How to create a financial forecast for a sports facilities company?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your sports facilities company.
Putting together a sports facilities company financial forecast may sound complex, but don’t worry, with the right tool, it’s easier than it looks, and The Business Plan Shop is here to guide you.
In this practical guide, we'll cover everything you need to know about building financial projections for your sports facilities company.
We will start by looking at why they are key, what information is needed, what a forecast looks like once completed, and what solutions you can use to create yours.
Let's dive in!
Why create and maintain a financial forecast for a sports facilities company?
In order to prosper, your business needs to have visibility on what lies ahead and the right financial resources to grow. This is where having a financial forecast for your sports facilities company becomes handy.
Creating a sports facilities company financial forecast forces you to take stock of where your business stands and where you want it to go.
Once you have clarity on the destination, you will need to draw up a plan to get there and assess what it means in terms of future profitability and cash flows for your sports facilities company.
Having this clear plan in place will give you the confidence needed to move forward with your business’s development.
Having an up-to-date financial forecast for a sports facilities company is also useful if your trading environment worsens, as the forecast enables you to adjust to your new market conditions and anticipate any potential cash shortfall.
Finally, your sports facilities company's financial projections will also help you secure financing, as banks and investors alike will want to see accurate projections before agreeing to finance your business.
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 sports facilities company financial forecast?
A sports facilities 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 sports facilities 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 sports facilities 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 sports facilities 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 sports facilities company's financial forecast.
The sales forecast for a sports facilities company
The sales forecast, also called topline projection, is normally where you will start when building your sports facilities company 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 sports facilities companies), and consider the elements below:
- Seasonal demand: As a sports facilities company, your average price and number of monthly transactions may be affected by seasonal demand. For example, during the summer months, there may be a higher demand for outdoor facilities such as tennis courts and soccer fields, while during the winter months, demand may shift to indoor facilities like basketball courts and swimming pools.
- Competition: The presence of competitors in the area may also impact your average price and number of monthly transactions. If there are other sports facilities companies offering similar services and amenities, you may need to adjust your prices or offer promotions to remain competitive and attract customers.
- Economic conditions: Economic conditions, such as a recession or economic boom, can also affect the average price and number of monthly transactions for your sports facilities company. During a recession, people may have less disposable income and may be less likely to spend money on recreational activities, while during an economic boom, they may have more disposable income and be more willing to spend on sports facilities.
- Weather: The weather can have a significant impact on your business's average price and number of monthly transactions. Inclement weather, such as heavy rain or snow, may lead to cancellations and lower demand for outdoor facilities, while favorable weather conditions may increase demand for your facilities.
- Demographics: The demographics of your target market can also play a role in your average price and number of monthly transactions. For example, if your facilities are located in a predominantly younger, more active area, you may have a higher demand for sports facilities and be able to charge a higher price. Conversely, if your facilities are located in an area with an older population, you may need to adjust your prices and offerings to cater to their needs and preferences.
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 sports facilities company
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your sports facilities company 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 sports facilities company will include some of the following items:
- Staff Costs: This includes salaries, wages, and benefits for all employees working at the sports facilities company. This also includes any contract workers or consultants that you may hire.
- Accountancy Fees: You will need to hire an accountant to handle your company's financial records, tax filings, and other financial matters.
- Insurance Costs: As a sports facilities company, you will need to have insurance coverage for your property, equipment, and liability in case of any accidents or injuries.
- Software Licences: You will need to purchase software licences for any programs or systems that you use to manage your business operations, such as booking and scheduling software.
- Banking Fees: You will have to pay fees for bank services, such as depositing and withdrawing funds, wire transfers, and other transactions.
- Utility Bills: This includes the costs of electricity, water, and other utilities that you use to operate your sports facilities.
- Maintenance and Repairs: As a sports facilities company, you will need to budget for ongoing maintenance and repairs for your equipment, facilities, and grounds.
- Cleaning Services: You will need to hire cleaning services to keep your facilities clean and well-maintained for your customers.
- Marketing and Advertising: To attract customers and promote your services, you will need to budget for marketing and advertising expenses, such as creating and distributing flyers or running social media ads.
- Office Supplies: You will need to purchase office supplies, such as paper, pens, and printer ink, to keep your business operations running smoothly.
- Legal Fees: You may need to hire a lawyer to help with legal matters, such as drafting contracts or handling any legal disputes that may arise.
- Training and Development: To ensure the quality of your services, you may need to invest in training and development programs for your employees.
- Event Expenses: If you host events at your sports facilities, you will need to budget for expenses such as event staff, security, and equipment rental.
- Taxes and Licences: You will need to pay taxes and obtain any necessary licences to operate your sports facilities company.
- Credit Card Processing Fees: If you accept credit card payments, you will need to budget for credit card processing fees charged by payment processors.
This list will need to be tailored to the specificities of your sports facilities company, but should offer a good starting point for your budget.
What investments are needed to start or grow a sports facilities company?
Your sports facilities 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 sports facilities company, these could include:
- Sports Equipment: This includes items such as basketball hoops, soccer goals, and tennis nets. These are essential for the functioning of a sports facility and will need to be replaced or repaired regularly.
- Facility Maintenance: This includes expenses for general upkeep and repairs of the facility, such as HVAC systems, plumbing, and electrical systems. Regular maintenance is crucial to ensure the safety and functionality of the facility.
- Field and Court Resurfacing: Depending on the type of sports facility, this could include resurfacing of basketball courts, tennis courts, or soccer fields. These surfaces can wear out over time and will need to be replaced to maintain safety and quality.
- Scoreboards and Audio Systems: These are important for keeping track of scores and creating a lively atmosphere for players and spectators. Upgrading or replacing these systems may be necessary to keep up with technological advancements and to enhance the overall experience at the facility.
- Locker Room and Concession Stand Renovations: These spaces are often used heavily and may require renovations or updates to maintain cleanliness and functionality. This can include items such as new lockers, seating, and food service equipment.
Again, this list will need to be adjusted according to the size and ambitions of your sports facilities 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 sports facilities company
The next step in the creation of your financial forecast for your sports facilities 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 sports facilities company?
Now let's have a look at the main output tables of your sports facilities 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 sports facilities 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 sports facilities company will look different than for a startup.
The projected balance sheet
The projected balance sheet gives an overview of your sports facilities company'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 sports facilities company. 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 forecast
Your sports facilities company'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 sports facilities company:
- 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 sports facilities company'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 sports facilities company'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 sports facilities company's financial forecast?
Creating your sports facilities 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 projection software to build your sports facilities company's forecast
The modern and easiest way to build a forecast is to use professional financial projection 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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional sports facilities company 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 sports facilities company's financial forecast?
Creating an accurate and error-free sports facilities 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 sports facilities 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 sports facilities company
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your sports facilities company.
- 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 sports facilities company. 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
- Financial forecast example
- Financial forecast for a business idea
- How to project revenues for a business?
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Founder & CEO at The Business Plan Shop Ltd
