How to create a financial forecast for a horse riding club?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your horse riding club.
Putting together a horse riding club 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 horse riding club.
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 horse riding club?
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 horse riding club becomes handy.
Creating a horse riding club 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 horse riding club.
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 horse riding club 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 horse riding club'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 used as input to build a horse riding club financial forecast?
A horse riding 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 horse riding club.
If you are creating (or updating) the forecast of an existing horse riding 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 horse riding 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 horse riding 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 horse riding club's financial forecast.
The sales forecast for a horse riding club
From experience, it is usually best to start creating your horse riding club financial forecast by your sales forecast.
To create an accurate sales forecast for your horse riding club, you will have to rely on the data collected in your market research, or if you're running an existing horse riding club, 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: As a horse riding club owner, you may experience fluctuations in the number of monthly transactions due to the unpredictable nature of weather. Extreme weather conditions such as heavy rain or snow may lead to cancellations and decrease in the average price per transaction as some customers may opt for indoor activities instead.
- Economic conditions: The state of the economy can greatly impact the number of monthly transactions and average price for your horse riding club. During times of economic downturn, customers may have less disposable income to spend on leisure activities, resulting in a decrease in both the number of transactions and average price.
- Competition: The presence of other horse riding clubs in the area can affect your average price and number of monthly transactions. If there are too many competitors offering similar services, you may have to lower your prices to stay competitive, resulting in a decrease in average price. Additionally, competitors may attract customers away from your club, leading to a decrease in the number of transactions.
- Seasonal changes: The time of year can also affect your sales forecast. In the summer months, when the weather is pleasant, you may experience an increase in the number of transactions and average price as more people are interested in outdoor activities. However, during the colder months, you may see a decrease in both as fewer people are willing to participate in outdoor activities.
- Maintenance and repairs: As a horse riding club owner, you must maintain your facilities and equipment to ensure the safety of your customers. However, unexpected maintenance or repairs can result in temporary closures or limited availability of services, leading to a decrease in the number of transactions and potentially affecting your average price if customers are dissatisfied with the temporary facilities or services.
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 horse riding club
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your horse riding 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 horse riding club will include some of the following items:
- Staff Costs: This includes salaries, benefits, and training costs for all employees, such as riding instructors, stable hands, and administrative staff.
- Accountancy Fees: You will need to hire a professional accountant or bookkeeper to manage your financial records and file taxes for your horse riding club.
- Insurance Costs: You will need to purchase various types of insurance to protect your club, horses, and riders, including liability insurance, property insurance, and equine insurance.
- Software Licences: To manage your club's operations, you may need to purchase software for scheduling appointments, managing memberships, and tracking expenses.
- Banking Fees: You will incur fees for maintaining a business bank account and conducting transactions, such as wire transfers or online payments.
- Rent or Mortgage: If you do not own the property where your horse riding club is located, you will need to pay rent or a mortgage for the facility.
- Utility Bills: You will need to cover the costs of electricity, water, and other utilities for your club's facilities, such as stables, arenas, and offices.
- Marketing Expenses: To attract new members and promote your club, you may need to invest in advertising, social media marketing, and event sponsorships.
- Equipment Maintenance: Your club's equipment, such as saddles, bridles, and grooming tools, will require regular maintenance and repairs to keep them in good working condition.
- Feed and Supplies: You will need to purchase feed, hay, bedding, and other necessary supplies for your horses on a regular basis.
- Veterinary Expenses: Your horses will require regular check-ups, vaccinations, and treatments from a veterinarian, which can be a significant expense for your club.
- Horse Care Services: If you do not have enough staff to care for your horses, you may need to hire outside contractors or freelancers to provide services, such as grooming, training, or exercising.
- Tack and Equipment Purchases: As your club grows, you may need to invest in new tack, riding equipment, and other supplies to accommodate more riders and horses.
- Professional Memberships and Certifications: To stay current with industry trends and best practices, you may need to pay for memberships to professional organizations or certifications for your staff.
- Event Expenses: If your club hosts events, such as horse shows or clinics, you will need to cover the costs of venue rental, prizes, and other event-related expenses.
This list will need to be tailored to the specificities of your horse riding club, but should offer a good starting point for your budget.
What investments are needed to start or grow a horse riding club?
Your horse riding club 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 horse riding club, these could include:
- Horse Purchases: As a horse riding club, one of your main expenses will be purchasing horses. These animals are essential to your club and will require a significant investment to acquire. When creating your expenditure forecast, make sure to include the cost of purchasing new horses or replacing old ones.
- Tack and Equipment: In addition to horses, your club will also need to purchase tack and equipment for riding and caring for the horses. This can include saddles, bridles, grooming supplies, and more. These items will need to be replaced periodically, so it's important to include them in your expenditure forecast.
- Facility Maintenance: Keeping your club's facilities in good condition is crucial for the safety and comfort of both horses and riders. This may include expenses such as repairing fences, maintaining arenas, and keeping the barn clean and well-maintained. Don't forget to factor in these costs when creating your expenditure forecast.
- Trailer and Truck: If your club offers trail rides or participates in horse shows, you may need to invest in a trailer and truck to transport your horses. These vehicles can be expensive, so it's important to include them in your expenditure forecast and plan for their maintenance and potential replacement in the future.
- Land and Building Improvements: As your club grows, you may need to make improvements to your land and buildings. This could include building new stables, adding more riding arenas, or expanding your facilities. These types of capital expenditures should also be included in your forecast.
Again, this list will need to be adjusted according to the size and ambitions of your horse riding 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 horse riding club
The next step in the creation of your financial forecast for your horse riding 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 horse riding club?
Now let's have a look at the main output tables of your horse riding club's financial forecast.
The forecasted profit & loss statement
The profit & loss forecast gives you a clear picture of your business’ expected growth over the first three to five years, and whether it’s likely to be profitable or not.
A healthy horse riding club's P&L statement should show:
- Sales growing at (minimum) or above (better) inflation
- Stable (minimum) or expanding (better) profit margins
- A healthy level of net profitability
This will of course depend on the stage of your business: numbers for an established horse riding club will look different than for a startup.
The projected balance sheet
Your horse riding club's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- 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 horse riding 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 horse riding 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 horse riding 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 horse riding 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 horse riding club's financial forecast?
Using the right tool or solution will make the creation of your horse riding club's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial projection software to build your horse riding club's forecast
The modern and easiest way to build a forecast is to use professional financial projection software 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 forecasting software for free by signing up here.
Calling in a financial consultant or chartered accountant
Outsourcing the creation of your horse riding 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 horse riding club's financial forecast?
Creating an accurate and error-free horse riding club 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 forecast shows expected growth, profitability, and cash generation metrics for your horse riding club.
- 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 horse riding club. 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
- Example of financial forecast for business idea
- How to project revenues for a business?
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Founder & CEO at The Business Plan Shop Ltd
