How to create a financial forecast for a mountain bike hiking club?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your mountain bike hiking club.
Putting together a mountain bike hiking club 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 mountain bike hiking club.
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 mountain bike hiking club?
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 mountain bike hiking club becomes handy.
Creating a mountain bike hiking club 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 mountain bike hiking club.
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 mountain bike hiking club 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 mountain bike hiking club'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 mountain bike hiking club financial forecast?
A mountain bike hiking club'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 mountain bike hiking club, 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 mountain bike hiking club 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 mountain bike hiking club 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 mountain bike hiking club's financial forecast.
The sales forecast for a mountain bike hiking club
The sales forecast, also called topline projection, is normally where you will start when building your mountain bike hiking club 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 mountain bike hiking clubs), and consider the elements below:
- Seasonal Demand: As a mountain bike hiking club, the demand for your services may fluctuate depending on the time of year. During the warmer months, you can expect to see a higher number of monthly transactions as more people are interested in outdoor activities. However, during the colder months, your average price may decrease as there is less demand for mountain biking.
- Weather Conditions: The weather can significantly impact the number of monthly transactions for your club. If there is a lot of rain or snow, it may be challenging for people to participate in mountain biking activities, resulting in a decrease in average price. However, if the weather is ideal for biking, you may see an increase in both the number of transactions and the average price.
- Economic Factors: Economic factors, such as a recession or a downturn in the local economy, may affect the disposable income of your potential customers. As a result, you may see a decrease in both the number of monthly transactions and the average price as people may not be able to afford your services.
- Competition: The presence of other mountain bike hiking clubs in the area may also impact your business's average price and number of monthly transactions. If there is a lot of competition, you may need to lower your prices to attract customers, resulting in a decrease in average price. On the other hand, if you are the only club in the area, you may be able to charge higher prices and see an increase in average price.
- Maintenance Costs: As a mountain bike hiking club, you will need to regularly maintain your bikes and equipment to ensure they are safe for use. Any unexpected maintenance costs may impact your average price as you may need to increase prices to cover these expenses. Additionally, if you are unable to maintain your equipment properly, it may result in a decrease in the number of monthly transactions as customers may not want to use unsafe equipment.
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 mountain bike hiking club
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your mountain bike hiking club 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 mountain bike hiking club will include some of the following items:
- Staff costs: This includes salaries for the club's staff members, such as guides, instructors, and administrative staff.
- Accountancy fees: You will need to hire an accountant to manage the club's finances and ensure compliance with tax laws.
- Insurance costs: It is important to have insurance coverage for the club's activities, including liability insurance and insurance for club-owned equipment.
- Software licenses: You may need to purchase software licenses for programs such as accounting software, membership management software, and website management software.
- Banking fees: Your club will have bank accounts for managing finances, and there may be fees associated with transactions, wire transfers, and other banking services.
- Marketing expenses: To attract new members and promote your club's activities, you may need to invest in marketing efforts, such as creating flyers, advertisements, and social media campaigns.
- Website maintenance: Your club's website will need to be regularly updated and maintained, which may require hiring a web developer or purchasing website management services.
- Membership fees: This could include expenses related to managing and processing membership fees, such as credit card processing fees or fees for using a membership management system.
- Training and certifications: To ensure the safety and quality of your club's activities, you may need to invest in training and certifications for your staff members and instructors.
- Rent or lease of facilities: If your club has a physical location, you may need to pay rent or lease fees for the space.
- Equipment maintenance and repair: Your club's mountain bikes and other equipment will need regular maintenance and occasional repairs, which will incur expenses.
- Permits and licenses: You may need to obtain permits and licenses for operating your club's activities, such as trail permits, event permits, and business licenses.
- Transportation costs: Your club may need to cover transportation expenses for members and equipment, such as renting vans or trailers.
- Office supplies: This could include expenses for basic office supplies, such as paper, printer ink, and pens, as well as any supplies needed for events or activities.
- Professional development: To improve the skills and knowledge of your staff members, you may need to invest in professional development opportunities, such as conferences or workshops.
This list will need to be tailored to the specificities of your mountain bike hiking club, but should offer a good starting point for your budget.
What investments are needed to start or grow a mountain bike hiking club?
Once you have an idea of how much sales you could achieve and what it will cost to run your mountain bike hiking club, it is time to look into the equipment required to launch or expand the activity.
For a mountain bike hiking club, capital expenditures and initial working capital items could include:
- Mountain Bikes: As a mountain bike hiking club, you will need to purchase several high-quality mountain bikes for your members to use. These bikes will be a fixed asset for your club and will provide your members with the necessary equipment to participate in hikes and rides.
- Safety Gear: Safety is of utmost importance in any outdoor activity, and as a club, it is your responsibility to provide your members with the necessary safety gear. This may include helmets, knee and elbow pads, and first aid kits. These items will be a fixed asset for your club and will ensure the safety of your members during your hikes and rides.
- Trail Maintenance Tools: Since your club will be organizing hikes and rides on mountain trails, it is essential to have the necessary tools for trail maintenance. This may include shovels, rakes, and other equipment to clear debris and maintain the trails. These tools will be a fixed asset for your club and will help ensure the safety and enjoyment of your members on the trails.
- Storage Facility: As your club grows, you will need a secure and suitable storage facility to store all of your equipment, including bikes, safety gear, and trail maintenance tools. Investing in a storage facility will be a fixed asset for your club and will provide a centralized location for all of your equipment.
- Transportation Vehicles: If your club plans on organizing out-of-town hikes and rides, you may need to invest in transportation vehicles, such as vans or trucks, to transport your members and equipment. These vehicles will be a fixed asset for your club and will allow you to expand your club's activities and reach.
Again, this list will need to be adjusted according to the specificities of your mountain bike hiking club.
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 mountain bike hiking club
The next step in the creation of your financial forecast for your mountain bike hiking club 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 mountain bike hiking club?
Now let's have a look at the main output tables of your mountain bike hiking club'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 mountain bike hiking club'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 mountain bike hiking club will look different than for a startup.
The projected balance sheet
Your mountain bike hiking club's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- 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 mountain bike hiking club 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 mountain bike hiking club'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 mountain bike hiking club 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 mountain bike hiking club'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 mountain bike hiking club's financial forecast?
Using the right tool or solution will make the creation of your mountain bike hiking club's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your mountain bike hiking club'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 mountain bike hiking club 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 mountain bike hiking club'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 mountain bike hiking club 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 mountain bike hiking club'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 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
- A financial forecast shows expected growth, profitability, and cash generation metrics for your mountain bike hiking club.
- 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 mountain bike hiking club. 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
- Sample financial forecast for business idea
- How to create a sales forecast for a business?
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Founder & CEO at The Business Plan Shop Ltd
