How to create a financial forecast for a geodetic surveying firm?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your geodetic surveying firm.
Putting together a geodetic surveying firm 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 geodetic surveying firm.
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 geodetic surveying firm?
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 geodetic surveying firm becomes handy.
Creating a geodetic surveying firm 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 geodetic surveying firm.
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 geodetic surveying firm 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 geodetic surveying firm'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 geodetic surveying firm financial forecast?
A geodetic surveying firm'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 geodetic surveying firm, 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 geodetic surveying firm 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 geodetic surveying firm 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 geodetic surveying firm's financial forecast.
The sales forecast for a geodetic surveying firm
The sales forecast, also called topline projection, is normally where you will start when building your geodetic surveying firm 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 geodetic surveying firms), and consider the elements below:
- Seasonal demand: As a geodetic surveying firm, your services may be in higher demand during certain seasons. For example, construction and development projects often take place during the warmer months, resulting in increased demand for surveying services during that time.
- Economic conditions: The overall health of the economy can impact the number of surveying projects being undertaken. During times of economic growth, there may be a higher demand for geodetic surveying services as more construction and development projects are initiated.
- Technological advancements: Advancements in technology can influence the average price of your services. For example, if new tools or software are developed that make surveying more efficient, you may be able to offer your services at a lower cost, making them more attractive to potential clients.
- Competition: The level of competition in your market can affect the average price of your services. If there are many other geodetic surveying firms in your area, you may need to lower your prices to remain competitive. Conversely, if you are one of the few firms in your area, you may be able to charge higher prices.
- Regulations and permits: Changes in regulations or permit requirements can impact the number of monthly transactions for your business. For example, if new regulations require more extensive surveying for certain projects, you may see an increase in demand for your services. On the other hand, if regulations become more relaxed, there may be a decrease in demand for your services.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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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 operating expenses for a geodetic surveying firm
The next step is to estimate the expenses needed to run your geodetic surveying firm 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 geodetic surveying firm's operating expenses should include the following items at a minimum:
- Staff Costs: This includes salaries, benefits, and any other expenses related to your employees, such as training and development costs.
- Accountancy Fees: As a geodetic surveying firm, you will need to hire a professional accountant to manage your financial records, prepare tax returns, and provide financial advice. These services come at a cost and should be included in your operating expenses forecast.
- Insurance Costs: It is important to protect your business and employees from any potential risks. As a geodetic surveying firm, you will need to have insurance coverage for professional liability, general liability, and worker's compensation. These costs should be factored into your operating expenses forecast.
- Software Licences: To operate efficiently, you will need to invest in software licenses for geodetic surveying and mapping tools, as well as project management and accounting software.
- Banking Fees: Your business will have regular banking transactions, such as deposits, withdrawals, and wire transfers. These transactions come with fees, which should be included in your operating expenses forecast.
- Rent and Utilities: Your business will need a physical office space to operate from, and this comes with rent and utility costs, such as electricity, water, and internet.
- Equipment Maintenance: As a geodetic surveying firm, you will need to regularly maintain your equipment, such as surveying instruments, vehicles, and computers, to ensure accurate and efficient operations.
- Office Supplies: This includes everything from pens and paper to printer ink and toner. These small but necessary expenses can add up and should be included in your operating expenses forecast.
- Marketing and Advertising: To attract new clients and promote your services, you will need to invest in marketing and advertising efforts, such as website development, digital marketing, and print materials.
- Professional Memberships and Subscriptions: As a geodetic surveying firm, it is important to stay updated on industry trends and advancements. This may require professional memberships and subscriptions to industry journals, publications, and associations.
- Travel Expenses: Depending on the scope of your projects, you may need to travel to different locations for site visits and client meetings. These expenses, including transportation, accommodation, and meals, should be included in your operating expenses forecast.
- Legal Fees: As a business, you may encounter legal issues that require the services of a lawyer. These fees should be included in your operating expenses forecast.
- Taxes: As a business owner, you are responsible for paying various taxes, including income tax, property tax, and sales tax. These should be factored into your operating expenses forecast.
- Training and Development: To stay competitive and provide quality services, you may need to invest in training and development programs for your employees. These costs should be included in your operating expenses forecast.
- Office Maintenance: Your office space will require regular maintenance, such as cleaning services, repairs, and upgrades. These expenses should be included in your operating expenses forecast.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small geodetic surveying firm might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a geodetic surveying firm?
Once you have an idea of how much sales you could achieve and what it will cost to run your geodetic surveying firm, it is time to look into the equipment required to launch or expand the activity.
For a geodetic surveying firm, capital expenditures and initial working capital items could include:
- Surveying equipment: This includes instruments such as total stations, GPS receivers, and laser scanners that are essential for conducting accurate geodetic surveys.
- Computer hardware and software: A geodetic surveying firm will need computers, laptops, tablets, and other hardware to process and analyze survey data. Software such as CAD and GIS programs are also necessary for creating maps and reports.
- Vehicles: Depending on the size and scope of your firm, you may need to invest in vehicles such as trucks, vans, or ATVs to transport survey equipment and personnel to various job sites.
- Office space and furnishings: A physical office space is essential for a geodetic surveying firm to store equipment, meet with clients, and conduct administrative tasks. This may include rent, utilities, and office furniture.
- Training and development: While not a physical asset, investing in ongoing training and development for your staff is crucial to maintaining a high level of expertise and staying up-to-date with industry advancements.
Again, this list will need to be adjusted according to the specificities of your geodetic surveying firm.
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 geodetic surveying firm
The next step in the creation of your financial forecast for your geodetic surveying firm 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 geodetic surveying firm?
Now let's have a look at the main output tables of your geodetic surveying firm'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 geodetic surveying firm'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 geodetic surveying firm will look different than for a startup.
The projected balance sheet
The projected balance sheet gives an overview of your geodetic surveying firm'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 geodetic surveying firm. 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 geodetic surveying firm 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 geodetic surveying firm'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 geodetic surveying firm 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 geodetic surveying firm's financial forecast?
Using the right tool or solution will make the creation of your geodetic surveying firm's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your geodetic surveying firm'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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional geodetic surveying firm 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 geodetic surveying firm's financial forecast?
Creating an accurate and error-free geodetic surveying firm 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 geodetic surveying firm, 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 geodetic surveying firm
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your geodetic surveying firm.
- 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 geodetic surveying firm. Don't hesitate to contact us if you 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
- Financial forecast example
- How to create a turnover forecast for a business?
- Financial forecast template for a business idea
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Founder & CEO at The Business Plan Shop Ltd
