How to create a financial forecast for a sailing school?
Creating a financial forecast for your sailing school, 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 sailing school 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 sailing school?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your sailing school and ensure that it can be financially viable in the years to come.
A financial plan for a sailing school 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 sailing school 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 sailing school'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.
What information is used as input to build a sailing school financial forecast?
A sailing school'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 sailing school.
If you are creating (or updating) the forecast of an existing sailing school, 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 sailing school 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 sailing school 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 sailing school's financial forecast.
The sales forecast for a sailing school
From experience, it is usually best to start creating your sailing school financial forecast by your sales forecast.
To create an accurate sales forecast for your sailing school, you will have to rely on the data collected in your market research, or if you're running an existing sailing school, 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:
- Weather Conditions: The average price and number of monthly transactions for your sailing school may be affected by weather conditions such as strong winds, heavy rain, or extreme temperatures. These conditions can make it difficult or unsafe for customers to participate in sailing activities, resulting in a decrease in sales.
- Tourism Season: The tourism season in your area can greatly impact the average price and number of monthly transactions for your sailing school. During peak tourism seasons, there may be a higher demand for sailing lessons and charters, resulting in an increase in sales. However, during off-peak seasons, there may be a decrease in demand and therefore a decrease in sales.
- Competition: The presence of other sailing schools in the area can also affect your average price and number of monthly transactions. If there are many competitors offering similar services, you may need to adjust your prices or offer promotions to attract customers, resulting in a potential decrease in average price. Additionally, if there is a highly reputable competitor in the area, it may be more difficult for your sailing school to attract customers, resulting in a decrease in monthly transactions.
- Boat Maintenance and Repairs: The condition of your sailing school's boats can also impact your average price and number of monthly transactions. If your boats are well-maintained and in good condition, customers may be more willing to pay a higher price for lessons or charters. On the other hand, if your boats require frequent repairs, you may need to decrease your prices, resulting in a decrease in average price. Additionally, if your boats are out of commission for extended periods of time, it can impact the number of monthly transactions as customers may be unable to book lessons or charters.
- Economic Factors: The overall state of the economy can also play a role in your sailing school's average price and number of monthly transactions. During times of economic downturn, customers may be more hesitant to spend money on leisure activities like sailing, resulting in a decrease in sales. However, during times of economic growth, customers may be more willing to spend money on leisure activities, potentially resulting in an increase in sales.
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.
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The operating expenses for a sailing school
The next step is to estimate the costs you’ll have to incur to operate your sailing school.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your sailing school's operating expenses should normally include the following items:
- Staff Costs: Salaries, wages, and benefits for sailing instructors, office staff, and other employees.
- Accountancy Fees: Fees for professional accounting services to help manage the financial aspects of your sailing school.
- Insurance Costs: Liability insurance to protect your sailing school in case of accidents or injuries.
- Software Licences: Fees for software programs used for managing bookings, scheduling lessons, and other administrative tasks.
- Banking Fees: Charges for maintaining a business bank account and processing transactions.
- Marketing Expenses: Costs for promoting your sailing school through advertising, website development, and other marketing efforts.
- Rent/Lease: Monthly rent or lease payments for your sailing school’s facilities and equipment.
- Fuel and Maintenance: Costs for fuel and regular maintenance of your sailing boats and other equipment.
- Office Supplies: Expenses for purchasing office supplies such as paper, ink, and other materials.
- Training and Certification Fees: Costs for training and certifying your sailing instructors.
- Utility Bills: Monthly expenses for electricity, water, and other utilities used in your sailing school.
- Professional Memberships: Annual fees for joining professional organizations related to sailing and water sports.
- Safety Equipment: Expenses for purchasing and maintaining safety equipment such as life jackets and first aid kits.
- Permits and Licences: Fees for obtaining necessary permits and licences to operate a sailing school.
- Equipment Repairs: Costs for repairing and replacing damaged or worn-out equipment used in your sailing school.
This list is not exhaustive by any means, and will need to be tailored to your sailing school's specific circumstances.
What investments are needed to start or grow a sailing school?
Once you have an idea of how much sales you could achieve and what it will cost to run your sailing school, it is time to look into the equipment required to launch or expand the activity.
For a sailing school, capital expenditures and initial working capital items could include:
- Sailing Vessels: As a sailing school, one of your main capital expenditures will be purchasing sailing vessels such as sailboats, dinghies, or catamarans. These vessels are essential for teaching students how to sail and should be included in your expenditure forecast.
- Docking and Mooring Equipment: In order to keep your sailing vessels safe and secure, you will need to invest in docking and mooring equipment such as docks, buoys, and anchors. These items will ensure that your vessels are protected from damage and will last for many years.
- Safety Gear: As a sailing school, it is your responsibility to ensure the safety of your students. This includes providing them with safety gear such as life jackets, first aid kits, and emergency flares. These items are necessary for any sailing excursion and should be included in your expenditure forecast.
- Navigation and Communication Equipment: In order to teach students how to navigate and communicate while sailing, you will need to invest in navigation and communication equipment. This may include items such as GPS devices, VHF radios, and compasses. These items will not only enhance the learning experience for your students but also ensure their safety while out on the water.
- Maintenance and Repair Costs: As with any equipment, your sailing vessels and gear will require maintenance and repairs over time. It is important to include these costs in your expenditure forecast to ensure that you have enough funds to keep your equipment in good working condition and to replace any worn or damaged items as needed.
Again, this list will need to be adjusted according to the specificities of your sailing school.
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 sailing school
The next step in the creation of your financial forecast for your sailing school 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 sailing school?
Now let's have a look at the main output tables of your sailing school'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 sailing school'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 sailing school will look different than for a startup.
The projected balance sheet
Your sailing school'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 forecast
Your sailing school's cash flow forecast shows how much cash your business is expected to consume or generate in the years to come.
It is best practice to organise the cash flow forecast by nature to better explain where cash is used or generated by the sailing school:
- Operating cash flow: shows how much cash is generated by the operating activities
- Investing cash flow: shows how much will be invested in capital expenditure to maintain or expand the business
- Financing cash flow: shows if the business is raising new capital or repaying financiers (debt repayment, dividends)
Keeping an eye on (and regularly updating) your sailing school's cash flow forecast is key to ensuring that your business has sufficient liquidity to operate normally and to detect financing requirements as early as possible.
If you are trying to raise capital, you will normally be asked to provide a monthly cash flow forecast in your sailing school's financial plan - so that banks or investors can assess seasonal variation and ensure your business 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 sailing school's financial forecast?
Using the right tool or solution will make the creation of your sailing school's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your sailing school'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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional sailing school 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 sailing school'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 sailing school 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 sailing school'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 sailing school, 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 sailing school
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your sailing school.
- 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 sailing school. 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 create a turnover forecast for a business?
- Financial forecast for a business idea
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Founder & CEO at The Business Plan Shop Ltd
