How to create a financial forecast for a quad store?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your quad store.
Putting together a quad store 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 quad store.
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 quad store?
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 quad store becomes handy.
Creating a quad store 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 quad store.
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 quad store 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 quad store'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 quad store financial forecast?
A quad store'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 quad store, 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 quad store 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 quad store 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 quad store's financial forecast.
The sales forecast for a quad store
The sales forecast, also called topline projection, is normally where you will start when building your quad 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 quad stores), and consider the elements below:
- You are planning to introduce a new line of high-end, luxury quads to your store. This may lead to an increase in the average price of your products, as these high-end quads will be priced higher than your current offerings.
- Your store is located in a popular tourist destination and you are expecting a surge in tourist arrivals in the next three years. This could result in an increase in the number of monthly transactions, as tourists often look for unique and exciting experiences, such as quad riding.
- You have recently invested in new technology and equipment for your store, allowing you to offer more advanced and customized quad options to your customers. This may lead to an increase in the average price, as these advanced quads will be priced higher than your previous models.
- Your store is located near a popular off-roading destination and you have formed a partnership with a local tour company to offer guided quad tours. This could result in an increase in the number of monthly transactions, as tourists and locals alike may be interested in trying out your guided tours.
- You are planning to expand your store to a larger location with more space to display and store your quads. This may lead to an increase in the average price, as you will be able to display a wider range of products and offer a more spacious and comfortable shopping experience for your customers.
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 quad store
The next step is to estimate the expenses needed to run your quad 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 quad store's operating expenses should include the following items at a minimum:
- Staff Costs: This includes salaries, wages, and benefits for all employees working at the quad store. These costs can vary depending on the number of staff you have, their roles and responsibilities, and any potential bonuses or incentives.
- Accountancy Fees: You may need to hire an accountant to manage your financial records, prepare tax returns, and provide financial advice for your quad store. These services come at a cost and should be factored into your operating expenses.
- Insurance Costs: As a quad store owner, it is essential to have insurance coverage to protect your business from potential risks and liabilities. This can include general liability insurance, property insurance, and worker's compensation insurance.
- Software Licences: Your quad store may require various software and applications to manage inventory, sales, and other operations. These software licenses can be a significant expense and should be included in your operating expenses forecast.
- Banking Fees: You will likely need a business bank account for your quad store, and with that comes various banking fees such as monthly maintenance fees, transaction fees, and wire transfer fees. These fees can add up quickly and should be budgeted for accordingly.
- Rent/Lease: If you are not operating your quad store from your own property, you will need to factor in rent or lease expenses for your business location. This can include monthly rent, utilities, and any potential property taxes.
- Marketing and Advertising: To attract customers to your quad store, you may need to invest in marketing and advertising efforts. This can include online ads, print ads, and promotional events. These expenses should be included in your operating expenses forecast.
- Utilities: Your quad store will likely have various utility expenses, such as electricity, water, and gas. These costs should be included in your operating expenses forecast to ensure you have enough funds to cover them.
- Maintenance and Repairs: As with any business, there may be maintenance and repair costs associated with your quad store. This can include equipment repairs, building maintenance, and vehicle maintenance if you have delivery services.
- Inventory Costs: As a quad store, you will need to stock and maintain inventory of various products. This can include purchasing products from suppliers, storing them, and managing inventory levels. These costs should be factored into your operating expenses forecast.
- Professional Services: You may need to hire outside professionals, such as lawyers or consultants, to assist with legal matters or provide expert advice for your quad store. These services come at a cost and should be included in your operating expenses.
- Office Supplies: Your quad store will likely require various office supplies, such as paper, ink, and other stationery items. These costs may seem small, but they can add up over time and should be included in your operating expenses forecast.
- Training and Development: To ensure your staff is knowledgeable and up-to-date with industry trends, you may need to invest in training and development programs. These costs should be included in your operating expenses to ensure your staff has the necessary skills to help your quad store succeed.
- Taxes and Licenses: As a business owner, you will be responsible for various taxes and licenses, such as sales tax and business licenses. These costs should be factored into your operating expenses to avoid any unexpected expenses.
- Waste Disposal: Your quad store may generate waste that needs to be disposed of properly. This can include recycling services, garbage collection, and hazardous waste disposal. These costs should be included in your operating expenses forecast.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small quad store might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a quad store?
Creating and expanding a quad store also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a quad store could include elements such as:
- Quad store building: This includes the purchase or construction of the actual building where your quad store will be located. This is a significant capital expenditure as it is the foundation of your business and will impact your finances for years to come.
- Furniture and fixtures: You will need to invest in furniture and fixtures to create a comfortable and functional shopping environment for your customers. This includes items such as display shelves, checkout counters, and seating areas.
- Point of sale system: A reliable and efficient point of sale system is essential for any retail business, including a quad store. This allows you to track sales, manage inventory, and process transactions quickly and accurately.
- Inventory: As a quad store, you will need to have a variety of products available for sale. This means investing in inventory, which can include items such as quad bikes, accessories, and spare parts.
- Security system: Protecting your business and your assets is crucial, and a good security system is a necessary capital expenditure for a quad store. This can include surveillance cameras, alarm systems, and door locks.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your quad 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.
The financing plan of your quad store
The next step in the creation of your financial forecast for your quad 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 quad store?
Now let's have a look at the main output tables of your quad store'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 quad store'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 quad store will look different than for a startup.
The projected balance sheet
Your quad store'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 cash flow projection
The cash flow forecast of your quad store 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 quad 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 quad 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 quad 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.
Which tool should you use to create your quad store's financial projections?
Building a quad store 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 projection software to build your quad store's forecast
The modern and easiest way to build a forecast is to use professional financial projection 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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional quad store 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 quad store's financial forecast?
Creating an accurate and error-free quad store 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 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 quad 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 quad store
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 quad 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 quad 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.
Also on The Business Plan Shop
- Example of financial forecast
- How to project revenues for a business?
- Example of financial forecast for business idea
Know someone who owns or is thinking of starting a quad store? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
