How to create a financial forecast for a dog daycare facility?
Creating a financial forecast for your dog daycare facility, 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 dog daycare facility 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 dog daycare facility?
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 dog daycare facility becomes handy.
Creating a dog daycare facility 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 dog daycare facility.
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 dog daycare facility 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 dog daycare facility'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 solid financial forecast?
The Business Plan Shop does the maths for you. Simply enter your revenues, costs and investments. Click save and our online tool builds a three-way forecast for you instantly.
What information is needed to build a dog daycare facility 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 dog daycare facility, 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 dog daycare facility 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 dog daycare facility, 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 dog daycare facility's financial forecast.
The sales forecast for a dog daycare facility
From experience, it is usually best to start creating your dog daycare facility financial forecast by your sales forecast.
To create an accurate sales forecast for your dog daycare facility, you will have to rely on the data collected in your market research, or if you're running an existing dog daycare facility, 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:
- Competition: The number of other dog daycare facilities in your area may affect your average price and number of monthly transactions. If there are a lot of competitors, you may need to lower your prices to stay competitive and attract more customers. However, if you are the only facility in the area, you may be able to charge higher prices and still have a high number of transactions.
- Seasonal Demand: The time of year may also impact your business. During peak vacation months or holidays, more people may need to use your services, leading to an increase in transactions. However, during slower months, you may need to lower your prices to entice customers to bring their dogs to your facility.
- Facility Amenities: The amenities you offer at your dog daycare facility can also affect your average price and number of monthly transactions. If you have a large, fenced-in outdoor play area, or offer additional services such as grooming or training, you may be able to charge higher prices and attract more customers. On the other hand, if your facility is small and basic, you may need to lower your prices to compete with other facilities.
- Customer Reviews: Positive reviews and word of mouth can greatly impact your business. If your customers are satisfied with your services, they may refer their friends and family to your facility, leading to an increase in transactions. Additionally, positive reviews online can attract new customers and allow you to charge higher prices due to your good reputation.
- Dog Breeds: Some dog breeds may require more attention and care, leading to a higher price point for their stay at your facility. For example, larger breeds or breeds with high energy may require more space and exercise, leading to a higher price. On the other hand, smaller or lower maintenance breeds may not require as much attention, allowing you to charge lower prices.
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.
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The operating expenses for a dog daycare facility
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your dog daycare facility 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 dog daycare facility will include some of the following items:
- Staff Costs: This includes wages, benefits, and training for your dog daycare staff. You will need to consider the number of employees you will have, their hourly rates, and any overtime or holiday pay.
- Accountancy Fees: You will need to hire an accountant or bookkeeper to help you with your financial records, tax filings, and other financial matters. Consider their hourly rate or monthly retainer fee.
- Insurance Costs: Running a dog daycare facility comes with potential risks, so it's important to have insurance to protect your business. This can include liability insurance, property insurance, and workers' compensation insurance.
- Software Licenses: You may need to purchase software to manage your bookings, appointments, and client information. This can include pet management software, accounting software, and scheduling software.
- Banking Fees: You will need to have a business bank account to manage your finances. This may come with monthly fees, transaction fees, and other banking charges.
- Rent/Lease: If you are not operating your dog daycare facility from your own property, you will need to factor in the cost of rent or lease for your business location.
- Utilities: You will need to pay for utilities such as electricity, water, and gas for your dog daycare facility. These costs will vary depending on the size of your facility and your usage.
- Cleaning Supplies: As a dog daycare facility, it's important to maintain a clean and hygienic environment for the dogs. This will require purchasing cleaning supplies such as disinfectants, paper towels, and trash bags.
- Pet Supplies: You will need to provide food, water, and treats for the dogs in your care. This may also include purchasing toys, beds, and other supplies to keep the dogs entertained and comfortable.
- Marketing Expenses: To attract clients to your dog daycare facility, you may need to invest in marketing efforts such as advertising, creating a website, and printing promotional materials.
- Training and Education: As a dog daycare facility owner, it's important to stay updated on industry trends and best practices. This may require attending conferences, workshops, and other educational events.
- Office Supplies: You will need basic office supplies such as paper, printer ink, and pens to manage your daily operations and keep track of client information.
- Professional Memberships: You may want to join professional organizations related to the pet industry to network with other business owners and stay informed about industry updates and developments.
- Waste Disposal: You will need to dispose of waste from the dogs in your care, so you may need to factor in the cost of hiring a waste removal service or purchasing waste disposal equipment.
- Legal Fees: It's important to have legal contracts and agreements in place to protect your business, so you may need to hire a lawyer to help you with this process.
This list will need to be tailored to the specificities of your dog daycare facility, but should offer a good starting point for your budget.
What investments are needed to start or grow a dog daycare facility?
Creating and expanding a dog daycare facility also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a dog daycare facility could include elements such as:
- Building Renovations: As a dog daycare facility owner, one of your potential capital expenditures could be building renovations. This could include things like creating separate play areas, installing flooring suitable for dogs, and adding fencing to outdoor play areas.
- Equipment and Supplies: In order to provide a safe and comfortable environment for the dogs in your care, you will need to invest in various equipment and supplies. This could include items such as crates, bedding, food and water bowls, toys, cleaning supplies, and grooming equipment.
- Security Systems: It is important to ensure the safety and security of the dogs in your daycare facility. As such, you may need to invest in security systems such as cameras, alarms, and access control systems to monitor and control who enters and exits the facility.
- HVAC System: Dogs can be sensitive to extreme temperatures, so it is important to have a reliable heating, ventilation, and air conditioning (HVAC) system in place. This can help maintain a comfortable temperature for the dogs and prevent them from becoming overheated or too cold.
- Outdoor Play Equipment: Dogs love to play and it is important to provide them with opportunities to exercise and have fun. Investing in outdoor play equipment such as agility courses, obstacle courses, and pools can make your daycare facility more appealing to potential clients and provide a fun and stimulating environment for the dogs.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your dog daycare facility.
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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 dog daycare facility
The next step in the creation of your financial forecast for your dog daycare facility 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 dog daycare facility?
Now let's have a look at the main output tables of your dog daycare facility's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your dog daycare facility is likely to be in the years to come.
For your dog daycare facility 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 dog daycare facilities, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your dog daycare facility'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 dog daycare facility'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 dog daycare facility:
- 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 dog daycare facility'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 dog daycare facility's financial plan - so that banks or investors can assess seasonal variation and ensure your business is appropriately capitalised.
Need a solid financial forecast?
The Business Plan Shop does the maths for you. Simply enter your revenues, costs and investments. Click save and our online tool builds a three-way forecast for you instantly.
Which tool should you use to create your dog daycare facility's financial projections?
Building a dog daycare facility 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 dog daycare facility'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 dog daycare facility 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 dog daycare facility's financial forecast?
Creating an accurate and error-free dog daycare facility 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 forecast templates for inspiration
The Business Plan Shop has dozens of financial forecast examples available.
Our templates contain both a financial forecast and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Our templates are a great source of inspiration, whether you just want to see what a complete business plan looks like, or are looking for concrete examples of how you should model financial elements in your own forecast.
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your dog daycare facility.
- Tracking actuals vs. forecast and having an up-to-date financial forecast is key to maintaining visibility on your future cash flows.
- Using financial forecasting software is the modern way of creating and maintaining financial projections.
We hope that this guide helped you gain a clearer perspective on the steps needed to create the financial forecast for a dog daycare facility. Don't hesitate to contact us if you have any questions!
Need inspiration for your business plan?
The Business Plan Shop has dozens of business plan templates that you can use to get a clear idea of what a complete business plan looks like.
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