How to create a financial forecast for a mobile home park?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your mobile home park.
Putting together a mobile home park 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 mobile home park.
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 mobile home park?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your mobile home park and ensure that it can be financially viable in the years to come.
A financial plan for a mobile home park 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 mobile home park 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 mobile home park'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 mobile home park financial forecast?
A mobile home park'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 mobile home park, 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 mobile home park 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 mobile home park 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 mobile home park's financial forecast.
The sales forecast for a mobile home park
From experience, it is usually best to start creating your mobile home park financial forecast by your sales forecast.
To create an accurate sales forecast for your mobile home park, you will have to rely on the data collected in your market research, or if you're running an existing mobile home park, 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:
- The local economy: The strength of the local economy can greatly influence the average price of homes in your mobile home park. If the economy is thriving, people may be willing to pay more for homes and demand may increase, resulting in higher prices and more monthly transactions. On the other hand, if the economy is struggling, people may be less likely to purchase homes and may demand lower prices, leading to a decrease in both average price and monthly transactions.
- Demographics: The demographic makeup of your mobile home park's target market can also impact your sales forecast. For example, if your park is located in an area with a large retiree population, you may see higher demand for affordable housing and an increase in both average price and monthly transactions. However, if your park is mostly targeted towards families with young children, you may see a decrease in demand and a lower average price.
- Competition: The level of competition in the area can also affect your sales forecast. If there are many other mobile home parks in the vicinity, you may need to lower your prices or offer unique amenities to attract potential buyers. This could result in a decrease in average price, but an increase in monthly transactions as you compete for customers.
- Location: The location of your mobile home park can also play a role in your sales forecast. If your park is located in a desirable area with good schools, low crime rates, and convenient access to amenities, you may see an increase in average price and monthly transactions. However, if your park is located in a less desirable area, you may need to adjust your prices accordingly, potentially resulting in a decrease in both average price and monthly transactions.
- Seasonal trends: Depending on the location of your mobile home park, you may experience seasonal fluctuations in both average price and monthly transactions. For example, if your park is located in a popular vacation destination, you may see a spike in demand and prices during peak tourist season, but a decrease during off-season. Alternatively, if your park is located in a colder climate, you may see a decrease in demand and prices during the winter months.
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 mobile home park
The next step is to estimate the costs you’ll have to incur to operate your mobile home park.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your mobile home park's operating expenses should normally include the following items:
- Staff Costs: This includes salaries, wages, and benefits for your park manager, maintenance staff, and any other employees you may have.
- Accountancy Fees: You will need to hire an accountant to help you with bookkeeping, tax preparation, and financial reporting for your park.
- Insurance Costs: You will need to have insurance to protect your park from any potential liabilities, such as accidents or natural disasters.
- Software Licences: You may need to purchase software to manage your park's operations, such as property management software or accounting software.
- Banking Fees: You will incur fees for bank transactions, such as deposits, withdrawals, and wire transfers.
- Utilities: This includes the cost of electricity, water, gas, and other utilities for your park.
- Maintenance and Repairs: You will need to budget for regular maintenance and repairs to keep your park in good condition for your residents.
- Property Taxes: You will need to pay property taxes on your park, which can vary depending on the location and size of your park.
- Marketing and Advertising: You may need to invest in marketing and advertising to attract new residents to your park.
- Legal Fees: You may need to seek legal advice or assistance for any legal matters pertaining to your park.
- Trash and Recycling: You will need to pay for trash and recycling services for your park.
- Landscaping and Groundskeeping: You will need to budget for maintaining the landscaping and grounds of your park.
- Property Management Fees: If you hire a property management company to handle the day-to-day operations of your park, you will need to pay their fees.
- Office Supplies: You will need to purchase office supplies, such as paper, ink, and other supplies for your park's office.
- Training and Development: You may want to invest in training and development for yourself or your employees to improve operations and management of your park.
This list is not exhaustive by any means, and will need to be tailored to your mobile home park's specific circumstances.
What investments are needed to start or grow a mobile home park?
Once you have an idea of how much sales you could achieve and what it will cost to run your mobile home park, it is time to look into the equipment required to launch or expand the activity.
For a mobile home park, capital expenditures and initial working capital items could include:
- Mobile homes: These are the main fixed assets of a mobile home park. As they age and require repairs or replacements, they should be included in the expenditure forecast. This includes the cost of purchasing new mobile homes or renovating existing ones.
- Infrastructure: This includes the roads, parking lots, and utility systems within the park. These are essential for the functioning of the park and may require periodic repairs or upgrades. Make sure to include the cost of maintaining and improving these assets in your expenditure forecast.
- Community amenities: Mobile home parks often offer amenities such as a clubhouse, swimming pool, playground, or picnic area to attract and retain tenants. These assets require ongoing maintenance and occasional upgrades, so be sure to include them in your expenditure forecast.
- Landscaping: The appearance of a mobile home park is important for attracting tenants and maintaining property value. This includes the cost of maintaining lawns, trees, and other green spaces within the park. Consider budgeting for seasonal landscaping as well.
- Security systems: It's important to keep your tenants and property safe. This may include installing security cameras, fences, or hiring security personnel. These expenses should be included in your expenditure forecast.
Again, this list will need to be adjusted according to the specificities of your mobile home park.
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 mobile home park
The next step in the creation of your financial forecast for your mobile home park 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 mobile home park?
Now let's have a look at the main output tables of your mobile home park'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 mobile home park'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 mobile home park will look different than for a startup.
The projected balance sheet
The projected balance sheet gives an overview of your mobile home park'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 mobile home park. 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 projected cash flow statement
A projected cash flow statement for a mobile home park 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 mobile home park'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 mobile home park 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 mobile home park's financial forecast?
Using the right tool or solution will make the creation of your mobile home park's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your mobile home park'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 mobile home park 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 mobile home park's financial forecast?
Creating an accurate and error-free mobile home park financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.
Most entrepreneurs lack the expertise required to create an accurate financial forecast using spreadsheet software like Excel or Google Sheets. As a result, it is unlikely anyone will trust your numbers.
The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.
This is why professional forecasters all use software. With the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and updating your forecast as the year progresses is manual, tedious, error-prone, and time-consuming. Whereas financial forecasting 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 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 mobile home park, 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 mobile home park
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your mobile home park.
- 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 mobile home park. 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
- How to create a turnover forecast for a business?
- Financial forecast for a business idea
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Founder & CEO at The Business Plan Shop Ltd
