How to create a financial forecast for a sightseeing boat company?
Creating a financial forecast for your sightseeing boat 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 sightseeing boat 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 sightseeing boat company?
The financial projections for your sightseeing boat company 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 sightseeing boat company'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 sightseeing boat company financial forecast?
A sightseeing boat company'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 sightseeing boat company.
If you are creating (or updating) the forecast of an existing sightseeing boat company, 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 sightseeing boat company 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 sightseeing boat company 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 sightseeing boat company's financial forecast.
The sales forecast for a sightseeing boat company
From experience, it usually makes sense to start your sightseeing boat company's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your sightseeing boat 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 sightseeing boat 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:
- Weather conditions: As a sightseeing boat company, you are highly dependent on favorable weather conditions for customers to book your tours. Inclement weather can result in cancellations or lower demand, affecting your average price and number of monthly transactions.
- Tourist season: The demand for sightseeing boat tours is heavily influenced by the tourist season in your area. During peak tourist season, you can expect a higher average price and more monthly transactions, while off-season may see a decrease in both.
- Competition: Your company's prices and offerings may be impacted by the presence of competitors in your area. If there are many other sightseeing boat companies operating in the same location, you may need to adjust your prices and promotions to remain competitive and attract customers.
- Special events: Special events such as festivals, concerts, or major sporting events can greatly impact the demand for sightseeing boat tours. Depending on the location and timing of these events, you may experience an increase or decrease in average price and monthly transactions.
- Customer demographics: The demographics of your target customers can also affect your business's average price and number of monthly transactions. For example, if your tours cater to families with young children, you may see higher demand during school breaks and holidays, while catering to older adults may result in more bookings during retirement season.
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.
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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 sightseeing boat company
The next step is to estimate the expenses needed to run your sightseeing boat company 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 sightseeing boat company's operating expenses should include the following items at a minimum:
- Staff costs: This includes salaries, wages, and benefits for employees such as captains, deckhands, and tour guides.
- Fuel costs: Running a sightseeing boat company requires fuel to power the boats, and this can be a significant expense.
- Maintenance and repairs: Boats require regular maintenance and occasional repairs to keep them in good working condition.
- Docking fees: You will need to pay fees for docking your boats at a marina or port.
- Marketing and advertising: It's important to promote your sightseeing boat company to attract customers, and this can involve expenses such as creating brochures, ads, and social media campaigns.
- Insurance costs: As with any business, you will need to have insurance to protect your company and its assets.
- Accountancy fees: You may need to hire an accountant to help manage your company's finances and taxes.
- Permits and licenses: Depending on where you operate, you may need to obtain permits and licenses to run your sightseeing boat company.
- Office supplies: You will need basic office supplies such as paper, pens, and printer ink to keep your business running smoothly.
- Software licenses: If you use any software to manage bookings, payments, or other aspects of your business, you will need to pay for software licenses.
- Banking fees: You may be charged fees for processing credit card payments or making wire transfers.
- Rent or lease payments: If you do not own the boats you use, you will need to pay rent or lease payments to the boat's owner.
- Utilities: This includes expenses such as electricity, water, and internet for your office or dock.
- Training and certifications: Your staff may need to undergo training and obtain certifications to operate the boats and provide tours.
- Professional services: You may need to hire outside professionals such as lawyers or consultants for specific tasks or projects.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small sightseeing boat company might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a sightseeing boat company?
Your sightseeing boat 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 sightseeing boat company, these could include:
- Boat Purchases: This is the most obvious and significant capital expenditure for a sightseeing boat company. As the main asset of your business, you will need to invest in purchasing boats that are suitable for sightseeing tours. This may include purchasing new boats or used ones, depending on your budget and business needs.
- Boat Upgrades and Maintenance: In addition to purchasing boats, you will also need to allocate funds for regular maintenance and upgrades. This may include engine repairs, hull cleaning, and other necessary upgrades to ensure the safety and efficiency of your boats. Don't forget to factor in the cost of spare parts and labor for these expenses.
- Dock and Marina Fees: As a sightseeing boat company, you will need to secure a location to dock your boats. Depending on the location and demand, dock and marina fees can be a significant capital expenditure. Make sure to research and negotiate the best prices and terms for these fees.
- Ticketing and Reservation System: To manage bookings and sales, you will need to invest in a ticketing and reservation system. This may include purchasing software, hardware, and training for your staff. Make sure to choose a reliable and user-friendly system that can handle the volume of your bookings.
- Safety Equipment and Supplies: As a responsible boat company, you will need to invest in safety equipment and supplies to ensure the safety of your passengers. This may include life jackets, first aid kits, fire extinguishers, and other necessary safety equipment. Don't compromise on the quality of these items as they are crucial for the well-being of your customers.
Again, this list will need to be adjusted according to the size and ambitions of your sightseeing boat 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 sightseeing boat company
The next step in the creation of your financial forecast for your sightseeing boat 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 sightseeing boat company?
Now let's have a look at the main output tables of your sightseeing boat 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 sightseeing boat 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 sightseeing boat company will look different than for a startup.
The projected balance sheet
Your sightseeing boat 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 projected cash flow statement
A projected cash flow statement for a sightseeing boat company is used to show how much cash the business is generating or consuming.
The cash flow forecast is usually organised by nature to show three key metrics:
- The operating cash flow: do the core business activities generate or consume cash?
- The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
- The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?
Cash is king and keeping an eye on future cash flows is imperative for running a successful business. Therefore, you should pay close attention to your sightseeing boat company's cash flow forecast.
If you are trying to secure financing, note that it is customary to provide both yearly and monthly cash flow forecasts in a financial plan - so that the reader can analyze seasonal variation and ensure the sightseeing boat company 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 sightseeing boat company's financial projections?
Building a sightseeing boat company 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 sightseeing boat 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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional sightseeing boat 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 sightseeing boat company's financial forecast?
Creating an accurate and error-free sightseeing boat 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 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 sightseeing boat 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 sightseeing boat 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 sightseeing boat 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 sightseeing boat 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
- How to project revenues for a business?
- Financial forecast template for a business idea
Know someone who runs or wants to start a sightseeing boat company? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
