How to create a financial forecast for a security system provider?

Developing and maintaining an up-to-date financial forecast for your security system provider 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 security system provider 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 security system provider?
The financial projections for your security system provider 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 security system provider'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 security system provider financial forecast?
A security system provider'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 security system provider, 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 security system provider 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 security system provider 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 security system provider's financial forecast.
The sales forecast for a security system provider
The sales forecast, also called topline projection, is normally where you will start when building your security system provider 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 security system providers), and consider the elements below:
- Increasing demand for smart home security systems: With the rise in smart home technology and the growing concern for home security, more and more consumers are turning to security system providers for their needs. This increase in demand can lead to a higher average price for your security systems and an increase in monthly transactions.
- Technological advancements: As technology continues to evolve, security system providers need to constantly update and improve their products to stay competitive. This may require investing in new equipment and software, which could impact the average price of your systems and the number of monthly transactions as customers upgrade to the latest technology.
- Changes in crime rates: Fluctuations in crime rates can also affect your business's average price and number of monthly transactions. If crime rates increase, more consumers may be willing to pay a higher price for better security systems, leading to an increase in your average price and transactions. On the other hand, a decrease in crime rates may result in a decrease in demand and potentially lower prices.
- Competition in the market: The presence of strong competitors in the market can also impact your business's average price and monthly transactions. If there are several competitors offering similar products at lower prices, you may need to adjust your prices to remain competitive and attract more customers. This could affect your average price and number of monthly transactions.
- Economic conditions: Economic factors such as inflation, consumer confidence, and unemployment rates can also influence your business's average price and monthly transactions. In times of economic uncertainty, consumers may be more cautious with their spending and opt for lower-priced security systems. This could lead to a decrease in your average price and 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.

The operating expenses for a security system provider
The next step is to estimate the expenses needed to run your security system provider 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 security system provider's operating expenses should include the following items at a minimum:
- Staff costs: This includes salaries, benefits, and any other expenses related to your employees. This may also include training and development costs to ensure your staff is equipped to provide top-notch security services.
- Accountancy fees: As a security system provider, you may need to hire an accountant to manage your finances, prepare tax returns, and provide financial advice.
- Insurance costs: Protecting your business and clients is crucial, so you'll need to budget for insurance costs such as liability insurance, property insurance, and workers' compensation insurance.
- Software licenses: To operate your security systems efficiently, you may need to purchase software licenses for programs such as intrusion detection systems, alarm monitoring software, and access control software.
- Banking fees: As a business, you'll need to have a bank account to manage your finances. This may include fees for maintaining the account, wire transfers, and transaction fees.
- Marketing expenses: To attract new clients and promote your services, you'll need to invest in marketing activities such as creating a website, printing marketing materials, and attending trade shows.
- Rent or lease costs: If you operate out of a physical location, you'll need to budget for rent or lease costs. This may also include utilities and maintenance fees.
- Travel expenses: Depending on the size of your business, you may need to travel for client meetings, training, or to attend industry conferences. This could include transportation, lodging, and meal costs.
- Office supplies: To keep your business running smoothly, you'll need to budget for office supplies such as paper, printer ink, and other essential items.
- Legal fees: As a security system provider, you may need to consult with lawyers to ensure your business is compliant with laws and regulations. This may also include fees for drafting contracts and legal documents.
- Telecommunication expenses: To communicate with clients and employees, you'll need to budget for telecommunication expenses such as phone bills and internet fees.
- Maintenance and repair costs: Your security systems will need regular maintenance and repairs to ensure they are functioning properly. This may also include fees for equipment upgrades.
- Training and development: To keep up with the latest technology and industry standards, you'll need to invest in training and development for yourself and your employees.
- Vehicle expenses: If your business requires you to have company vehicles, you'll need to budget for expenses such as gas, insurance, and maintenance.
- Utilities: Depending on your business's physical location, you may need to budget for utilities such as electricity, water, and gas.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small security system provider might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a security system provider?
Your security system provider financial forecast will also need to include the capital expenditures (aka investments in plain English) and initial working capital items required for the creation or development of your business.
For a security system provider, these could include:
- Security Cameras: As a security system provider, investing in high-quality security cameras is crucial for providing reliable surveillance for your clients. These cameras can range from fixed, dome, or pan-tilt-zoom options and can be used for both indoor and outdoor monitoring.
- Access Control Systems: Access control systems are essential for limiting and monitoring access to a building or specific areas within a building. As a security system provider, you may need to invest in keycard or biometric access control systems to provide your clients with the highest level of security.
- Alarm Systems: Alarm systems are a necessary investment for any security system provider. These systems can include door and window sensors, motion detectors, and sirens to alert clients and authorities of any potential break-ins or security breaches.
- Intercom Systems: Intercom systems allow for communication between individuals at different locations within a building. As a security system provider, investing in intercom systems can add an extra layer of security by providing a way for clients to verify the identity of individuals before granting them access.
- Monitoring Equipment: In order to provide 24/7 monitoring services to your clients, you will need to invest in monitoring equipment such as computers, software, and servers. This equipment is essential for receiving and responding to any security alerts from your clients' systems.
Again, this list will need to be adjusted according to the size and ambitions of your security system provider.
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 security system provider
The next step in the creation of your financial forecast for your security system provider 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 security system provider?
Now let's have a look at the main output tables of your security system provider's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your security system provider is likely to be in the years to come.

For your security system provider 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 security system providers, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your security system provider'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 security system provider 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 security system provider'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 security system provider 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 security system provider'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 security system provider's financial projections?
Building a security system provider 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 forecasting software to build your security system provider'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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional security system provider 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 security system provider's financial forecast?
Creating an accurate and error-free security system provider 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 security system provider, 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 security system provider 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 security system provider, 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 sales forecast for a business?
- Financial forecast for a business idea
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