How to create a financial forecast for a self storage company?
Developing and maintaining an up-to-date financial forecast for your self storage company 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 self storage company 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 self storage company?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your self storage company and ensure that it can be financially viable in the years to come.
A financial plan for a self storage company 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 self storage company 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 self storage company'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 self storage company financial forecast?
A self storage company'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 self storage company, 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 self storage company 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 self storage company 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 self storage company's financial forecast.
The sales forecast for a self storage company
From experience, it usually makes sense to start your self storage company's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your self storage company (which can be used as a starting point for existing businesses) and the data collected in your market research (which both new ventures and existing businesses need to project their sales forward).
Your self storage company's sales forecast can be broken down into two key estimates:
- The average price
- The number of monthly transactions
To assess these variables accurately, you will need to consider the following factors:
You are advising the owner of a self storage company on the creation of a sales forecast for the next three years. The following are examples of drivers that may affect your business's average price or number of monthly transactions:
- Economic conditions: Fluctuations in the economy can affect the demand for self storage units. During economic downturns, people may need to downsize or move to smaller homes, resulting in increased demand for storage. On the other hand, during economic booms, people may have more disposable income to spend on bigger homes and may not require storage units.
- Seasonal demand: Depending on the location of your self storage facility, there may be seasonal fluctuations in demand. For example, if your facility is located in a college town, you may experience higher demand during the summer months when students are moving in and out of dorms and apartments.
- Competition: The presence of other self storage facilities in the area can impact your average price and number of monthly transactions. If there are many competitors offering similar services at lower prices, you may need to adjust your prices or offer promotions to remain competitive.
- Population growth: The growth of the population in your area can directly impact the demand for self storage units. An increase in population means more potential customers and higher demand for storage space.
- Location and accessibility: The location and accessibility of your self storage facility can also affect your sales. A facility that is easily accessible and in a convenient location may attract more customers and allow you to charge higher prices.
Once you have a sales forecast in place, the next step will be to work on your overhead budget. Let’s have a look at that now.
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 self storage company
The next step is to estimate the costs you’ll have to incur to operate your self storage company.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your self storage company's operating expenses should normally include the following items:
- Staff Costs: This includes the salaries, benefits, and training costs for your employees at the self storage facility. It also includes any additional costs such as uniforms, employee insurance, and payroll taxes.
- Accountancy Fees: As a self storage company, you will need to hire a professional accountant to handle your financial records and tax filings. These fees can include bookkeeping, tax preparation, and financial consulting services.
- Insurance Costs: You will need to have insurance coverage for your self storage facility to protect against any potential damages or losses. This could include property insurance, liability insurance, and workers' compensation insurance.
- Software Licences: In order to efficiently manage your self storage facility, you will need to invest in software for tasks such as inventory management, customer billing, and security monitoring. These software licences can come at a significant cost.
- Banking Fees: You will need to have a business bank account to handle your financial transactions. This may include fees for maintaining the account, wire transfers, and credit card processing fees.
- Marketing Expenses: To attract customers, you will need to invest in marketing efforts such as online advertising, local marketing, and promotional materials. These expenses can vary depending on your target market and marketing strategy.
- Maintenance Costs: You will need to regularly maintain your self storage facility to ensure it is in good condition for your customers. This can include repairs, cleaning services, and landscaping.
- Utilities: You will need to cover the costs of utilities such as electricity, water, and gas for your self storage facility. This may also include internet and phone services for your office.
- Security Expenses: As a self storage company, you are responsible for ensuring the safety and security of your customers' belongings. This may include expenses for security cameras, alarms, and security personnel.
- Legal Fees: You may need to hire a lawyer to help with legal aspects of your self storage business, such as drafting contracts, handling disputes, and ensuring compliance with laws and regulations.
- Property Taxes: You will need to pay property taxes on your self storage facility to the local government. This cost can vary depending on the location and value of your property.
- Inventory Costs: To keep your self storage facility stocked with necessary supplies, you will need to purchase inventory such as storage units, locks, and packing materials.
- Waste Management: You will need to properly dispose of any waste generated by your self storage facility. This may include hiring a waste management company or purchasing trash bins.
- Professional Memberships: To stay updated on industry trends and network with other self storage professionals, you may choose to join professional organizations and attend conferences. These memberships and events can come at a cost.
- Training and Development: It is important to invest in training and development for yourself and your staff to continually improve your self storage business. This may include attending seminars, workshops, or online courses.
This list is not exhaustive by any means, and will need to be tailored to your self storage company's specific circumstances.
What investments are needed to start or grow a self storage company?
Your self storage company 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 self storage company, these could include:
- Storage Units: This is the most essential capital expenditure for a self storage company. These units are the primary source of revenue for your business and need to be well-maintained and secure. You may need to invest in building or purchasing storage units, as well as ongoing maintenance and repairs.
- Security Systems: As a self storage company, it is crucial to provide a safe and secure environment for your customers' belongings. This may include investing in security cameras, alarms, access control systems, and other security measures to protect your facility and your customers' items.
- Office Equipment and Supplies: Your self storage company will also need to invest in office equipment and supplies such as computers, printers, furniture, and stationery to manage day-to-day operations. These items are considered fixed assets and will need to be replaced or upgraded periodically.
- Vehicle Fleet: Depending on the size of your self storage company, you may need to invest in a fleet of vehicles for transportation and maintenance purposes. This could include trucks, vans, and other vehicles to help with moving items in and out of the storage units and to maintain the facility.
- Climate Control Systems: If you offer climate-controlled storage units, you may need to invest in specialized HVAC systems to maintain the proper temperature and humidity levels. This can be a significant capital expenditure, but it is necessary to protect certain types of items, such as sensitive documents or electronics.
Again, this list will need to be adjusted according to the size and ambitions of your self storage 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 self storage company
The next step in the creation of your financial forecast for your self storage 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 self storage company?
Now let's have a look at the main output tables of your self storage company'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 self storage company'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 self storage company will look different than for a startup.
The projected balance sheet
Your self storage company'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 self storage 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 self storage 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 self storage 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 self storage 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 self storage company's financial forecast?
Creating your self storage 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 self storage company'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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional self storage company 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 self storage company's financial forecast?
Creating an accurate and error-free self storage company 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 self storage company, 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 self storage company
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 self storage company.
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 self storage company. 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
- Financial forecast template for a business idea
- How to project sales for a business?
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Founder & CEO at The Business Plan Shop Ltd
