How to create a financial forecast for a soundproofing consulting firm?
Developing and maintaining an up-to-date financial forecast for your soundproofing consulting firm 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 soundproofing consulting firm 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 soundproofing consulting firm?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your soundproofing consulting firm and ensure that it can be financially viable in the years to come.
A financial plan for a soundproofing consulting firm 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 soundproofing consulting firm 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 soundproofing consulting firm'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 soundproofing consulting firm financial forecast?
A soundproofing consulting firm'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 soundproofing consulting firm, 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 soundproofing consulting firm 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 soundproofing consulting firm 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 soundproofing consulting firm's financial forecast.
The sales forecast for a soundproofing consulting firm
From experience, it usually makes sense to start your soundproofing consulting firm's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your soundproofing consulting firm (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 soundproofing consulting firm'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:
- Seasonal demand: As the weather gets colder, more people may seek out soundproofing services to keep their homes warm and quiet. This could lead to an increase in average price as demand rises, especially in the winter months.
- Trends in construction: If there is a surge in new construction projects, there may be more opportunities for your soundproofing consulting firm to provide services to new buildings. This could lead to an increase in monthly transactions as well as a higher average price for larger projects.
- Population growth in urban areas: As more people move into cities and urban areas, noise pollution becomes a bigger concern. This could lead to an increase in demand for soundproofing services, resulting in a higher average price and more monthly transactions.
- Technology advancements: With the constant development of new technologies, there may be more innovative and efficient solutions for soundproofing. This could potentially lead to a decrease in average price as materials and techniques become more affordable, but an increase in monthly transactions as more clients seek out these advanced services.
- Changes in building codes: As building codes and regulations continue to evolve, there may be new requirements for soundproofing in certain types of buildings. This could result in an increase in demand for your services, leading to a higher average price and more monthly transactions.
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 soundproofing consulting firm
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your soundproofing consulting firm 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 soundproofing consulting firm will include some of the following items:
- Staff Salaries: This includes all salaries and wages for your employees, including consultants, administrative staff, and any other employees.
- Rent/Lease: This expense covers the cost of renting or leasing office space for your consulting firm.
- Marketing and Advertising: This includes expenses related to promoting your consulting services, such as website development, advertising campaigns, and marketing materials.
- Travel Expenses: As a soundproofing consulting firm, you may need to travel to meet with clients or attend conferences and trade shows. This expense includes airfare, accommodations, and other related costs.
- Professional Fees: This includes fees for any outside consultants or specialists that you may need to hire for specific projects or tasks.
- Accounting and Legal Fees: You may need to hire an accountant or lawyer to help with financial and legal matters for your consulting firm.
- Insurance: As a consulting firm, you will need to have various insurance policies in place, such as professional liability insurance and general business insurance.
- Software Licenses: To run your business efficiently, you may need to purchase software licenses for tools such as project management software, accounting software, and CRM systems.
- Office Supplies: This expense covers the cost of office supplies, such as stationery, printer ink, and other supplies needed for day-to-day operations.
- Telephone and Internet: A reliable phone and internet connection are essential for your consulting business, so this expense covers the cost of these services.
- Utilities: This includes expenses for electricity, water, and other utilities needed to run your office space.
- Training and Development: As a soundproofing consulting firm, it's important to stay up-to-date with industry developments and best practices. This expense covers the cost of training and development for you and your employees.
- Banking Fees: This includes fees for bank transactions, such as wire transfers, credit card processing, and account maintenance.
- Office Equipment and Maintenance: This expense covers the cost of purchasing and maintaining office equipment, such as computers, printers, and furniture.
- Travel and Entertainment: This expense covers the cost of client entertainment and business-related meals while traveling for work.
This list will need to be tailored to the specificities of your soundproofing consulting firm, but should offer a good starting point for your budget.
What investments are needed to start or grow a soundproofing consulting firm?
Creating and expanding a soundproofing consulting firm also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a soundproofing consulting firm could include elements such as:
- Soundproofing Materials: As a soundproofing consulting firm, one of your main expenses will be the materials used to soundproof buildings and rooms. This can include items such as acoustic panels, soundproofing insulation, and specialized sealants and adhesives.
- Acoustic Testing Equipment: In order to accurately assess the soundproofing needs of your clients, you will need to invest in quality acoustic testing equipment. This can include items such as sound level meters, frequency analyzers, and soundproofing software.
- Soundproofing Tools: As with any construction or renovation project, having the right tools is crucial. For a soundproofing consulting firm, this can include items such as drills, saws, hammers, and specialized soundproofing tools like soundproofing putty knives and acoustic sealant guns.
- Transportation: Depending on the size and scope of your projects, you may need to invest in a reliable means of transportation, such as a van or truck, to transport your team and soundproofing materials to job sites.
- Office Space and Equipment: While not a fixed asset, having a dedicated office space and equipment is necessary for the day-to-day operations of your soundproofing consulting firm. This can include items such as computers, printers, office furniture, and office supplies.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your soundproofing consulting firm.
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 soundproofing consulting firm
The next step in the creation of your financial forecast for your soundproofing consulting firm 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 soundproofing consulting firm?
Now let's have a look at the main output tables of your soundproofing consulting firm'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 soundproofing consulting firm'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 soundproofing consulting firm will look different than for a startup.
The projected balance sheet
Your soundproofing consulting firm'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 forecast
Your soundproofing consulting firm's cash flow forecast shows how much cash your business is expected to consume or generate in the years to come.
It is best practice to organise the cash flow forecast by nature to better explain where cash is used or generated by the soundproofing consulting firm:
- Operating cash flow: shows how much cash is generated by the operating activities
- Investing cash flow: shows how much will be invested in capital expenditure to maintain or expand the business
- Financing cash flow: shows if the business is raising new capital or repaying financiers (debt repayment, dividends)
Keeping an eye on (and regularly updating) your soundproofing consulting firm's cash flow forecast is key to ensuring that your business has sufficient liquidity to operate normally and to detect financing requirements as early as possible.
If you are trying to raise capital, you will normally be asked to provide a monthly cash flow forecast in your soundproofing consulting firm's financial plan - so that banks or investors can assess seasonal variation and ensure your business 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 soundproofing consulting firm's financial forecast?
Using the right tool or solution will make the creation of your soundproofing consulting firm's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your soundproofing consulting firm'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 soundproofing consulting firm 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 soundproofing consulting firm'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 soundproofing consulting firm 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 soundproofing consulting firm'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 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 soundproofing consulting firm, 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 soundproofing consulting firm
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 soundproofing consulting firm 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 soundproofing consulting firm, 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 project sales for a business?
- Example of financial forecast for business idea
Know someone who owns or is thinking of starting a soundproofing consulting firm? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
