How to create a financial forecast for a secured transport company?
Creating a financial forecast for your secured transport company, 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 secured transport company 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 secured transport company?
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 secured transport company becomes handy.
Creating a secured transport company 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 secured transport company.
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 secured transport company 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 secured transport company'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 secured transport company 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 secured transport company, 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 secured transport company 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 secured transport company, 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 secured transport company's financial forecast.
The sales forecast for a secured transport company
From experience, it is usually best to start creating your secured transport company financial forecast by your sales forecast.
To create an accurate sales forecast for your secured transport company, you will have to rely on the data collected in your market research, or if you're running an existing secured transport company, 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:
- Increased demand for secure transport due to rising crime rates in major cities
- Introduction of new security measures and technology, leading to increased costs for the business
- Changes in government regulations and policies regarding transportation of high-value goods
- Competition from other secure transport companies offering lower prices or better services
- Major events or disasters that require increased security and transportation of valuable assets
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 secured transport company
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your secured transport company 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 secured transport company will include some of the following items:
- Staff Costs: This includes salaries, wages, and benefits for your employees who are involved in the day-to-day operations of the company. This can also include training, uniforms, and any other related expenses.
- Accountancy Fees: As a secured transport company, you will need to ensure proper financial management and compliance. This may require hiring an accountant or outsourcing accounting services, which will incur fees.
- Insurance Costs: As a transport company, you will need to have insurance coverage for your vehicles, cargo, and liability. This can include commercial auto insurance, cargo insurance, and general liability insurance.
- Software Licenses: To efficiently manage your operations, you may need to invest in software for tracking shipments, managing inventory, and other logistics processes. These software licenses will incur ongoing fees.
- Banking Fees: As a business, you will need to have a bank account to manage your finances. This will incur fees for transactions, wire transfers, and other banking services.
- Fuel Expenses: Your transport company will have ongoing fuel expenses for your vehicles. These costs can fluctuate depending on fuel prices and the distance traveled.
- Maintenance and Repairs: As with any vehicle, your transport company's vehicles will require regular maintenance and repairs. This can include oil changes, tire replacements, and other necessary repairs.
- Vehicle Registration and Permits: Your company will need to register your vehicles and obtain proper permits to operate legally. These fees may vary depending on the type of vehicle and the location of your operations.
- Toll and Parking Fees: Your vehicles will incur toll fees and parking fees when transporting goods. These costs can add up, especially if your operations cover a large geographic area.
- Security Measures: As a secured transport company, you will need to invest in security measures to protect your vehicles and cargo. This can include GPS tracking systems, security cameras, and other security equipment.
- Marketing and Advertising: To attract clients and promote your services, you may need to invest in marketing and advertising efforts. This can include print ads, online ads, and other promotional activities.
- Office Rent and Utilities: Your company may have a physical office where you manage operations and handle administrative tasks. This will incur rent and utility expenses.
- Vehicle and Cargo Insurance: In addition to general insurance, you may need to invest in specific insurance for your vehicles and cargo to protect against theft, damage, or loss.
- Employee Benefits: In addition to salaries, your company may offer employee benefits such as health insurance, retirement plans, and paid time off. These expenses can add up over time.
- Training and Development: As a secured transport company, you may need to invest in ongoing training and development programs for your employees to ensure they are up-to-date with industry regulations and best practices.
This list will need to be tailored to the specificities of your secured transport company, but should offer a good starting point for your budget.
What investments are needed to start or grow a secured transport company?
Once you have an idea of how much sales you could achieve and what it will cost to run your secured transport company, it is time to look into the equipment required to launch or expand the activity.
For a secured transport company, capital expenditures and initial working capital items could include:
- Fleet Vehicles: As a secured transport company, you will need to invest in a fleet of vehicles to transport goods and materials. This can include trucks, vans, and other specialized vehicles designed for secure transportation.
- Security Equipment: To ensure the safety and security of your transported goods, you will need to invest in various security equipment such as surveillance cameras, alarms, tracking devices, and secure storage containers.
- Communication Devices: As a secured transport company, effective communication is crucial. Therefore, you will need to invest in reliable communication devices such as two-way radios, satellite phones, and GPS systems to stay connected with your drivers and clients.
- Warehouse and Storage Facilities: In order to store and secure your transported goods, you will need to invest in warehouse and storage facilities. This can include purchasing or renting a warehouse, as well as investing in security measures for the facility.
- Equipment and Maintenance: Your transport vehicles and other equipment will need regular maintenance and repairs to ensure they are operating efficiently and safely. Therefore, you will need to budget for expenses related to equipment and vehicle maintenance, as well as any necessary equipment upgrades.
Again, this list will need to be adjusted according to the specificities of your secured transport company.
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 secured transport company
The next step in the creation of your financial forecast for your secured transport company 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 secured transport company?
Now let's have a look at the main output tables of your secured transport company's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your secured transport company's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a secured transport company should normally show:
- Sales growing above inflation
- Stable or expanding (ideally) profit margins
- A net profit
This will of course depend on the stage of your business: a new venture might be loss-making until it reaches its breakeven point in year 2 or 3, for example.
The projected balance sheet
Your secured transport company'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 secured transport company 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 secured transport company'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 secured transport company 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 secured transport company'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 secured transport company's financial forecast?
Creating your secured transport company'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 secured transport company'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
Outsourcing the creation of your secured transport company 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 secured transport company's financial forecast?
Creating an accurate and error-free secured transport company 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 forecasting templates available.
Our examples contain both the financial forecast, and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own secured transport company, looking at our template is always a good way to get ideas on how to model financial items and what to write when creating a business plan to secure funding.
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 secured transport company 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 secured transport company, 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 create a turnover forecast for a business?
- Sample financial forecast for business idea
Know someone who owns or is thinking of starting a secured transport company? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
