How to create a financial forecast for a golf shop?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your golf shop.
Putting together a golf shop 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 golf shop.
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 golf shop?
The financial projections for your golf shop 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 golf shop'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 used as input to build a golf shop financial forecast?
A golf shop's financial forecast needs to be built on the right foundation: your assumptions.
The data required to create your assumptions will depend on whether you are a new or existing golf shop.
If you are creating (or updating) the forecast of an existing golf shop, then your main inputs will be historical accounting data and operating metrics, and your team’s view on what to expect for the next three to five years.
If you are building financial projections for a new golf shop startup, you will need to rely on market research to form your go-to-market strategy and derive your sales forecast.
For a new venture, you will also need an itemised list of resources needed for the golf shop to operate, along with a list of equipment required to launch the venture (more on that below).
Now that you understand what is needed, let’s have a look at what elements will make up your golf shop's financial forecast.
The sales forecast for a golf shop
The sales forecast, also called topline projection, is normally where you will start when building your golf shop 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 golf shops), and consider the elements below:
- Weather conditions: As a golf shop owner, you know that weather plays a significant role in the number of customers visiting your shop. Harsh weather conditions such as heavy rain or extreme heat can affect the number of transactions as well as the average price of your products. For example, during rainy days, customers may be less likely to purchase expensive golf equipment, resulting in lower average prices.
- Golf course closures: The availability of nearby golf courses can also impact your shop's sales forecast. If a popular golf course near your shop closes down, it can lead to a decrease in the number of customers, resulting in lower average prices. On the other hand, if a new golf course opens up, it can attract more golfers to the area, potentially increasing your shop's sales and average prices.
- Economic conditions: Economic factors such as inflation, unemployment, and consumer confidence can also affect your shop's sales forecast. During a recession, customers may be more hesitant to spend money on expensive golf equipment, leading to lower average prices and fewer transactions. In a strong economy, customers may be more willing to splurge on high-end golf clubs, resulting in higher average prices and more transactions.
- Competitor pricing: As a golf shop owner, you must always keep an eye on your competitors' pricing. If a competitor offers a similar product at a lower price, it can impact your shop's average prices and transactions. You may need to adjust your prices to remain competitive and attract customers.
- Trends in golf equipment: The popularity and demand for certain types of golf equipment can also affect your shop's sales forecast. For example, if there is a sudden trend for a specific brand or type of golf club, customers may be more willing to pay higher prices for it, resulting in an increase in your shop's average prices and transactions. On the other hand, if a particular type of equipment falls out of fashion, it can lead to a decline in sales and average prices.
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 golf shop
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your golf shop 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 golf shop will include some of the following items:
- Staff costs: This includes the salaries, wages, and benefits of all employees working in the golf shop, including pro shop staff, teaching professionals, and maintenance staff.
- Accountancy fees: You may need to hire an accountant to help you with bookkeeping, tax preparation, and financial planning for your golf shop.
- Insurance costs: It is important to have insurance coverage for your golf shop, including liability insurance, property insurance, and workers' compensation insurance.
- Software licenses: You may need to purchase software licenses for point-of-sale systems, inventory management, and tee time booking software for your golf shop.
- Banking fees: You will likely have to pay fees for processing credit and debit card transactions, as well as fees for maintaining a business bank account.
- Inventory expenses: This includes the cost of purchasing golf equipment, apparel, and accessories to sell in your shop, as well as the cost of restocking and maintaining inventory levels.
- Marketing and advertising: You may need to budget for marketing and advertising expenses to promote your golf shop and attract customers, such as print ads, digital ads, and social media marketing.
- Rent or lease: If you do not own the property where your golf shop is located, you will have to pay rent or lease payments.
- Utilities: This includes the cost of electricity, water, gas, and other utilities needed to run your golf shop.
- Maintenance and repairs: You may need to budget for regular maintenance and repairs of equipment and facilities in your golf shop.
- Professional development: To stay current in the golf industry, you may need to attend conferences, workshops, and other professional development events, which will incur expenses.
- Cleaning and janitorial services: You may need to hire a cleaning company to keep your golf shop and facilities clean and presentable.
- Security: To protect your golf shop and its assets, you may need to invest in security measures such as surveillance cameras, alarms, and security personnel.
- Office supplies: You will need to purchase office supplies such as paper, ink, and pens to keep your golf shop running smoothly.
- Credit card processing fees: In addition to banking fees, you may also have to pay fees for processing credit and debit card transactions in your golf shop.
This list will need to be tailored to the specificities of your golf shop, but should offer a good starting point for your budget.
What investments are needed to start or grow a golf shop?
Your golf shop 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 golf shop, these could include:
- Golf Carts: As a golf shop owner, you will need to invest in a fleet of golf carts to rent out to customers. These carts can range in price depending on the brand, size, and features, but they are essential for a successful golf shop.
- Pro Shop Equipment: Your pro shop will require various equipment such as display cases, shelving, and racks to showcase and organize your merchandise. These are fixed assets that will enhance the appearance and functionality of your shop.
- Golf Club Inventory: As a golf shop owner, you will need to stock up on a variety of golf clubs to cater to your customers' needs. This includes irons, drivers, putters, and wedges, which are all essential for a successful golf shop.
- Golf Simulator: Investing in a golf simulator can attract customers and provide an additional source of revenue. This fixed asset allows customers to play virtual golf, practice their swing, and even take lessons in a controlled environment.
- Point of Sale System: A reliable point of sale system is crucial for any golf shop. It allows you to track sales, manage inventory, and process transactions efficiently. This fixed asset is an essential investment for the daily operations of your shop.
Again, this list will need to be adjusted according to the size and ambitions of your golf shop.
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 shop
The next step in the creation of your financial forecast for your golf shop 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 shop?
Now let's have a look at the main output tables of your golf shop's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your golf shop's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a golf shop 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 shop'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 projection
The cash flow forecast of your golf shop 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 golf shop'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 golf shop 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 golf shop'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 golf shop's financial forecast?
Using the right tool or solution will make the creation of your golf shop's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your golf shop'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 golf shop 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 golf shop'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 shop 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 shop'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 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 golf shop, 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 golf shop.
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 golf shop. 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 create a sales forecast for a business?
- Example of financial forecast for business idea
Know someone who runs or wants to start a golf shop? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
