equipment
- Financing cash flow: is the business raising additional funds or repaying financiers (debt repayment, dividends)
Your cash flow forecast is the most important element of your overall financial projection and that’s where you should focus your attention to ensure that your dental chair manufacturing business is adequately funded.
Note: if you are preparing a financial forecast in order to try to secure funding, you will need to include both a yearly and monthly cash flow forecast in your dental chair manufacturing business's financial plan.
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 dental chair manufacturing business's financial projections?
Building a dental chair manufacturing business 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 dental chair manufacturing business'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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional dental chair manufacturing business 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 dental chair manufacturing business's financial forecast?
Creating an accurate and error-free dental chair manufacturing business 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 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 dental chair manufacturing business, 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 dental chair manufacturing business
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 dental chair manufacturing business.
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 dental chair manufacturing business. 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 project sales for a business?
- Financial forecast for a business idea
Know someone who runs or wants to start a dental chair manufacturing business? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
