How to create a financial forecast for a running club?
Developing and maintaining an up-to-date financial forecast for your running club 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 running club 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 running club?
The financial projections for your running club 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 running club'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 running club financial forecast?
A running 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 running 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 running 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 running 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 running club's financial forecast.
The sales forecast for a running club
The sales forecast, also called topline projection, is normally where you will start when building your running 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 running clubs), and consider the elements below:
- Weather Conditions: As a running club, the weather can greatly impact your average price and number of monthly transactions. For example, during the summer months when the weather is warm and sunny, more people may be inclined to join the club and participate in outdoor activities, resulting in an increase in both average price and monthly transactions. On the other hand, during the winter months when the weather is cold and snowy, there may be a decrease in both average price and monthly transactions as fewer individuals are willing to brave the elements for a run.
- Local Events: Local events such as marathons, charity runs, and fun runs can also affect the average price and number of monthly transactions for your running club. These events can attract more people to the sport of running and increase the demand for your club's services. On the other hand, if there are multiple events happening in close proximity to your club, it may lead to a decrease in both average price and monthly transactions as individuals may choose to participate in the events rather than join your club.
- Membership Options: The types of membership options you offer can also impact your average price and number of monthly transactions. For example, if you offer a variety of membership options such as individual, family, and student memberships, it can attract a wider range of customers and potentially increase both average price and monthly transactions. On the other hand, if you only offer one type of membership, it may limit your customer base and result in a decrease in both average price and monthly transactions.
- Location: The location of your running club can also play a role in the average price and number of monthly transactions. If your club is located in a highly populated and easily accessible area, it may attract more customers and lead to an increase in both average price and monthly transactions. However, if your club is located in a remote or less accessible area, it may limit your customer base and result in a decrease in both average price and monthly transactions.
- Seasonal Trends: Finally, the time of year can also affect your running club's average price and number of monthly transactions. For example, during the summer when people are more likely to be outdoors and active, your club may see an increase in both average price and monthly transactions. On the other hand, during the holiday season when people are busy with other activities, there may be a decrease in both average price and monthly transactions as individuals may prioritize other commitments over joining the club.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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The operating expenses for a running club
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your running 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 running club will include some of the following items:
- Staff Costs: This includes salaries, wages, and benefits for employees such as coaches, trainers, and administrative staff.
- Accountancy Fees: You will need to hire an accountant to ensure accurate record-keeping and tax compliance for your running club.
- Insurance Costs: It is important to have insurance coverage for your running club in case of any accidents or injuries during activities.
- Software Licences: You may need to invest in software for membership management, event registration, or financial tracking.
- Banking Fees: This includes charges for maintaining a business bank account, transaction fees, and ATM fees.
- Marketing and Advertising: You may need to advertise your running club through flyers, social media, or local publications to attract members.
- Equipment Maintenance: Regular maintenance and repairs on equipment such as treadmills, weights, and exercise machines can be a significant expense.
- Rent/Lease: If you have a physical location for your running club, you will need to pay rent or lease fees.
- Utilities: This includes electricity, water, and gas bills for your running club location.
- Office Supplies: You will need to purchase supplies such as paper, printer ink, and stationery for administrative tasks.
- Training and Certification: It is important for your staff to stay up-to-date with training and certifications, which may require fees.
- Event Expenses: If your running club hosts events, you will need to budget for expenses such as permits, refreshments, and medals.
- Travel Expenses: This includes costs for transportation, lodging, and meals for races or events that require travel.
- Uniforms and Gear: You may need to provide uniforms or branded gear for your running club members, which can be an ongoing expense.
- Professional Fees: This includes fees for legal and consulting services that may be necessary for your running club.
This list will need to be tailored to the specificities of your running club, but should offer a good starting point for your budget.
What investments are needed to start or grow a running club?
Creating and expanding a running club also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a running club could include elements such as:
- Running Shoes: As a running club, one of your main expenses will be purchasing running shoes for your members. These are essential for each runner to have and should be included in your expenditure forecast.
- Treadmills: Purchasing treadmills for your club's indoor training sessions is another potential capital expenditure. These machines can be expensive, but they are a great investment for your club's long-term success.
- Timing Systems: If your club hosts races or time trials, you may want to invest in a timing system. This will allow you to accurately track and record your members' race times, making it a valuable asset for your club.
- Team Uniforms: Having a uniform for your running club not only promotes team unity, but it also creates a sense of identity for your members. You may want to budget for purchasing team uniforms as a capital expenditure for your club.
- Storage Equipment: As your club grows, you may need to invest in storage equipment such as lockers or shelving units to keep your running gear organized. This could be considered a capital expenditure as it is a fixed asset for your club.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your running 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 running club
The next step in the creation of your financial forecast for your running 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 running club?
Now let's have a look at the main output tables of your running 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 running 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 running club will look different than for a startup.
The projected balance sheet
Your running 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 running 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 running 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 running 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 running 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 running club's financial forecast?
Creating your running club'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 running club'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
Outsourcing the creation of your running club financial forecast is another possible solution.
This will cost more than using software as you can expect as your price will have to cover the accountant’s time, software cost, and profit margin.
Price can vary greatly based on the complexity of your business. For a small business, from experience, a simple three-year financial forecast (including a balance sheet, income statement, and cash flow statement) will start at around £700 or $1,000.
Bear in mind that this is for forecasts produced at a single point in time, updating or tracking your forecast against actuals will cost extra.
If you decide to outsource your forecasting:
- Make sure the professional has direct experience in your industry and is able to challenge your assumptions constructively.
- Steer away from consultants using sectorial ratios to build their client’s financial forecasts (these projections are worthless for a small business).
Why not use a spreadsheet such as Excel or Google Sheets to build your running 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 running 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 running 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 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 running club, 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 running club
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 running club.
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 running club. 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
Know someone who runs or wants to start a running club? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
