How to create a financial forecast for a skydiving club?
Creating a financial forecast for your skydiving club, 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 skydiving club 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 skydiving club?
The financial projections for your skydiving club 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 skydiving club'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 skydiving club financial forecast?
A skydiving club'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 skydiving club, 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 skydiving club 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 skydiving club 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 skydiving club's financial forecast.
The sales forecast for a skydiving club
From experience, it is usually best to start creating your skydiving club financial forecast by your sales forecast.
To create an accurate sales forecast for your skydiving club, you will have to rely on the data collected in your market research, or if you're running an existing skydiving club, 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:
- Seasonal Demand: As a skydiving club owner, you know that the demand for skydiving experiences is highly dependent on the season. During peak season, such as summer or holidays, you can expect an increase in the number of monthly transactions as more people are looking for adventurous activities.
- Weather Conditions: The weather plays a crucial role in the skydiving industry. Unfavorable weather conditions, such as strong winds or heavy rain, can lead to cancellations and rescheduling of appointments, resulting in a decrease in the number of monthly transactions.
- Competition: Your skydiving club may face competition from other similar businesses in the area. If there are other skydiving clubs offering lower prices or better deals, it may impact your average price and the number of monthly transactions as customers may choose to go to your competitors.
- Equipment Maintenance: Skydiving equipment requires regular maintenance and replacement to ensure safety. If your equipment needs frequent repairs or replacements, it may increase your costs and potentially lead to an increase in your average price to cover these expenses.
- Customer Reviews: In today's digital age, online reviews and ratings can greatly impact a business's reputation and success. Positive reviews can attract more customers and lead to an increase in the number of monthly transactions, while negative reviews can deter potential customers and result in a decrease in demand.
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 skydiving club
The next step is to estimate the costs you’ll have to incur to operate your skydiving club.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your skydiving club's operating expenses should normally include the following items:
- Staff Costs: This includes the salaries, benefits, and training costs for the instructors, pilots, and administrative staff.
- Aircraft Expenses: This covers the costs of fuel, maintenance, and repairs for the planes used for skydiving operations.
- Rental Fees: You may need to pay rent for the land or airfield where your skydiving club operates.
- Equipment Costs: This includes the costs of purchasing, maintaining, and replacing parachutes, harnesses, helmets, and other necessary equipment.
- Marketing and Advertising: To attract new customers and promote your club, you may need to spend money on advertising, website development, and social media marketing.
- Accountancy Fees: You may need to hire an accountant to manage your club's finances and file taxes.
- Insurance Costs: To protect your club and its members, you will need to pay for liability insurance, property insurance, and other types of coverage.
- Software Licences: You may need to purchase software for booking appointments, managing payments, and other administrative tasks.
- Utilities: This includes the costs of electricity, water, and other utilities needed for your club's facilities.
- Training and Certification: Instructors and staff may need to undergo regular training and obtain certifications, which can be an ongoing expense for your club.
- Office Supplies: To keep your club running smoothly, you may need to purchase office supplies such as paper, ink, and pens.
- Safety and Maintenance Inspections: To ensure the safety of your equipment and facilities, you may need to regularly conduct inspections and make necessary repairs, which can be costly.
- Banking Fees: This includes fees for processing payments, wire transfers, and other banking services.
- Permits and Licenses: You may need to obtain permits and licenses from local authorities to operate your skydiving club.
- Legal Fees: In case of any legal issues or disputes, you may need to hire a lawyer and pay for legal fees.
This list is not exhaustive by any means, and will need to be tailored to your skydiving club's specific circumstances.
What investments are needed to start or grow a skydiving club?
Creating and expanding a skydiving club also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a skydiving club could include elements such as:
- Aircraft: As a skydiving club, one of your main capital expenditures will be purchasing or leasing aircraft. This includes the initial cost of the aircraft, as well as ongoing maintenance and repairs.
- Parachutes and Equipment: Another important capital expenditure for a skydiving club is the purchase and upkeep of parachutes and other equipment, such as harnesses and helmets. These items need to be replaced periodically to ensure safety and effectiveness.
- Facility Improvements: Your club's facilities are crucial for providing a safe and enjoyable experience for your members. This may include investments in building upgrades, such as new hangars or a larger landing area, as well as improvements to amenities like restrooms and a club house.
- Technology: In today's digital age, investing in technology is becoming increasingly important for businesses. For a skydiving club, this may include purchasing new software for booking and scheduling jumps, as well as investing in GPS systems for tracking aircraft and jumpers.
- Safety Equipment: As safety should always be a top priority, investing in safety equipment is a necessary capital expenditure for a skydiving club. This may include items such as first aid kits, AEDs, and emergency response equipment.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your skydiving club.
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 skydiving club
The next step in the creation of your financial forecast for your skydiving club 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 skydiving club?
Now let's have a look at the main output tables of your skydiving club's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your skydiving club is likely to be in the years to come.
For your skydiving club 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 skydiving clubs, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
The projected balance sheet gives an overview of your skydiving club's financial structure at the end of the financial year.
It is composed of three categories of items: assets, liabilities and equity:
- Assets: are what the business possesses and uses to produce cash flows. It includes resources such as cash, buildings, equipment, and accounts receivable (money owed by clients).
- Liabilities: are the debts of your skydiving club. They include accounts payable (money owed to suppliers), taxes due and bank loans.
- Equity: is the combination of what has been invested by the business owners and the cumulative profits 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 skydiving club 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 skydiving club'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 skydiving club 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 skydiving club'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 skydiving club's financial projections?
Building a skydiving club 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 skydiving club'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.
Calling in a financial consultant or chartered accountant
Outsourcing the creation of your skydiving club 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 skydiving club'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 skydiving club 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 skydiving club'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 forecast templates for inspiration
The Business Plan Shop has dozens of financial forecast examples available.
Our templates contain both a financial forecast and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Our templates are a great source of inspiration, whether you just want to see what a complete business plan looks like, or are looking for concrete examples of how you should model financial elements in your own forecast.
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your skydiving club.
- 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 skydiving club. 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
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- How to project revenues for a business?
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Founder & CEO at The Business Plan Shop Ltd
