How to create a financial forecast for a surveying firm?
Developing and maintaining an up-to-date financial forecast for your surveying 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 surveying 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 surveying firm?
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 surveying firm becomes handy.
Creating a surveying firm 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 surveying firm.
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 surveying firm 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 surveying firm'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 needed to build a surveying firm financial forecast?
The quality of your inputs is key when it comes to financial modelling: no matter how good the model is, if your inputs are off, so will the forecast.
If you are building a financial plan to start a surveying firm, you will need to have done your market research and have a clear picture of your sales and marketing strategies so that you can project revenues with confidence.
You will also need to have a clear idea of what resources will be required to operate the surveying firm on a daily basis, and to have done your research with regard to the equipment needed to launch your venture (see further down this guide).
If you are creating a financial forecast of an existing surveying firm, things are usually simpler as you will be able to use your historical accounting data as a budgeting base, and complement that with your team’s view on what lies ahead for the years to come.
Let's now zoom in on what will go in your surveying firm's financial forecast.
The sales forecast for a surveying firm
The sales forecast, also called topline projection, is normally where you will start when building your surveying firm 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 surveying firms), and consider the elements below:
- You increase your average price by offering specialized services such as land surveying for large-scale construction projects, which are in high demand in your local area.
- You decrease your average price due to increased competition from other surveying firms in your area, causing you to lower your prices in order to stay competitive.
- Your number of monthly transactions may decrease if there is a decrease in construction activity in your local area, as there will be less demand for your services.
- Your average price may be affected by changes in the cost of materials and equipment needed for surveying projects, as these expenses directly impact your pricing strategy.
- You increase your number of monthly transactions by expanding your services to include environmental surveying, which is a growing market and in demand by developers for environmental impact assessments.
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 surveying firm
The next step is to estimate the costs you’ll have to incur to operate your surveying firm.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your surveying firm's operating expenses should normally include the following items:
- Staff costs: This includes salaries, benefits, and training costs for your surveying team. As a surveying firm, your employees are your most valuable asset, so it's important to factor in their compensation in your operating expenses forecast.
- Accountancy fees: As a business owner, you know the importance of keeping your books in order. Hiring an accountant or using accounting software can help you accurately track your finances and stay compliant with tax laws.
- Insurance costs: As a surveying firm, you will need to invest in insurance to protect your business from potential risks and liabilities. This may include professional liability insurance, general liability insurance, and workers' compensation insurance.
- Software licenses: In today's digital age, software is essential for a surveying firm to operate efficiently. This may include CAD software, GIS software, and project management software, among others. Keep in mind the cost of renewing licenses annually.
- Banking fees: Your business will have various banking needs, such as setting up a business account, making transactions, and managing payroll. These services often come with fees, so be sure to include them in your operating expenses forecast.
- Office rent: Your surveying firm will need a physical space to operate from. This could be a rented office space or a co-working space. Be sure to factor in the cost of rent, utilities, and other expenses associated with your office space.
- Marketing and advertising: To attract new clients and grow your business, you will need to invest in marketing and advertising efforts. This may include creating a website, attending industry events, and running online ads.
- Travel expenses: As a surveying firm, you may have to travel to project sites or meet with clients. Be sure to include travel expenses such as airfare, lodging, and transportation in your operating expenses forecast.
- Professional development: It's important to stay up-to-date with the latest trends and technologies in the surveying industry. This may require investing in professional development courses, conferences, and workshops for you and your team.
- Equipment maintenance: Your surveying equipment is crucial for the success of your business. Regular maintenance and repairs can help extend the lifespan of your equipment and ensure accurate results.
- Office supplies: From paper and pens to printer ink and toner, office supplies are a necessary expense for any business. Be sure to factor in the cost of these supplies in your operating expenses forecast.
- Utilities: Your office space will have ongoing utility expenses such as electricity, water, and internet. Be sure to include these costs in your operating expenses forecast.
- Legal fees: As a business owner, you may encounter legal issues that require the help of a lawyer. Be sure to budget for potential legal fees in your operating expenses forecast.
- Taxes: As a business, you will have to pay various taxes, including income tax, property tax, and sales tax. It's important to accurately estimate these costs in your operating expenses forecast.
- Subcontractor fees: Depending on the size and scope of your projects, you may need to hire subcontractors. Be sure to budget for their fees in your operating expenses forecast.
This list is not exhaustive by any means, and will need to be tailored to your surveying firm's specific circumstances.
What investments are needed to start or grow a surveying firm?
Your surveying firm 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 surveying firm, these could include:
- Land surveying equipment: This includes items such as total stations, GPS receivers, and laser scanners. These tools are essential for conducting accurate and efficient land surveys.
- Office equipment: This includes items such as computers, printers, and scanners. These are necessary for processing and analyzing survey data, as well as creating reports and maps.
- Vehicles: Surveyors often need to travel to various locations for field work. Investing in reliable and durable vehicles, such as trucks or SUVs, is crucial for a surveying firm.
- Software licenses: Surveying firms rely on specialized software for data collection, analysis, and mapping. These software licenses can be expensive, but they are essential for the smooth operation of the firm.
- Surveying instruments: In addition to land surveying equipment, there are other instruments that may be necessary for specific types of surveys, such as hydrographic surveys or aerial surveys. These may include sonar equipment, drones, or LiDAR systems.
Again, this list will need to be adjusted according to the size and ambitions of your surveying 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 surveying firm
The next step in the creation of your financial forecast for your surveying 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 surveying firm?
Now let's have a look at the main output tables of your surveying 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 surveying 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 surveying firm will look different than for a startup.
The projected balance sheet
The projected balance sheet gives an overview of your surveying firm'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 surveying firm. 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 surveying 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 surveying 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 surveying 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 surveying 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 surveying firm's financial projections?
Building a surveying firm 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 surveying firm'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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional surveying 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 surveying 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 surveying 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 surveying 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 forecasting templates available.
Our examples contain both the financial forecast, and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own surveying firm, looking at our template is always a good way to get ideas on how to model financial items and what to write when creating a business plan to secure funding.
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 surveying 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 surveying 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 create a sales forecast for a business?
- Sample financial forecast for business idea
Know someone who owns or is thinking of starting a surveying firm? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
