How to create a financial forecast for a mobile phone repair 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 mobile phone repair shop.
Putting together a mobile phone repair 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 mobile phone repair 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 mobile phone repair shop?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your mobile phone repair shop and ensure that it can be financially viable in the years to come.
A financial plan for a mobile phone repair 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 mobile phone repair 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 mobile phone repair 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 mobile phone repair shop financial forecast?
A mobile phone repair 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 mobile phone repair shop.
If you are creating (or updating) the forecast of an existing mobile phone repair 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 mobile phone repair 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 mobile phone repair 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 mobile phone repair shop's financial forecast.
The sales forecast for a mobile phone repair shop
From experience, it usually makes sense to start your mobile phone repair shop's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your mobile phone repair 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 mobile phone repair 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:
- New Phone Releases: As new mobile phone models are released, their repairs may require different parts and techniques, which may affect the average price of repairs and the number of monthly transactions for your shop. Stay updated on the latest releases to anticipate any changes in your business.
- Competition: The presence of other mobile phone repair shops in your area can affect your average price and number of monthly transactions. If there are many competitors, you may have to lower your prices to attract customers, resulting in a decrease in average price. On the other hand, if you are the only repair shop in the area, you may be able to charge higher prices, resulting in an increase in average price.
- Seasonal Demand: The demand for mobile phone repairs may fluctuate throughout the year, with certain times being busier than others. For example, during the holiday season, there may be an increase in the number of repairs needed due to people purchasing new phones or traveling. This can affect your number of monthly transactions and average price.
- Technological Advancements: As technology advances, the complexity of mobile phones may increase, making repairs more difficult and expensive. This can result in an increase in average price and a decrease in the number of monthly transactions as customers may choose to replace their phones instead of repairing them.
- Brand Reputation: The reputation of your shop and the brands you use for repairs can also affect your average price and number of monthly transactions. If your shop has a good reputation for quality repairs, you may be able to charge higher prices and attract more customers. On the other hand, if there are any negative reviews or complaints about the brands you use, it can result in a decrease in both 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 mobile phone repair shop
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your mobile phone repair 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 mobile phone repair shop will include some of the following items:
- Staff costs: This includes the salaries and wages of your employees, as well as any benefits, bonuses, and training expenses. As a mobile phone repair shop, you will need skilled technicians to handle repairs and customer service representatives to assist with inquiries.
- Accountancy fees: You will need to hire an accountant or use accounting software to manage your finances, track sales, and file taxes. This will also include any fees for bookkeeping or financial consulting services.
- Insurance costs: As a business owner, it is important to protect your assets and employees. You will need to budget for insurance policies such as general liability insurance, workers' compensation insurance, and property insurance.
- Software licenses: To run your business efficiently, you may need to invest in software licenses for point-of-sale systems, inventory management, and customer relationship management. These licenses may have monthly or annual fees.
- Banking fees: You will need a business bank account to manage your finances and accept payments from customers. Be aware of any fees associated with maintaining the account, processing credit card transactions, and using ATMs.
- Rent/Lease: If you are not operating your repair shop from home, you will need to budget for rent or lease payments for your physical location. This may also include utilities and maintenance fees.
- Inventory costs: As a mobile phone repair shop, you will need to stock up on replacement parts, tools, and accessories. Keep track of your inventory and budget for regular restocking to meet customer demand.
- Marketing expenses: To attract new customers and retain existing ones, you may need to invest in marketing efforts such as social media ads, flyers, and promotions. This can help increase your visibility and drive sales.
- Training and certifications: As technology evolves, it is important for your technicians to stay updated on the latest repair techniques and technologies. Budget for training and certification programs to ensure your staff is knowledgeable and skilled.
- Equipment maintenance: Your repair equipment, such as soldering irons and screwdrivers, will require regular maintenance to ensure they are functioning properly. This may include calibration, cleaning, and replacement of worn parts.
- Office supplies: You will need basic office supplies such as paper, ink, and pens to keep your business running smoothly. Make sure to budget for these expenses to avoid any last-minute trips to the office supply store.
- Legal fees: Depending on your business structure and location, you may need to budget for legal fees such as business registration, permits, and contracts. It is important to comply with all laws and regulations to avoid any legal issues.
- Telephone and internet: As a mobile phone repair shop, you will need a reliable phone and internet connection to communicate with customers, suppliers, and partners. Budget for these expenses to stay connected.
- Travel expenses: If you provide on-site repair services or attend industry events, you will need to budget for travel expenses such as gas, tolls, and accommodations. These can add up quickly, so plan ahead.
- Professional fees: You may need to hire professionals such as lawyers, consultants, or marketing agencies to assist with specific aspects of your business. Budget for these fees and make sure to research and compare prices to get the best value.
This list will need to be tailored to the specificities of your mobile phone repair shop, but should offer a good starting point for your budget.
What investments are needed to start or grow a mobile phone repair shop?
Your mobile phone repair 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 mobile phone repair shop, these could include:
- Repair Equipment: This includes tools and equipment necessary for repairing mobile phones, such as screwdrivers, tweezers, heat guns, and soldering equipment.
- Inventory: This includes the cost of purchasing initial inventory of replacement parts, such as screens, batteries, and other components needed for repairs.
- Store Fixtures and Furniture: This includes the cost of shelving, display cases, and other furniture needed to set up the shop and showcase products.
- Point-of-Sale System: This includes the cost of purchasing a cash register or POS system for processing transactions and keeping track of sales.
- Security System: This includes the cost of installing security cameras, alarms, and other systems to protect the shop and its inventory.
Again, this list will need to be adjusted according to the size and ambitions of your mobile phone repair 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 mobile phone repair shop
The next step in the creation of your financial forecast for your mobile phone repair 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 mobile phone repair shop?
Now let's have a look at the main output tables of your mobile phone repair shop's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your mobile phone repair shop is likely to be in the years to come.
For your mobile phone repair shop 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 mobile phone repair shops, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
The projected balance sheet gives an overview of your mobile phone repair shop'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 phone repair shop. 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 phone repair 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 mobile phone repair 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 mobile phone repair 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 mobile phone repair shop's financial projections?
Building a mobile phone repair shop 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 mobile phone repair shop'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 mobile phone repair shop 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 mobile phone repair 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 mobile phone repair 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 mobile phone repair 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 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 phone repair shop, 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 phone repair shop
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 mobile phone repair 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 mobile phone repair 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 project sales for a business?
- Example of financial forecast for business idea
Know someone who owns or is thinking of starting a mobile phone repair shop? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
