How to create a financial forecast for a leather goods store?

Creating a financial forecast for your leather goods store, 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 leather goods store 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 leather goods store?
The financial projections for your leather goods store 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 leather goods store'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 leather goods store financial forecast?
A leather goods store's financial forecast is only as good as the inputs used to build it.
If you are creating (or updating) the forecast of an existing leather goods store, then you mostly need your accounting information, key historical operating non-financial data, and your team’s input on what to expect for the coming years.
If you are building financial projections for a leather goods store startup, you will need to have done your research and have a clear picture of your competitive environment and go-to-market strategy so that you can forecast sales accurately.
For a new venture, you will also need a precise list of the resources needed to keep the leather goods store running on a day-to-day basis and a list of the equipment and expenditures required to start the business (more on that later).
Let's now take a closer look at the elements that make up your leather goods store's financial forecast.
The sales forecast for a leather goods store
From experience, it is usually best to start creating your leather goods store financial forecast by your sales forecast.
To create an accurate sales forecast for your leather goods store, you will have to rely on the data collected in your market research, or if you're running an existing leather goods store, 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:
- Your location: The location of your store can greatly impact the average price and number of monthly transactions. A prime location in a high-end shopping district can command higher prices and attract more customers, while a more remote location may result in lower prices and fewer transactions.
- Brand reputation: The reputation of your store and the brands you carry can also affect your average price and number of monthly transactions. A store known for carrying high-quality, luxury leather goods may be able to charge higher prices and attract more customers, while a store with a less reputable brand may struggle to sell at the same price point.
- Seasonal trends: The leather goods industry is heavily influenced by seasonal trends. For example, during the winter months, there may be a higher demand for leather jackets and boots, resulting in higher prices and more transactions. In the summer, there may be a decrease in demand for these items, leading to lower prices and fewer transactions.
- Economic conditions: Economic factors such as inflation, unemployment, and consumer confidence can also impact your average price and number of monthly transactions. During times of economic prosperity, consumers may be more willing to spend on luxury items like leather goods, resulting in higher prices and more transactions. Conversely, during a recession, consumers may be more budget-conscious, leading to lower prices and fewer transactions.
- Competition: The level of competition in your local market can also affect your sales forecast. If there are several other leather goods stores in close proximity, you may need to adjust your prices and promotions to stay competitive and attract customers. On the other hand, if you are the only leather goods store in the area, you may be able to charge higher prices and have more 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.
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 leather goods store
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your leather goods store 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 leather goods store will include some of the following items:
- Staff costs: This includes the salaries and wages of all employees, including sales staff, managers, and any other staff members you may have.
- Rent: This is the cost of leasing or renting your store space for your leather goods business.
- Inventory costs: This includes the cost of purchasing and maintaining your inventory of leather goods, such as bags, wallets, and accessories.
- Marketing and advertising: This covers the cost of promoting your leather goods store through various channels, such as social media, print ads, and events.
- Accountancy fees: You may need to hire an accountant to help you manage your financial records and prepare your taxes.
- Insurance costs: This includes insurance for your store, inventory, and any other business assets.
- Utilities: This includes the cost of electricity, water, and other utilities necessary to operate your store.
- Software licenses: You may need to purchase licenses for software programs that help you manage your inventory, sales, and other aspects of your business.
- Banking fees: These are the fees associated with maintaining a business bank account, such as transaction fees and monthly account fees.
- Shipping and delivery: If you offer online sales or ship products to customers, you will need to cover the cost of shipping and delivery.
- Repairs and maintenance: This covers the cost of any repairs or maintenance needed for your store, equipment, or inventory.
- Professional fees: You may need to hire a lawyer or other professional to help you with legal or other business matters.
- Taxes and licenses: This includes the cost of business licenses and any taxes that your business is responsible for paying.
- Office supplies: This covers the cost of basic office supplies, such as paper, pens, and printer ink.
- Credit card processing fees: If you accept credit card payments, you will need to pay fees to your payment processor for each transaction.
This list will need to be tailored to the specificities of your leather goods store, but should offer a good starting point for your budget.
What investments are needed to start or grow a leather goods store?
Your leather goods store 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 leather goods store, these could include:
- Leatherworking Equipment: This includes the necessary tools and machinery for crafting leather goods, such as cutting and sewing machines, leather presses, and leather embossing tools.
- Store Fixtures and Displays: These are essential for showcasing your leather goods and creating an appealing store layout. Examples include display cases, shelving units, and mannequins.
- Inventory: As a leather goods store, your inventory will consist of various types of leather, hardware, and other materials needed for production. This may also include pre-made items for resale.
- Furniture and Decor: In addition to functional items, it's important to invest in furniture and decor that will enhance the overall aesthetic of your store. This may include seating, lighting, and decorative accents.
- Point-of-Sale (POS) System: A POS system is crucial for tracking sales, managing inventory, and processing transactions. This may include hardware such as cash registers, card readers, and barcode scanners, as well as software for managing sales data.
Again, this list will need to be adjusted according to the size and ambitions of your leather goods store.
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 leather goods store
The next step in the creation of your financial forecast for your leather goods store 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 leather goods store?
Now let's have a look at the main output tables of your leather goods store's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your leather goods store's expected growth and profitability over the next three to five years.

A financially viable P&L statement for a leather goods store 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 leather goods store'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 leather goods store 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 leather goods store'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 leather goods store 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 leather goods store's financial forecast?
Creating your leather goods store'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 leather goods store'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
Outsourcing the creation of your leather goods store 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 leather goods store's financial forecast?
Creating an accurate and error-free leather goods store 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
- 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 leather goods store 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 leather goods store, 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 sales forecast for a business?
- Financial forecast for a business idea
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