How to create a financial forecast for a hiking club?
Creating a financial forecast for your hiking club, 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 hiking club 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 hiking club?
The financial projections for your hiking club 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 hiking club'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 hiking club financial forecast?
A hiking club'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 hiking club.
If you are creating (or updating) the forecast of an existing hiking club, 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 hiking club 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 hiking club 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 hiking club's financial forecast.
The sales forecast for a hiking club
From experience, it usually makes sense to start your hiking club's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your hiking club (which can be used as a starting point for existing businesses) and the data collected in your market research (which both new ventures and existing businesses need to project their sales forward).
Your hiking club's sales forecast can be broken down into two key estimates:
- The average price
- The number of monthly transactions
To assess these variables accurately, you will need to consider the following factors:
- Weather conditions: The average price and number of monthly transactions may be affected by weather conditions. If the weather is favorable, more people may be interested in joining hikes, leading to an increase in both average price and transactions. On the other hand, if the weather is poor, there may be a decrease in both average price and transactions as people may be less inclined to participate in outdoor activities.
- Demand for hiking: The popularity of hiking as a recreational activity can also impact the average price and number of monthly transactions for your club. If there is a high demand for hiking in your area, you may be able to charge a higher price for your services and see an increase in monthly transactions. However, if the demand is low, you may need to lower your prices to attract more customers and maintain a steady flow of transactions.
- Availability of hiking trails: The availability of hiking trails can also affect your club's sales forecast. If there are limited hiking trails in your area, you may have a competitive advantage and be able to charge higher prices. However, if there are many hiking trails available, you may face competition from other hiking clubs and need to adjust your prices accordingly to remain competitive.
- Seasonal fluctuations: The time of year can also impact the average price and number of monthly transactions for your club. During peak hiking season, you may see an increase in demand and be able to charge higher prices. However, during off-peak seasons, you may need to offer discounts or promotions to attract customers and maintain a steady flow of transactions.
- Economic conditions: Economic conditions, such as a recession or economic boom, can also affect your club's sales forecast. During a recession, people may be more price-sensitive and less likely to spend money on recreational activities like hiking. On the other hand, during an economic boom, people may have more disposable income and be more willing to invest in leisure activities, leading to an increase in both average price and transactions for your club.
Once you have a sales forecast in place, the next step will be to work on your overhead budget. Let’s have a look at that now.
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The operating expenses for a hiking club
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your hiking club 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 hiking club will include some of the following items:
- Staff costs: This includes salaries and benefits for employees such as trail guides, administrative staff, and event coordinators.
- Accountancy fees: You will need to hire an accountant to handle the club's financial records and tax filings.
- Insurance costs: It is important to have insurance coverage for the club's activities and events, including liability and property insurance.
- Software licenses: You may need to purchase software licenses for programs used for membership management, event planning, and marketing.
- Banking fees: This includes fees for maintaining a business bank account, processing payments, and utilizing online banking services.
- Marketing and advertising: You will need to budget for marketing and advertising expenses to promote your club and attract new members.
- Equipment and gear: Maintaining and replacing hiking gear, such as tents, backpacks, and hiking boots, is a necessary expense for the club.
- Permit fees: Depending on the location of your hikes, you may need to pay for permits or passes to access certain trails or parks.
- Transportation costs: This includes the cost of gas, vehicle maintenance, and rentals for transporting club members to and from hiking locations.
- Training and development: Investing in training and development for club leaders and guides is important for maintaining safety and providing quality experiences for members.
- Event expenses: This includes costs for organizing and hosting events, such as food, drinks, and rental fees for event spaces.
- Website maintenance: If your club has a website, you will need to budget for domain and hosting fees, as well as any maintenance or updates.
- Office supplies: You will need basic office supplies to keep the club running smoothly, such as paper, printer ink, and pens.
- Meeting expenses: This includes costs for renting meeting spaces, providing refreshments, and other expenses related to holding club meetings.
- Training and development: Investing in training and development for club leaders and guides is important for maintaining safety and providing quality experiences for members.
This list will need to be tailored to the specificities of your hiking club, but should offer a good starting point for your budget.
What investments are needed to start or grow a hiking club?
Creating and expanding a hiking club also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a hiking club could include elements such as:
- Hiking gear and equipment: This includes items such as backpacks, tents, sleeping bags, and hiking poles. These are essential for any hiking club and should be regularly replaced or upgraded to ensure the safety and comfort of members.
- Trail maintenance equipment: As a hiking club, you will likely need to invest in tools and equipment for trail maintenance, such as shovels, rakes, and pruning shears. These items are necessary for keeping your hiking trails safe and accessible for members.
- Transportation vehicles: If your hiking club plans to organize trips to different hiking locations, you may need to purchase or lease transportation vehicles, such as vans or buses. These vehicles will be used to transport members and their gear to and from hiking locations.
- Clubhouse or meeting space: Depending on the size and needs of your hiking club, you may need to rent or purchase a clubhouse or meeting space. This can serve as a central location for meetings, equipment storage, and social gatherings.
- First aid and emergency equipment: As a hiking club, it's essential to have proper first aid and emergency equipment on hand, such as first aid kits, emergency radios, and GPS devices. These items may need to be replaced or upgraded regularly to ensure the safety of your members.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your hiking club.
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 hiking club
The next step in the creation of your financial forecast for your hiking club 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 hiking club?
Now let's have a look at the main output tables of your hiking club's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your hiking club is likely to be in the years to come.
For your hiking club 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 hiking clubs, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your hiking club'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 hiking club 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 hiking club'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 hiking club 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 hiking club'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 hiking club's financial forecast?
Using the right tool or solution will make the creation of your hiking club's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your hiking club'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
Outsourcing the creation of your hiking club 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 hiking club'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 hiking club 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 hiking club'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 hiking club, 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
- Having a financial forecast enables you to visualise the expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial projections up-to-date is the only way to get a view on what your hiking club future cash flows may look like.
- Using financial forecasting software is the mordern and easy way to create and maintain your forecasts.
This is the end of our guide on how to build the financial forecast for a hiking club, we hope you found it useful. Don't hesitate to contact us if you want to share your feedback or 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
- Example of financial forecast
- Financial forecast for a business idea
- How to project revenues for a business?
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Founder & CEO at The Business Plan Shop Ltd
