How to create a financial forecast for a hockey equipment 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 hockey equipment shop.
Putting together a hockey equipment 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 hockey equipment 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 hockey equipment shop?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your hockey equipment shop and ensure that it can be financially viable in the years to come.
A financial plan for a hockey equipment shop enables you to look at your business in detail - from income to operating costs and investments - to evaluate its expected profitability and future cash flows.
This gives you the visibility needed to plan future investments and expansion with confidence.
And, when your trading environment gets tougher, having an up to date hockey equipment shop forecast enables you to detect potential upcoming financing shortfalls in advance, enabling you to make adjustments or secure financing before you run out of cash.
It’s also important to remember that your hockey equipment shop's financial forecast will be essential when looking for financing. You can be 100% certain that banks and investors will ask to see your numbers, so make sure they’re set out accurately and attractively.
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 hockey equipment shop financial forecast?
A hockey equipment 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 hockey equipment shop.
If you are creating (or updating) the forecast of an existing hockey equipment 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 hockey equipment 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 hockey equipment 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 hockey equipment shop's financial forecast.
The sales forecast for a hockey equipment shop
From experience, it usually makes sense to start your hockey equipment shop's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your hockey equipment shop (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 hockey equipment shop'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:
- Seasonal Demand: As a hockey equipment shop owner, you are aware that the demand for hockey equipment is heavily influenced by the season. During the winter months, there is usually an increase in demand for hockey equipment due to the hockey season being in full swing. However, during the summer months, demand may decrease as hockey is not typically played as much.
- Popularity of Hockey: The popularity of hockey can also affect your average price and number of monthly transactions. If hockey is a popular sport in your area, there may be a higher demand for equipment, leading to an increase in average price and transactions. On the other hand, if hockey is not as popular, you may see a decrease in both metrics.
- Competitor Pricing: The pricing of your competitors can also impact your average price and number of monthly transactions. If your competitors are offering lower prices for similar equipment, you may need to adjust your prices to stay competitive. This could result in a decrease in your average price, but potentially an increase in transactions.
- New Product Releases: As a hockey equipment shop owner, you need to keep up with new product releases in the industry. If there are new and innovative products being released, it could attract customers and potentially lead to an increase in average price and transactions. However, if there are no notable product releases, there may not be much change in these metrics.
- Economic Conditions: Economic conditions, such as a recession or a booming economy, can also have an impact on your average price and number of monthly transactions. During a recession, customers may be more price-sensitive and may be looking for more affordable equipment, resulting in a decrease in average price and transactions. On the other hand, during a booming economy, customers may be more willing to spend on higher-end equipment, leading to an increase in average price and transactions.
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.
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 hockey equipment shop
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your hockey equipment 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 hockey equipment shop will include some of the following items:
- Staff Costs: This includes salaries, wages, and benefits for your employees. As a hockey equipment shop, you will need to have knowledgeable and experienced staff members to assist customers in finding the right equipment for their needs.
- Accountancy Fees: You may need to hire an accountant to help you with bookkeeping, tax preparation, and financial planning. This is especially important for small businesses like yours.
- Insurance Costs: As a retailer, you need to protect your business from potential risks such as theft, property damage, and liability claims. You will need to pay for insurance coverage to minimize these risks.
- Software Licenses: You will need to use software to manage your inventory, sales, and customer information. This may include point-of-sale systems, accounting software, and customer relationship management tools.
- Banking Fees: You will need to open a business bank account to manage your finances. This may include fees for transactions, wire transfers, and monthly account maintenance.
- Rent: You will need to pay rent for your retail space. The cost will depend on the location, size, and condition of the space.
- Utilities: This includes electricity, water, and other utilities needed to run your store. You may also need to pay for internet and phone services.
- Marketing and Advertising: To attract customers, you will need to invest in marketing and advertising efforts. This may include print ads, online ads, and social media campaigns.
- Inventory: You will need to purchase inventory to sell in your store. This includes equipment such as hockey sticks, skates, and protective gear.
- Shipping and Delivery: If you offer online sales, you will need to pay for shipping and delivery costs. This may include packaging materials, shipping fees, and delivery services.
- Maintenance and Repairs: You will need to keep your store and equipment in good condition to provide a positive shopping experience for your customers. This may include repairs, maintenance, and cleaning services.
- Professional Services: You may need to hire professionals such as lawyers or consultants for specific tasks, such as legal advice or marketing strategy.
- Training and Development: To ensure your staff members are knowledgeable and up-to-date on the latest equipment and trends in the hockey industry, you may need to invest in training and development opportunities.
- Office Supplies: You will need basic office supplies such as paper, pens, and printer ink to run your business effectively.
- Taxes and Licenses: As a business owner, you will need to pay taxes and obtain necessary licenses to operate your business legally.
This list will need to be tailored to the specificities of your hockey equipment shop, but should offer a good starting point for your budget.
What investments are needed to start or grow a hockey equipment shop?
Your hockey equipment 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 hockey equipment shop, these could include:
- Hockey Equipment: This includes all the necessary gear for players, such as sticks, helmets, pads, skates, and jerseys. These items are essential for running a hockey equipment shop and should be regularly restocked to meet the demands of customers.
- Point-of-Sale System: A modern and efficient point-of-sale (POS) system is crucial for any retail business, including a hockey equipment shop. This system will allow you to track sales, manage inventory, and process transactions quickly and accurately.
- Storage and Display Fixtures: To showcase your merchandise and make it easily accessible to customers, you will need display shelves, racks, and other storage fixtures. These can be custom-made or purchased from suppliers, but they are necessary for organizing and presenting your products effectively.
- Store Renovations: As your business grows, you may need to make renovations to improve the layout and functionality of your store. This could include adding more space, upgrading lighting, or installing new flooring. These renovations will enhance the shopping experience for customers and help your business stay competitive.
- Delivery Vehicle: If you offer delivery services to customers, investing in a delivery vehicle is a wise choice. This will allow you to transport large or bulky items to customers' homes or to restock your inventory from suppliers. A reliable and branded delivery vehicle can also serve as a mobile advertisement for your business.
Again, this list will need to be adjusted according to the size and ambitions of your hockey equipment 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 hockey equipment shop
The next step in the creation of your financial forecast for your hockey equipment 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 hockey equipment shop?
Now let's have a look at the main output tables of your hockey equipment shop's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your hockey equipment shop's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a hockey equipment 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 hockey equipment 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 projected cash flow statement
A projected cash flow statement for a hockey equipment shop is used to show how much cash the business is generating or consuming.
The cash flow forecast is usually organised by nature to show three key metrics:
- The operating cash flow: do the core business activities generate or consume cash?
- The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
- The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?
Cash is king and keeping an eye on future cash flows is imperative for running a successful business. Therefore, you should pay close attention to your hockey equipment shop's cash flow forecast.
If you are trying to secure financing, note that it is customary to provide both yearly and monthly cash flow forecasts in a financial plan - so that the reader can analyze seasonal variation and ensure the hockey equipment shop 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 hockey equipment shop's financial forecast?
Creating your hockey equipment shop's financial forecast may sound fairly daunting, but the good news is that there are several ways to go about it.
Using online financial forecasting software to build your hockey equipment 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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional hockey equipment shop 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 hockey equipment 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 hockey equipment 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 hockey equipment 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 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
- 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 hockey equipment shop 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 hockey equipment shop, 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
- How to create a turnover forecast for a business?
- Financial forecast template for a business idea
Know someone who owns or is thinking of starting a hockey equipment shop? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
