How to create a financial forecast for a historical preservation society?
Creating a financial forecast for your historical preservation society, 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 historical preservation society 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 historical preservation society?
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 historical preservation society becomes handy.
Creating a historical preservation society 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 historical preservation society.
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 historical preservation society 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 historical preservation society'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.
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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.
What information is needed to build a historical preservation society 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 historical preservation society, 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 historical preservation society 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 historical preservation society, 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 historical preservation society's financial forecast.
The sales forecast for a historical preservation society
From experience, it is usually best to start creating your historical preservation society financial forecast by your sales forecast.
To create an accurate sales forecast for your historical preservation society, you will have to rely on the data collected in your market research, or if you're running an existing historical preservation society, 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:
- Historical Significance: The historical significance of a property can greatly affect its average price and number of monthly transactions. Properties with a rich history or famous past events tend to be more valuable and in higher demand.
- Location: The location of a historical property can also impact its average price and number of transactions. Properties located in popular tourist destinations or in areas with high demand for historical preservation tend to command higher prices and have more frequent transactions.
- Condition: The condition of a historical property can also play a role in its average price and number of transactions. Properties that are well-maintained and have been properly restored tend to be more valuable and have more frequent transactions.
- Accessibility: The accessibility of a historical property can also affect its average price and number of transactions. Properties that are easily accessible by public transportation or in close proximity to popular tourist attractions tend to have higher demand and therefore, higher prices and more frequent transactions.
- Local Regulations: Local regulations and zoning laws can also impact the average price and number of transactions for a historical property. Properties located in areas with strict preservation regulations may have limited options for development or renovation, leading to higher prices and fewer 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.
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The operating expenses for a historical preservation society
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your historical preservation society 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 historical preservation society will include some of the following items:
- Staff Costs: This includes salaries, benefits, and other expenses related to hiring and maintaining a team of qualified staff members to run the historical preservation society. This may also include costs for training and development programs to ensure the staff is knowledgeable and up-to-date on preservation techniques.
- Accountancy Fees: As a non-profit organization, it is important to have accurate and transparent financial records. You may need to hire an accountant or bookkeeper to help with budgeting, tax filings, and other financial tasks.
- Insurance Costs: Protecting the historical buildings, artifacts, and other assets of the society is crucial. You may need to pay for insurance coverage to guard against potential risks such as fire, theft, or natural disasters.
- Software Licenses: In today's digital age, software is essential for efficient operations. You may need to purchase licenses for programs such as accounting software, project management tools, or membership databases.
- Banking Fees: Managing the society's finances will involve various banking transactions, such as depositing donations, paying bills, and transferring funds. You may need to pay fees for these services, so it's important to budget for them.
- Marketing and Advertising: To attract visitors and donors, you may need to invest in marketing and advertising efforts. This can include creating brochures, running social media campaigns, or placing advertisements in local newspapers.
- Utilities: Operating a historical site can require significant energy usage, especially for climate control and lighting. You may need to budget for electricity, gas, water, and other utility costs.
- Building Maintenance: It's important to keep the historical buildings and structures in good condition to preserve their integrity. You may need to budget for regular maintenance and repairs, as well as unexpected costs for emergencies.
- Collection Conservation: If the society has a collection of historical artifacts, it's important to properly care for and preserve them. This may involve hiring a professional conservator or purchasing specialized equipment and materials.
- Event Expenses: Hosting events is a great way to engage the community and raise funds for the society. However, there may be costs associated with organizing and hosting events, such as venue rental, catering, and entertainment.
- Professional Memberships: Joining professional organizations can provide networking opportunities and resources for historical preservation societies. However, there may be annual membership fees that need to be budgeted for.
- Legal Fees: As a non-profit organization, there may be legal requirements and regulations that you need to comply with. This may involve hiring a lawyer for advice or representation, which can be costly.
- Office Supplies: To keep the society's operations running smoothly, you may need to purchase office supplies such as paper, ink, pens, and other essential items.
- Travel Expenses: If the society is involved in projects or partnerships with other organizations, there may be travel expenses involved for staff members. This can include transportation, lodging, and meals.
- Volunteer Expenses: Volunteers can be a valuable resource for historical preservation societies. However, there may be costs associated with recruiting, training, and supporting volunteers, such as background checks or volunteer appreciation events.
This list will need to be tailored to the specificities of your historical preservation society, but should offer a good starting point for your budget.
What investments are needed to start or grow a historical preservation society?
Creating and expanding a historical preservation society also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a historical preservation society could include elements such as:
- Building Renovations: This could include repairs, restoration, or upgrades to the historical preservation society's building or buildings. This could also include the addition of new features, such as ramps or elevators for accessibility.
- Artifact Preservation: This includes the cost of preserving and maintaining historical artifacts that are in the society's possession. This could include specialized storage units, conservation materials, and professional preservation services.
- Technology Upgrades: As technology advances, it is important for historical preservation societies to keep up with the times. This could include upgrading computer systems, software, or audio-visual equipment used for presentations or exhibits.
- Landscaping and Grounds Maintenance: The exterior of the historical preservation society's building is just as important as the interior. This could include the cost of maintaining gardens, lawns, and other outdoor spaces to ensure they are in line with the historical significance of the property.
- Security Measures: Historical artifacts and documents are often valuable and need to be protected. This could include the cost of installing security systems, surveillance cameras, or hiring security personnel to ensure the safety of the society's assets.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your historical preservation society.
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 historical preservation society
The next step in the creation of your financial forecast for your historical preservation society 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 historical preservation society?
Now let's have a look at the main output tables of your historical preservation society's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your historical preservation society is likely to be in the years to come.
For your historical preservation society 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 historical preservation societies, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
The projected balance sheet gives an overview of your historical preservation society'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 historical preservation society. 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 cash flow projection
The cash flow forecast of your historical preservation society 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 historical preservation society'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 historical preservation society 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 historical preservation society'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 historical preservation society's financial forecast?
Using the right tool or solution will make the creation of your historical preservation society's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your historical preservation society'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 historical preservation society 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 historical preservation society's financial forecast?
Creating an accurate and error-free historical preservation society financial forecast with a spreadsheet is very technical and requires a deep knowledge of accounting and an understanding of financial modelling.
Very few business owners are financially savvy enough to be able to build a forecast themselves on Excel without making mistakes.
Lenders and investors know this, which is why forecasts created on Excel by the business owner are often frowned upon.
Having numbers one can trust is key when it comes to financial forecasting and to that end using software is much safer.
Using financial forecasting software is also faster than using a spreadsheet, and, with the rise of artificial intelligence, software is also becoming smarter at helping us analyse the numbers to make smarter decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and keeping your projections up to date as the year progresses is manual, tedious, and error-prone. Whereas financial projection 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 forecast templates for inspiration
The Business Plan Shop has dozens of financial forecast examples available.
Our templates contain both a financial forecast and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Our templates are a great source of inspiration, whether you just want to see what a complete business plan looks like, or are looking for concrete examples of how you should model financial elements in your own forecast.
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 historical preservation society.
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 historical preservation society. 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?
- Financial forecast template for a business idea
Know someone who runs or wants to start a historical preservation society? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
