How to create a financial forecast for a golf course?
Creating a financial forecast for your golf course, 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 golf course 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 golf course?
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 golf course becomes handy.
Creating a golf course 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 golf course.
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 golf course 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 golf course'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 needed to build a golf course 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 golf course, 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 golf course 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 golf course, 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 golf course's financial forecast.
The sales forecast for a golf course
From experience, it is usually best to start creating your golf course financial forecast by your sales forecast.
To create an accurate sales forecast for your golf course, you will have to rely on the data collected in your market research, or if you're running an existing golf course, 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:
- Weather conditions: You must take into account the potential impact of weather conditions on the average price and number of monthly transactions at your golf course. Adverse weather, such as heavy rain or extreme heat, can cause cancellations and a decrease in revenue.
- Economic climate: The current economic climate can also have a significant influence on the success of your golf course. If the economy is experiencing a downturn, people may have less disposable income to spend on leisure activities, which could result in a decrease in both average price and number of monthly transactions.
- Competitor activity: Keep an eye on the actions of your competitors, as they can impact your business's average price and number of monthly transactions. For example, if a nearby golf course lowers their prices or offers special promotions, it may lure customers away from your course.
- Course maintenance: The condition of your golf course can directly affect its appeal to customers. If the course is not well-maintained, it may deter customers and result in a decrease in both average price and number of monthly transactions. It's essential to invest in regular maintenance and upkeep to attract and retain customers.
- Trends and events: Keep an eye on current trends and events that may impact the popularity of golf. For example, if a major golf tournament is held in your area, it may attract more customers to your course and result in an increase in both average price and number of monthly transactions.
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.
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 golf course
The next step is to estimate the costs you’ll have to incur to operate your golf course.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your golf course's operating expenses should normally include the following items:
- Staff salaries and wages: This includes the salaries and wages of your golf course staff, such as golf professionals, course maintenance crew, pro shop staff, and food and beverage employees.
- Accountancy fees: You will need to hire an accountant to help you manage your financial records and prepare your tax returns.
- Insurance costs: It is important to have insurance coverage for your golf course to protect against potential accidents, property damage, and other liabilities.
- Software licenses: You may need to purchase software licenses for your golf course management system, point of sale system, and other specialized software.
- Banking fees: You will incur fees for your business bank account, such as monthly maintenance fees, transaction fees, and wire transfer fees.
- Marketing and advertising: To attract new customers and retain existing ones, you will need to spend money on marketing and advertising efforts, such as print ads, social media ads, and email campaigns.
- Utilities: Your golf course will have various utility expenses, including electricity, water, gas, and sewer.
- Course maintenance: Keeping your course in top condition requires regular maintenance, such as mowing, fertilizing, and pest control.
- Pro shop inventory: You will need to purchase and stock inventory for your pro shop, including golf clubs, balls, apparel, and accessories.
- Food and beverage: If your golf course has a restaurant or snack bar, you will need to budget for food and beverage costs, including ingredients, supplies, and staffing.
- Golf cart maintenance: If your course offers golf cart rentals, you will need to budget for regular maintenance and repairs.
- Membership fees: If you offer memberships at your golf course, you will need to account for the revenue lost from discounted or free rounds of golf.
- Tournament expenses: Hosting tournaments and events can bring in revenue, but you will also incur expenses for prizes, catering, and other costs.
- Golf course improvements: To keep your course competitive, you may need to invest in improvements, such as new equipment, course renovations, or landscaping upgrades.
- Professional fees: You may need to hire consultants or specialists for specific projects, such as course design, marketing campaigns, or legal advice.
This list is not exhaustive by any means, and will need to be tailored to your golf course's specific circumstances.
What investments are needed to start or grow a golf course?
Creating and expanding a golf course also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a golf course could include elements such as:
- Golf Course Maintenance Equipment: This includes items such as lawn mowers, irrigation systems, and sand trap rakes. These are essential for keeping the course in top condition and ensuring a great golfing experience for your customers.
- Clubhouse Renovations: The clubhouse is often the hub of activity for a golf course, and it's important to keep it updated and appealing to customers. This may include renovations to the dining area, pro shop, or locker rooms.
- Golf Carts: Many golf courses offer golf carts for players to use while on the course. These can be a significant expense, but they are crucial for providing a convenient and enjoyable experience for your customers.
- New Course Features: To keep your course competitive and attract new customers, you may want to invest in new features such as a driving range, putting green, or additional tee boxes. These can be costly, but they can also greatly enhance the overall experience of your course.
- Upgraded Technology: Technology is constantly evolving, and it's important for golf courses to keep up with the latest advancements. This may include investing in GPS systems for golf carts, online booking systems, or updated software for managing tee times and reservations.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your golf course.
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 golf course
The next step in the creation of your financial forecast for your golf course 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 golf course?
Now let's have a look at the main output tables of your golf course's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your golf course's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a golf course 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 golf course'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 golf course'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 golf course:
- 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 golf course'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 golf course'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 golf course's financial projections?
Building a golf course 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 golf course'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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional golf course financial projection.
As you can imagine, this solution is much more expensive than using software. From experience, the creation of a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to start around £700 or $1,000 excluding taxes.
The indicative estimate above, is for a small business, and a forecast done as a one-off. Using a financial consultant or accountant to track your actuals vs. forecast and to keep your financial forecast up to date on a monthly or quarterly basis will naturally cost a lot more.
If you choose this solution, make sure your service provider has first-hand experience in your industry, so that they may challenge your assumptions and offer insights (as opposed to just taking your figures at face value to create the forecast’s financial statements).
Why not use a spreadsheet such as Excel or Google Sheets to build your golf course's financial forecast?
You and your financial partners need numbers you can trust. Unless you have studied finance or accounting, creating a trustworthy and error-free golf course financial forecast on a spreadsheet is likely to prove challenging.
Financial modelling is very technical by nature and requires a solid grasp of accounting principles to be done without errors. This means that using spreadsheet software like Excel or Google Sheets to create accurate financial forecasts is out of reach for most business owners.
Creating forecasts in Excel is also inefficient nowadays:
- Software has advanced to the point where forecasting can be done much faster and more accurately than manually on a spreadsheet.
- With artificial intelligence, the software is capable of detecting mistakes and helping decision-making.
Spreadsheets are versatile tools but they are not tailor-made for reporting. Importing your golf course's accounting data in Excel to track actual vs. forecast is incredibly manual and tedious (and so is keeping forecasts up to date). It is much faster to use dedicated financial planning tools like The Business Plan Shop which are built specially 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 golf course, 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 golf course
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your golf course.
- 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 golf course. 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 project revenues for a business?
- Example of financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
