How to create a financial forecast for a moving company?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your moving company.
Putting together a moving company 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 moving company.
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 moving company?
The financial projections for your moving company 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 moving company'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 moving company financial forecast?
A moving company'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 moving company.
If you are creating (or updating) the forecast of an existing moving company, 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 moving company 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 moving company 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 moving company's financial forecast.
The sales forecast for a moving company
The sales forecast, also called topline projection, is normally where you will start when building your moving company 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 moving companies), and consider the elements below:
- Seasonal Demand: As a moving company, you may experience higher demand during peak moving seasons, such as summer months and the end of the year. This may lead to an increase in your average price as well as the number of monthly transactions.
- Population Growth: If your business operates in an area with a growing population, you may see an increase in the number of monthly transactions as more people move in and out of the area. This could also potentially drive up your average price as demand for your services increases.
- Economic Conditions: Economic factors, such as a strong job market or a booming real estate market, can also impact your business. In a thriving economy, more people may be moving for job opportunities or to purchase a new home, leading to a higher number of monthly transactions and potentially higher average prices.
- Competition: The level of competition in your local market can also affect your sales forecast. If there are many other moving companies in the area, you may need to adjust your prices to stay competitive and attract customers. On the other hand, if you are the only moving company in the area, you may be able to charge higher prices.
- Customer Reviews and Referrals: Positive customer reviews and referrals can be a major driver for your business. Satisfied customers are likely to recommend your services to others, leading to a higher number of monthly transactions. Additionally, positive reviews can help build trust with potential customers and justify higher prices.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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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 moving company
The next step is to estimate the expenses needed to run your moving company on a day-to-day basis.
These will vary based on the level of sales expected, and the location and size of your business.
But your moving company's operating expenses should include the following items at a minimum:
- Staff Costs: This includes salaries, bonuses, benefits, and training expenses for your moving team.
- Accountancy Fees: You will need to hire an accountant to keep track of your financial records and file taxes for your moving company.
- Insurance Costs: As a moving company, you will need to have insurance for your employees, vehicles, and goods to protect against any damages or liabilities.
- Vehicle Expenses: This includes fuel costs, maintenance and repairs, and insurance for your moving trucks and vans.
- Rent/Lease Payments: If you are not operating from your own property, you will have to pay rent or lease for your office space and warehouse.
- Marketing and Advertising: To attract new customers, you will need to invest in marketing and advertising strategies such as online ads, flyers, and brochures.
- Office Supplies: This includes items such as stationary, printer cartridges, and other office supplies needed to run your moving company.
- Telephone and Internet Bills: You will need to have a reliable phone and internet connection to communicate with clients and manage your business operations.
- Software Licenses: You may need to purchase licenses for software programs such as accounting software, scheduling software, and customer relationship management (CRM) software.
- Banking Fees: You will have to pay fees for transactions, wire transfers, and other banking services for your business.
- Legal Fees: You may need to hire a lawyer for legal advice, drafting contracts, and handling any legal matters related to your moving company.
- Utilities: This includes electricity, water, and gas expenses for your office and warehouse.
- Training and Development: It's important to invest in training and development for your employees to ensure they have the necessary skills and knowledge to provide quality moving services.
- Vehicle Registration and Licensing: You will need to pay fees for registering and licensing your moving vehicles with the appropriate authorities.
- Cleaning and Maintenance: This includes expenses for cleaning and maintaining your office and warehouse space to ensure a safe and hygienic working environment for your employees.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small moving company might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a moving company?
Once you have an idea of how much sales you could achieve and what it will cost to run your moving company, it is time to look into the equipment required to launch or expand the activity.
For a moving company, capital expenditures and initial working capital items could include:
- Moving Trucks: These are the most essential capital expenditures for a moving company. You will need to purchase or lease a fleet of trucks to transport your clients' belongings from one location to another. Make sure to factor in the cost of fuel and maintenance when creating your expenditure forecast.
- Warehouse/Storage Space: As a moving company, you will need a designated space to store your clients' belongings before and after a move. This could include a warehouse, storage units, or even a secure parking lot. Be sure to consider the cost of rent or purchase, as well as any necessary renovations or security measures.
- Equipment and Supplies: In addition to trucks, you will need various equipment and supplies to facilitate a move, such as dollies, moving blankets, packing materials, and tools for disassembling and assembling furniture. These items may need to be replaced or upgraded over time, so be sure to include them in your expenditure forecast.
- Office Space and Furniture: Your moving company will also need a designated office space for administrative tasks and client consultations. This could include rent or purchase of a commercial space, as well as office furniture and equipment such as desks, chairs, computers, and phones.
- Software and Technology: As technology continues to advance, it is important for a moving company to have the necessary software and technology to efficiently manage operations and communicate with clients. This could include a moving management software, GPS systems for trucks, and a website for online bookings and inquiries.
Again, this list will need to be adjusted according to the specificities of your moving company.
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 moving company
The next step in the creation of your financial forecast for your moving company 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 moving company?
Now let's have a look at the main output tables of your moving company's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your moving company's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a moving company 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 moving company'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 moving company 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 moving company'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 moving company 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 moving company's financial forecast?
Creating your moving company'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 moving company'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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional moving company financial forecast.
The downside of this solution is its cost. From experience, obtaining a simple financial forecast over three years (including a balance sheet, income statement, and cash flow statement) is likely to cost a minimum of £700 or $1,000.
The indicative cost above, is for a small business, and a forecast is done as a one-shot exercise. Using a consultant or accountant to track your actuals vs. forecast and to keep your financial projections up to date on a monthly or quarterly basis will cost a lot more.
If you opt for this solution, make sure your accountant has in-depth knowledge of your industry, so that they may challenge your figures and offer insights (as opposed to just taking your assumptions at face value to create the forecast).
Why not use a spreadsheet such as Excel or Google Sheets to build your moving company's financial forecast?
Creating an accurate and error-free moving company 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 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 moving company, 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
- A financial projection shows expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial forecast up-to-date is the only way to maintain visibility on future cash flows.
- Using financial forecasting software makes it easy to create and maintain up-to-date projections for your moving company.
You have reached the end of our guide. We hope you now have a better understanding of how to create a financial forecast for a moving company. Don't hesitate to contact our team if you have any questions or want to share your experience building forecasts!
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 projections
- How to create a turnover forecast for a business?
- Example of financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
