How to create a financial forecast for a horse training school?
Creating a financial forecast for your horse training school, 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 horse training school 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 horse training school?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your horse training school and ensure that it can be financially viable in the years to come.
A financial plan for a horse training school 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 horse training school 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 horse training school'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 needed to build a horse training school 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 horse training school, 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 horse training school 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 horse training school, 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 horse training school's financial forecast.
The sales forecast for a horse training school
From experience, it usually makes sense to start your horse training school's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your horse training school (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 horse training school'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 changes in demand: As a horse training school, you may experience a decrease in demand during the winter months when fewer people are looking to ride and train their horses. This could result in a lower average price and number of transactions during these months.
- Competitor prices: The prices of other horse training schools in your area may affect your average price and number of monthly transactions. If your competitors are offering lower prices, you may need to adjust your prices to remain competitive and attract customers.
- Local events: Local events such as horse shows or competitions can greatly impact the demand for your services. If there are major events happening in your area, you may see an increase in demand and therefore, a higher average price and number of transactions.
- Economic conditions: Economic factors such as a recession or a downturn in the equine industry can affect the number of people who are able to afford horse training services. This could result in a decrease in your average price and number of transactions.
- Changes in horse training methods: As new training methods and techniques are developed and become popular, customers may be more willing to pay higher prices for these services. Keeping up with industry trends and adapting your training methods accordingly can lead to an increase in your average price and number of 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 horse training school
The next step is to estimate the costs you’ll have to incur to operate your horse training school.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your horse training school's operating expenses should normally include the following items:
- Staff costs: This includes salaries, wages, and benefits for your trainers, stable hands, and administrative staff.
- Accountancy fees: You will need to hire an accountant to handle your bookkeeping, taxes, and financial planning.
- Insurance costs: As a horse training school, you will need to have insurance in place to protect your business from potential liabilities.
- Software licenses: You may need to purchase software for managing your bookings, scheduling, and client information.
- Banking fees: You will need a business bank account and will incur fees for services such as wire transfers, check processing, and credit card transactions.
- Feed and supplies: Horses require specialized feed and supplies, such as hay, grains, supplements, and grooming products.
- Veterinary expenses: You will need to budget for regular check-ups, vaccinations, and potential emergency medical care for your horses.
- Farrier services: Horses need their hooves trimmed and shoes replaced regularly, which will require the services of a farrier.
- Facility maintenance: Keeping your stable, arena, and other facilities in good condition will require regular maintenance and repairs.
- Utilities: You will need to cover the costs of electricity, water, and other utilities for your facilities.
- Marketing and advertising: You will need to promote your horse training school through various channels, such as social media, print ads, and events.
- Professional development: To stay current in the industry and improve your skills, you may need to attend workshops, conferences, or training programs.
- Transportation costs: You will need to factor in the costs of transporting horses to and from your training school for competitions or other events.
- Tack and equipment: Horses require specialized equipment, such as saddles, bridles, and training aids, which will need to be replaced or repaired as needed.
- Office supplies: You will need basic office supplies, such as paper, ink, and pens, for administrative tasks.
This list is not exhaustive by any means, and will need to be tailored to your horse training school's specific circumstances.
What investments are needed to start or grow a horse training school?
Creating and expanding a horse training school also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a horse training school could include elements such as:
- Horse Stalls: As a horse training school, you will need to have proper facilities to house and care for your horses. This may include purchasing or building horse stalls that are safe, comfortable, and well-ventilated.
- Riding Arena: A well-maintained riding arena is essential for training and exercising horses. This may include expenses for constructing or renovating an existing arena, as well as purchasing materials such as sand, jumps, and fencing.
- Tack and Equipment: Tack and equipment are necessary for horse training and can include items such as saddles, bridles, grooming supplies, and training aids. These items may need to be replaced or upgraded over time, so it's important to include them in your expenditure forecast.
- Trucks and Trailers: Depending on the size of your horse training school, you may need to invest in trucks and trailers for transporting horses to and from competitions or off-site training. These vehicles can be a significant capital expenditure, so it's important to plan for them in your forecast.
- Barn and Facility Upgrades: As your horse training school grows, you may need to make upgrades or renovations to your barn and other facilities. This could include expanding the barn to accommodate more horses, adding a wash bay or indoor riding area, or upgrading the lighting and ventilation systems.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your horse training school.
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 training school
The next step in the creation of your financial forecast for your horse training school 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 training school?
Now let's have a look at the main output tables of your horse training school's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your horse training school is likely to be in the years to come.
For your horse training school 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 horse training schools, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your horse training school'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 horse training school 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 training school'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 training school 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 training school'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 training school's financial projections?
Building a horse training school financial forecast is not difficult provided that you use the right tool for the job. Let’s see what options are available below.
Using online financial forecasting software to build your horse training school's projections
The modern and easiest way is to use professional online financial forecasting 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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional horse training school 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 horse training school'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 horse training school 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 horse training school'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 forecast templates available.
Our examples contain a complete business plan with a financial forecast and a written presentation of the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own horse training school, looking at our financial forecast template is a good way to:
- Understand what a complete business plan should look like
- Understand how you should model financial items for your horse training school
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 horse training school.
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 horse training school. 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 turnover forecast for a business?
- Financial forecast for a business idea
Know someone who runs or wants to start a horse training school? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
