How to create a financial forecast for a photography equipment rental store?

Developing and maintaining an up-to-date financial forecast for your photography equipment rental store is key in order to maintain visibility on your business’s future cash flows.

If you feel overwhelmed at the thought of putting together a photography equipment rental store financial forecast then don’t worry as this guide is here to help you.

We'll cover everything from: the main objectives of a financial forecast, the data you need to gather before starting, to the tables that compose it, and the tools that will help you create and maintain your forecast efficiently.

Let's get started!

Why create and maintain a financial forecast for a photography equipment rental store?

Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your photography equipment rental store and ensure that it can be financially viable in the years to come.

A financial plan for a photography equipment rental store 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 photography equipment rental store 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 photography equipment rental store'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.

The Business Plan Shop's Business Plan Software

Start Your Free Trial Now Or learn more about our solution here

What information is used as input to build a photography equipment rental store financial forecast?

A photography equipment rental store'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 photography equipment rental store.

If you are creating (or updating) the forecast of an existing photography equipment rental store, 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 photography equipment rental store 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 photography equipment rental store 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 photography equipment rental store's financial forecast.

The sales forecast for a photography equipment rental store

The sales forecast, also called topline projection, is normally where you will start when building your photography equipment rental store 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 photography equipment rental stores), and consider the elements below:

Seasonal Demand: The demand for photography equipment rentals may fluctuate based on the time of year. During peak wedding and event season, there may be an increase in demand for cameras, lenses, and lighting equipment. This could result in higher average prices and an increase in the number of monthly transactions.
Competition: The number of competitors in the area can have a significant impact on your business's average price and number of monthly transactions. If you are the only photography equipment rental store in the area, you may be able to charge higher prices and have a larger customer base. However, if there are several competitors, you may need to lower your prices and find ways to differentiate your services to attract customers.
New Technology: The introduction of new technology in the photography industry can also affect your average price and number of monthly transactions. For example, if a new camera or lens is released that is highly sought after by photographers, you may be able to charge a premium for it and see an increase in demand. On the other hand, if your equipment becomes outdated, you may need to lower prices to remain competitive.
Customer Base: The type of customers you attract can also impact your business's average price and number of monthly transactions. If you primarily serve professional photographers, you may be able to charge higher prices for your high-end equipment and see a consistent demand. However, if your customer base consists mostly of hobbyists or beginners, you may need to adjust your prices and offerings to cater to their needs.
Economic Conditions: Economic conditions can play a role in the success of your photography equipment rental store. During times of economic downturn, customers may be more price-sensitive and may be less likely to rent expensive equipment. On the other hand, during periods of economic growth, customers may be more willing to spend on rentals, resulting in higher average prices and an increase in the number of monthly 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.

Start Your Free Trial Now Or learn more about our solution here

The operating expenses for a photography equipment rental store

The next step is to estimate the expenses needed to run your photography equipment rental store 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 photography equipment rental store's operating expenses should include the following items at a minimum:

Staff costs: This includes the salaries and benefits for your employees, such as rental associates, customer service representatives, and maintenance staff.
Accountancy fees: You may need to hire an accountant to help you manage your finances, file taxes, and provide financial advice specific to your photography equipment rental store.
Insurance costs: It is important to have insurance to protect your business from any potential risks or liabilities, such as damage to equipment or injuries to customers.
Software licences: You may need to purchase or renew software licences for programs that are essential to running your photography equipment rental store, such as booking software or inventory management systems.
Banking fees: Your business will have banking fees associated with maintaining a business bank account, processing credit card payments, and making deposits.
Rent: You will need to pay rent for the physical space where you store your photography equipment and conduct business with customers.
Utilities: You will need to cover the costs of utilities, such as electricity, water, and internet, for your photography equipment rental store.
Marketing and advertising: It is important to promote your business and attract customers through various marketing and advertising channels, such as social media, print ads, and online listings.
Maintenance and repairs: You may need to budget for regular maintenance and repairs for your photography equipment to ensure it is in good working condition for rental.
Cleaning supplies: You will need to purchase cleaning supplies to keep your photography equipment and store clean for customers.
Office supplies: This includes items such as paper, pens, and printer ink for everyday business operations.
Professional development: You may want to invest in professional development opportunities for yourself and your staff to improve skills and stay up-to-date with industry trends.
Taxes: You will need to pay taxes on your business income and may also need to budget for property taxes.
Delivery and shipping: If you offer delivery or shipping services for your photography equipment rentals, you will need to cover the costs associated with these services.
Legal fees: You may need to hire a lawyer for legal advice or to handle any legal matters related to your photography equipment rental store.

