How to create a financial forecast for a motorcycle and scooter rental firm?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your motorcycle and scooter rental firm.
Putting together a motorcycle and scooter rental firm 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 motorcycle and scooter rental firm.
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 motorcycle and scooter rental firm?
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 motorcycle and scooter rental firm becomes handy.
Creating a motorcycle and scooter rental firm 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 motorcycle and scooter rental firm.
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 motorcycle and scooter rental firm 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 motorcycle and scooter rental firm'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 motorcycle and scooter rental firm financial forecast?
A motorcycle and scooter rental firm'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 motorcycle and scooter rental firm, 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 motorcycle and scooter rental firm 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 motorcycle and scooter rental firm 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 motorcycle and scooter rental firm's financial forecast.
The sales forecast for a motorcycle and scooter rental firm
The sales forecast, also called topline projection, is normally where you will start when building your motorcycle and scooter rental firm financial forecast.
Creating a coherent sales projection boils down to estimating two key drivers:
- The average price
- The number of monthly transactions
To do this, you will need to rely on historical data (for an existing business), market research data (for both new and existing motorcycle and scooter rental firms), and consider the elements below:
- Seasonal demand: Depending on your location, the demand for motorcycle and scooter rentals may vary throughout the year. For example, if your business is located in a tourist destination, you can expect higher demand during peak seasons and lower demand during off-peak seasons.
- Fuel prices: Fluctuations in fuel prices can significantly impact the average price of your rentals. Higher fuel prices may lead to an increase in rental prices, while lower fuel prices may allow you to offer more competitive rates.
- Weather conditions: Inclement weather, such as heavy rain or snow, can affect the number of monthly transactions. If the weather is unfavorable, customers may be less likely to rent a motorcycle or scooter, resulting in a decrease in transactions.
- Competition: The presence of competitors in your area can also affect your average price and number of transactions. If there are many other rental firms offering similar services, you may need to adjust your prices or offer unique promotions to attract customers.
- Events and festivals: The occurrence of major events or festivals in your area can also impact your business. If there is a popular event happening, it may attract more tourists, resulting in an increase in demand for rentals. On the other hand, if there are no significant events, you may experience a decrease in transactions.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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 motorcycle and scooter rental firm
The next step is to estimate the costs you’ll have to incur to operate your motorcycle and scooter rental firm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your motorcycle and scooter rental firm's operating expenses should normally include the following items:
- Staff costs: This includes salaries, wages, benefits, and training for your employees who will be responsible for managing and maintaining the motorcycles and scooters, as well as handling customer service and administrative tasks.
- Vehicle maintenance: This includes regular maintenance and repairs for your fleet of motorcycles and scooters, as well as any unexpected repairs that may arise.
- Fuel expenses: Since motorcycles and scooters run on gasoline, this will be a significant expense for your rental firm. You will need to budget for the cost of fuel to keep your vehicles running.
- Insurance costs: As with any business, it is important to have proper insurance coverage to protect your assets and liabilities. This includes liability insurance for accidents and damages, as well as insurance for your vehicles.
- Accountancy fees: It is recommended to hire an accountant to help you manage your finances and ensure compliance with tax laws and regulations.
- Marketing expenses: In order to attract customers, you will need to invest in marketing initiatives such as advertising, promotions, and partnerships. This can include online and offline efforts.
- Software licenses: You will need to invest in software to manage your rental bookings, inventory, and finances. This may include purchasing or subscribing to rental management software, accounting software, and other tools.
- Banking fees: You will need to pay fees for bank transactions such as deposits, withdrawals, and credit card processing. It is important to research and compare different banking options to find the best fit for your business needs.
- Office rent and utilities: If you have a physical location for your rental firm, you will need to budget for rent, utilities, and other expenses associated with maintaining an office space.
- Permits and licenses: Depending on your location, you may need to obtain permits and licenses to operate a motorcycle and scooter rental business. This may include business licenses, vehicle permits, and other regulatory requirements.
- Inventory costs: This includes the cost of purchasing and maintaining a fleet of motorcycles and scooters for rental purposes. You will also need to budget for accessories and safety equipment for your vehicles.
- Legal fees: It is important to consult with a lawyer to ensure that your rental firm is operating in compliance with laws and regulations. This may include drafting contracts, reviewing insurance policies, and handling any legal issues that may arise.
- Credit card processing fees: If you accept credit card payments, you will need to budget for processing fees charged by your merchant service provider.
- Safety and maintenance equipment: This includes purchasing and maintaining safety equipment such as helmets, gloves, and reflective vests for your customers to use while riding your motorcycles and scooters.
- Taxes: As a business owner, you will be responsible for paying various taxes such as income tax, property tax, and sales tax. It is important to consult with a tax professional to ensure that you are meeting your tax obligations.
This list is not exhaustive by any means, and will need to be tailored to your motorcycle and scooter rental firm's specific circumstances.
What investments are needed to start or grow a motorcycle and scooter rental firm?
Once you have an idea of how much sales you could achieve and what it will cost to run your motorcycle and scooter rental firm, it is time to look into the equipment required to launch or expand the activity.
For a motorcycle and scooter rental firm, capital expenditures and initial working capital items could include:
- Motorcycles and scooters: This is the main capital expenditure for your rental firm. You will need to purchase a fleet of motorcycles and scooters to rent out to customers. Make sure to budget for a variety of models and sizes to cater to different customer needs.
- Storage and maintenance equipment: You will need to invest in equipment such as storage racks, lifts, and tools to properly store and maintain your motorcycles and scooters. This will ensure the safety and longevity of your assets.
- Insurance and licenses: In order to legally operate a motorcycle and scooter rental firm, you will need to obtain insurance and licenses. This may include liability insurance, business licenses, and vehicle registration fees.
- Technology and software: To efficiently manage your rental operations, you may want to invest in technology and software such as a booking system, inventory management software, and a website for customers to make reservations.
- Safety gear and accessories: It is important to provide your customers with essential safety gear and accessories such as helmets, gloves, and locks. These items may need to be replaced over time, so it is important to budget for their initial purchase and ongoing maintenance.
Again, this list will need to be adjusted according to the specificities of your motorcycle and scooter rental firm.
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 motorcycle and scooter rental firm
The next step in the creation of your financial forecast for your motorcycle and scooter rental firm 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 motorcycle and scooter rental firm?
Now let's have a look at the main output tables of your motorcycle and scooter rental firm's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your motorcycle and scooter rental firm's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a motorcycle and scooter rental firm 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
The projected balance sheet gives an overview of your motorcycle and scooter rental firm'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 motorcycle and scooter rental firm. 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 cash flow projection
The cash flow forecast of your motorcycle and scooter rental firm 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 motorcycle and scooter rental firm'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 motorcycle and scooter rental firm 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 motorcycle and scooter rental firm'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 motorcycle and scooter rental firm's financial projections?
Building a motorcycle and scooter rental firm 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 motorcycle and scooter rental firm'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.
Calling in a financial consultant or chartered accountant
Outsourcing the creation of your motorcycle and scooter rental firm 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 motorcycle and scooter rental firm's financial forecast?
Creating an accurate and error-free motorcycle and scooter rental firm 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 forecasting templates available.
Our examples contain both the financial forecast, and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own motorcycle and scooter rental firm, looking at our template is always a good way to get ideas on how to model financial items and what to write when creating a business plan to secure funding.
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 motorcycle and scooter rental firm 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 motorcycle and scooter rental firm, 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 revenues for a business?
- Sample financial forecast for business idea
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