How to create a financial forecast for a newspaper stall?
Creating a financial forecast for your newspaper stall, and ensuring it stays up to date, is the only way to maintain visibility on future cash flows.
This might sound complex, but with the right guidance and tools, creating an accurate financial forecast for your newspaper stall is not that hard.
In this guide, we'll cover everything from the main goal of a financial projection, the data you need as input, to the tables that compose it, and the tools that can help you build a forecast efficiently.
Without further ado, let us begin!
Why create and maintain a financial forecast for a newspaper stall?
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 newspaper stall becomes handy.
Creating a newspaper stall 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 newspaper stall.
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 newspaper stall 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 newspaper stall'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 needed to build a newspaper stall financial forecast?
The quality of your inputs is key when it comes to financial modelling: no matter how good the model is, if your inputs are off, so will the forecast.
If you are building a financial plan to start a newspaper stall, you will need to have done your market research and have a clear picture of your sales and marketing strategies so that you can project revenues with confidence.
You will also need to have a clear idea of what resources will be required to operate the newspaper stall on a daily basis, and to have done your research with regard to the equipment needed to launch your venture (see further down this guide).
If you are creating a financial forecast of an existing newspaper stall, things are usually simpler as you will be able to use your historical accounting data as a budgeting base, and complement that with your team’s view on what lies ahead for the years to come.
Let's now zoom in on what will go in your newspaper stall's financial forecast.
The sales forecast for a newspaper stall
From experience, it is usually best to start creating your newspaper stall financial forecast by your sales forecast.
To create an accurate sales forecast for your newspaper stall, you will have to rely on the data collected in your market research, or if you're running an existing newspaper stall, 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 introduction of a new newspaper that is highly popular in your area may attract more customers to your stall, resulting in an increase in your average price and number of monthly transactions.
- Unfavorable weather conditions, such as heavy rainfall or snow, may decrease foot traffic to your stall, leading to a decrease in your average price and number of monthly transactions.
- A sudden increase in the price of your newspapers from your suppliers may force you to raise your average price, potentially resulting in a decrease in your number of monthly transactions due to customers seeking cheaper alternatives.
- The opening of a new convenience store or supermarket in your vicinity may offer newspapers at lower prices, causing a decrease in your average price and number of monthly transactions as customers opt for the cheaper option.
- An increase in the popularity of digital media may lead to a decrease in demand for physical newspapers, resulting in a decrease in your average price and number of monthly transactions.
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 newspaper stall
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your newspaper stall 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 newspaper stall will include some of the following items:
- Staff Costs: This includes salaries, wages, and benefits for any employees you may have at your newspaper stall. This can also include any training or development costs for your staff.
- Rent: If you are operating out of a physical location, you will likely have to pay rent for the space. This can also include utilities such as electricity, water, and internet.
- Inventory Costs: This includes the cost of purchasing newspapers, magazines, and other reading materials to stock your stall.
- Marketing and Advertising: In order to attract customers to your newspaper stall, you may need to spend money on marketing and advertising efforts. This can include print ads, flyers, and social media promotions.
- Accountancy Fees: To ensure proper financial management, you may need to hire an accountant or pay for accounting software to help with bookkeeping and tax filings.
- Insurance Costs: It is important to have insurance coverage for your newspaper stall in case of any accidents or incidents. This can include property insurance, liability insurance, and workers' compensation insurance.
- Software Licences: If you are using any software to manage your newspaper stall operations, you may need to pay for annual licences or subscriptions.
- Banking Fees: This includes any fees associated with maintaining a business bank account, such as transaction fees, overdraft fees, and monthly service fees.
- Packaging and Supplies: In order to package and protect your newspapers and magazines, you may need to purchase packaging materials and supplies such as bags, boxes, and labels.
- Transportation Costs: If you are delivering newspapers to customers or receiving deliveries of new stock, you may need to account for transportation costs such as gas, tolls, and vehicle maintenance.
- Repairs and Maintenance: If you own your own newspaper stall, you may need to budget for repairs and maintenance of the physical structure and any equipment used to run your business.
- Taxes and Permits: As a business owner, you will be responsible for paying taxes on your profits and obtaining any necessary permits or licenses to operate your newspaper stall.
- Credit Card Processing Fees: If you accept credit or debit card payments from customers, you may need to pay processing fees to the credit card companies or payment processors.
- Legal Fees: In case of any legal issues or contracts related to your newspaper stall, you may need to hire a lawyer and pay for legal fees.
- Office Supplies: You may need to purchase basic office supplies such as paper, ink, and pens to keep your newspaper stall running smoothly.
This list will need to be tailored to the specificities of your newspaper stall, but should offer a good starting point for your budget.
What investments are needed to start or grow a newspaper stall?
Creating and expanding a newspaper stall also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a newspaper stall could include elements such as:
- Newspaper Stands: As a newspaper stall owner, you will need to purchase newspaper stands to display and organize your newspapers. These can range from simple wire racks to more elaborate wooden stands with shelves and compartments.
- Cash Register: A cash register is an essential piece of equipment for any newspaper stall. It will help you accurately track your sales and manage your cash flow.
- Display Cases: Display cases are used to showcase and protect special or limited edition newspapers and magazines. These can be glass or acrylic cases with locking mechanisms to ensure the safety of your valuable items.
- Security System: It's important to protect your newspaper stall from theft and vandalism. A security system, such as cameras or alarms, can be a worthwhile investment to deter potential crimes and protect your assets.
- Inventory Management Software: As your newspaper stall grows, it can become challenging to keep track of your inventory manually. Consider investing in inventory management software to help you accurately track your stock levels and re-order when necessary.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your newspaper stall.
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 newspaper stall
The next step in the creation of your financial forecast for your newspaper stall 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 newspaper stall?
Now let's have a look at the main output tables of your newspaper stall's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your newspaper stall is likely to be in the years to come.
For your newspaper stall 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 newspaper stalls, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your newspaper stall'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 newspaper stall 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 newspaper stall'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 newspaper stall 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 newspaper stall's financial forecast?
Creating your newspaper stall'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 newspaper stall'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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional newspaper stall 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 newspaper stall's financial forecast?
Creating an accurate and error-free newspaper stall 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 newspaper stall, 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 newspaper stall
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your newspaper stall.
- 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 newspaper stall. 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 project revenues for a business?
- Financial forecast template for a business idea
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