This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small photography equipment rental store might not have the same level of expenditure as a larger one, for example.

What investments are needed to start or grow a photography equipment rental store?

Creating and expanding a photography equipment rental store also requires investments which you need to factor into your financial forecast.

Capital expenditures and initial working capital items for a photography equipment rental store could include elements such as:

1. Camera and Lens Equipment: As a photography equipment rental store, you will need to invest in a variety of cameras and lenses to offer your customers a range of options for their photography needs. This can include DSLR cameras, mirrorless cameras, and various lens types such as prime, zoom, and macro lenses. These items are considered fixed assets and will require a significant upfront investment. 2. Studio Equipment: If you plan on offering studio rentals, you will need to purchase equipment such as lighting kits, backdrops, and props. These items are essential for creating a professional and versatile studio space for your customers. As they are fixed assets, they will need to be included in your expenditure forecast. 3. Computer and Editing Software: In order to manage and edit the photos taken with your rental equipment, you will need to invest in high-quality computers and editing software. These items are necessary for the smooth operation of your business and should be included in your expenditure forecast. 4. Storage and Transportation: As a photography equipment rental store, you will need to consider the cost of storage and transportation for your equipment. This can include purchasing storage solutions, such as shelves or cabinets, to keep your inventory organized and secure. You may also need to invest in a vehicle for transporting your equipment to and from rental locations. These items are important fixed assets that should be included in your forecast. 5. Maintenance and Repairs: It is important to keep your equipment in good working condition, so you will need to budget for maintenance and repairs. This can include regular cleaning, tune-ups, and occasional repairs. These expenses may vary month-to-month but should be included in your expenditure forecast to ensure accurate financial planning for your business.

Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your photography equipment rental store.

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.

Start Your Free Trial Now Or learn more about our solution here

The financing plan of your photography equipment rental store

The next step in the creation of your financial forecast for your photography equipment rental store 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 photography equipment rental store?

Now let's have a look at the main output tables of your photography equipment rental store's financial forecast.

The projected profit & loss statement

The projected profit & loss shows how profitable your photography equipment rental store is likely to be in the years to come.

photography equipment rental store profit and loss forecast

For your photography equipment rental store 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 photography equipment rental stores, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.

The projected balance sheet

Your photography equipment rental store'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.

example of photography equipment rental store projected balance sheet

The cash flow projection

The cash flow forecast of your photography equipment rental store will show how much cash the business is expected to generate or consume over the next three to five years.

photography equipment rental store cash flow projection

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 photography equipment rental store'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 photography equipment rental store 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 photography equipment rental store'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.

Start Your Free Trial Now Or learn more about our solution here

Which tool should you use to create your photography equipment rental store's financial forecast?

Creating your photography equipment rental store'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 photography equipment rental store'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 photography equipment rental store 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 photography equipment rental store's financial forecast?

Creating an accurate and error-free photography equipment rental store 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.

Start Your Free Trial Now Or learn more about our solution here

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 photography equipment rental store, 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 photography equipment rental store

The Business Plan Shop's financial forecast templates

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 photography equipment rental store 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 photography equipment rental store, 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.

Start Your Free Trial Now Or learn more about our solution here

Also on The Business Plan Shop

Know someone who owns or is thinking of starting a photography equipment rental store? Share our forecasting guide with them!

Guillaume Le Brouster

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.