How to create a financial forecast for a glazing company?
Creating a financial forecast for your glazing company, 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 glazing company 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 glazing company?
The financial projections for your glazing company 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 glazing company'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 needed to build a glazing company 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 glazing company, 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 glazing company 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 glazing company, 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 glazing company's financial forecast.
The sales forecast for a glazing company
The sales forecast, also called topline projection, is normally where you will start when building your glazing company 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 glazing companies), and consider the elements below:
- Economic conditions: Changes in the local or national economy can affect the average price of glazing services. In times of economic growth, you may be able to charge higher prices as customers are willing to invest more in their properties. Similarly, during a recession, you may need to lower your prices to remain competitive and attract customers.
- Competition: The level of competition in your area can also impact your average price. If there are many other glazing companies in your area, you may need to lower your prices to stay competitive. On the other hand, if you are one of the few glazing companies in your area, you may be able to charge higher prices.
- Material costs: The cost of materials needed for glazing, such as glass and frames, can fluctuate and affect your average price. If the cost of materials increases, you may need to adjust your prices accordingly to maintain your profit margin. Alternatively, if material costs decrease, you may be able to offer lower prices to attract more customers.
- Seasonal demand: The demand for glazing services may vary throughout the year, which can impact your number of monthly transactions. For example, during the winter months, customers may be less likely to invest in glazing services due to the colder weather. In contrast, during the summer months, customers may be more willing to have their windows replaced or repaired.
- Technological advancements: Advancements in glazing technology can also affect your average price and number of monthly transactions. If new, more efficient technologies become available, you may need to adjust your prices to stay competitive. Additionally, if you are able to offer innovative services that your competitors do not, you may see an increase in demand for your glazing services.
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 glazing company
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your glazing company 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 glazing company will include some of the following items:
- Staff costs: This includes salaries, wages, bonuses, and benefits for your employees. As a glazing company, you will need skilled workers to install and repair glass, as well as office staff to handle administrative tasks.
- Accountancy fees: You will need to hire an accountant to manage your financial records, prepare tax returns, and provide financial advice. Depending on the size of your glazing company, you may also need to hire an accounting firm to handle more complex financial tasks.
- Insurance costs: Protecting your glazing company from potential risks is crucial. You will need to purchase insurance policies such as general liability, workers' compensation, and property insurance to cover any accidents or damages that may occur.
- Software licenses: In today's digital age, having the right software is essential. Your glazing company will need software for accounting, project management, and customer relationship management. Make sure to budget for the necessary software licenses and updates.
- Banking fees: Your glazing company will need a business bank account to manage your finances. You will also incur fees for services such as wire transfers, check deposits, and monthly account maintenance.
- Rent and utilities: Whether you have a physical storefront or operate from a commercial space, you will need to budget for rent and utilities such as electricity, water, and internet.
- Marketing and advertising: To attract new customers and promote your glazing services, you will need to invest in marketing and advertising. This may include creating a website, printing business cards and flyers, and running social media ads.
- Vehicle expenses: If your glazing company requires you to travel to job sites, you will need to budget for vehicle expenses such as gas, maintenance, and insurance.
- Materials and supplies: As a glazing company, you will need to purchase glass, tools, and other materials and supplies to complete your projects. Make sure to budget for these expenses to ensure you have the necessary resources.
- Training and professional development: To stay competitive in the glazing industry, you and your employees may need to attend training and professional development courses. Make sure to budget for these expenses to improve your skills and knowledge.
- Legal fees: As a business owner, you may encounter legal issues that require the assistance of a lawyer. Budget for legal fees to protect your glazing company and handle any legal matters that may arise.
- Office supplies: Your glazing company will need basic office supplies such as paper, ink, and pens. Make sure to budget for these expenses to keep your office running smoothly.
- Telephone and internet: You will need to have reliable communication channels to communicate with clients and suppliers. Budget for telephone and internet expenses to ensure you can stay connected.
- Travel and entertainment: If your glazing company requires you to travel for business purposes, make sure to budget for expenses such as airfare, hotels, and meals. You may also need to entertain clients, so budget for those expenses as well.
- Taxes and licenses: As a business owner, you will need to pay various taxes and obtain necessary licenses to operate your glazing company legally. Make sure to budget for these expenses to avoid any penalties or fines.
This list will need to be tailored to the specificities of your glazing company, but should offer a good starting point for your budget.
What investments are needed to start or grow a glazing company?
Creating and expanding a glazing company also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a glazing company could include elements such as:
- Machinery and Equipment: This includes all the necessary machinery and equipment needed for a glazing company, such as glass cutting machines, glass polishing machines, and glass tempering machines.
- Vehicles: A glazing company may need to invest in vehicles for transportation of materials and equipment to job sites. This could include trucks, vans, or even specialized vehicles for carrying large sheets of glass.
- Tools and Supplies: Glazing companies require a variety of tools and supplies to complete their projects, such as glass cutters, measuring tools, sealants, and adhesives. These items may need to be replaced or upgraded regularly.
- Facility Improvements: This could include renovations or upgrades to the company's office or warehouse space, such as installing new lighting, HVAC systems, or security systems.
- Software and Technology: With advancements in technology, glazing companies may need to invest in software and technology to improve their processes and efficiency. This could include purchasing specialized software for glass design or investing in new equipment with digital capabilities.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your glazing company.
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 glazing company
The next step in the creation of your financial forecast for your glazing company 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 glazing company?
Now let's have a look at the main output tables of your glazing company's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your glazing company's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a glazing company should normally show:
- Sales growing above inflation
- Stable or expanding (ideally) profit margins
- A net profit
This will of course depend on the stage of your business: a new venture might be loss-making until it reaches its breakeven point in year 2 or 3, for example.
The projected balance sheet
Your glazing company's projected balance sheet provides a snapshot of your business’s financial position at year-end.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business possesses including cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. They include accounts payable (money owed to suppliers), taxes payable and loans from banks and financial institutions.
- 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 glazing company'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 glazing company:
- 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 glazing company'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 glazing company'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 glazing company's financial forecast?
Creating your glazing company's financial forecast may sound fairly daunting, but the good news is that there are several ways to go about it.
Using online financial projection software to build your glazing company's forecast
The modern and easiest way to build a forecast is to use professional financial projection 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 glazing company 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 glazing company's financial forecast?
Creating an accurate and error-free glazing company 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 glazing company, 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 glazing company.
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 glazing company. 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 revenues for a business?
- Sample financial forecast for business idea
Know someone who runs or wants to start a glazing company? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
