How to create a financial forecast for a swimming pool store?
Developing and maintaining an up-to-date financial forecast for your swimming pool store 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 swimming pool store 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 swimming pool store?
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 swimming pool store becomes handy.
Creating a swimming pool store 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 swimming pool store.
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 swimming pool store 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 swimming pool store'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 swimming pool store financial forecast?
A swimming pool store'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 swimming pool store.
If you are creating (or updating) the forecast of an existing swimming pool store, 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 swimming pool store 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 swimming pool store 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 swimming pool store's financial forecast.
The sales forecast for a swimming pool store
From experience, it usually makes sense to start your swimming pool store's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your swimming pool store (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 swimming pool store'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:
- Local climate: The weather in your area can greatly affect the demand for swimming pool products. If you live in a region with a warm climate, you can expect a higher demand for your products throughout the year. On the other hand, if you live in a colder region, your sales may be lower during the winter months.
- Competition: The presence of other swimming pool stores in your area can impact your average price and number of monthly transactions. If you have strong competition, you may need to lower your prices or offer promotions to attract customers. However, if you are the only store in the area, you may be able to charge higher prices.
- Economic conditions: Economic factors, such as a recession or economic boom, can also affect your sales forecast. During a recession, people may have less disposable income and may not be as willing to spend money on non-essential items like swimming pool products. On the other hand, during an economic boom, people may have more disposable income and may be more willing to invest in their pools.
- Tourism: If your store is located in a popular tourist destination, your sales may fluctuate depending on the tourist season. During peak tourist season, you may see an increase in sales as visitors to the area may need supplies for their rental properties or vacation homes. However, during the off-season, your sales may decrease as fewer people are in the area.
- Demographics: The demographics of your area can also impact your sales forecast. If you are located in a neighborhood with a high percentage of homeowners, you may have a steady stream of customers looking to maintain their pools. However, if you are in an area with a high number of renters, your sales may be lower as renters may not have the same level of investment in pool maintenance.
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.
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 swimming pool store
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your swimming pool store 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 swimming pool store will include some of the following items:
- Staff costs: This includes salaries, wages, and benefits for all employees working at your swimming pool store, such as lifeguards, sales associates, and maintenance staff.
- Accountancy fees: You may need to hire an accountant to help you manage the financial aspect of your swimming pool store, including bookkeeping, tax preparation, and financial reporting.
- Insurance costs: It is important to have insurance for your swimming pool store to protect against potential liabilities, such as accidents or injuries that may occur on your premises.
- Software licenses: You may need to purchase software licenses for programs that can help you manage your inventory, schedule appointments, and track sales at your swimming pool store.
- Banking fees: There may be fees associated with maintaining a business bank account, such as monthly service fees, transaction fees, and wire transfer fees.
- Rent: If you are leasing the space for your swimming pool store, you will need to include rent as one of your operating expenses.
- Utilities: This includes electricity, water, and gas expenses for running your swimming pool store and maintaining a comfortable environment for customers.
- Marketing and advertising: To attract customers to your swimming pool store, you may need to spend money on marketing and advertising efforts, such as social media ads or flyers.
- Supplies and equipment: You will need to purchase supplies and equipment to maintain your swimming pool and run your store, such as cleaning chemicals, pool toys, and cash registers.
- Professional services: You may need to hire professionals, such as pool maintenance technicians or landscapers, to help you keep your swimming pool store in top condition.
- Training and development: It is important to invest in the development of your employees to ensure they have the necessary skills and knowledge to provide excellent service at your swimming pool store.
- Taxes and licenses: As a business owner, you will need to pay taxes and obtain necessary licenses to operate your swimming pool store legally.
- Office supplies: This includes items such as paper, pens, and printer ink that are necessary for running your swimming pool store's administrative tasks.
- Maintenance and repairs: Your swimming pool store and its equipment will require regular maintenance and occasional repairs, which should be included in your operating expenses.
- Delivery and shipping costs: If you offer delivery or shipping services for your products, you will need to factor in the associated costs, such as packaging materials and shipping fees.
This list will need to be tailored to the specificities of your swimming pool store, but should offer a good starting point for your budget.
What investments are needed to start or grow a swimming pool store?
Once you have an idea of how much sales you could achieve and what it will cost to run your swimming pool store, it is time to look into the equipment required to launch or expand the activity.
For a swimming pool store, capital expenditures and initial working capital items could include:
- Swimming pool construction - This includes the cost of building the actual pool, including excavation, materials, and labor. It is a significant capital expenditure for a swimming pool store, as it is the main product being sold.
- Pool equipment - This includes items such as pumps, filters, and heaters, which are necessary for the proper functioning and maintenance of the pool. These items can be expensive and may need to be replaced periodically.
- Pool furniture and accessories - This includes items such as pool chairs, umbrellas, and pool toys, which are necessary for creating a comfortable and enjoyable pool environment for customers. These items can also add to the aesthetic appeal of the pool store.
- Pool renovation or expansion - Over time, a swimming pool store may need to renovate or expand their pool to meet the changing needs and preferences of customers. This can include adding new features or updating the design of the pool, which can be a significant capital expenditure.
- Pool maintenance equipment - In addition to the pool equipment mentioned earlier, a swimming pool store may also need to invest in maintenance equipment such as vacuums, brushes, and testing kits. These items are essential for keeping the pool clean and well-maintained, and may need to be replaced regularly.
Again, this list will need to be adjusted according to the specificities of your swimming pool store.
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 swimming pool store
The next step in the creation of your financial forecast for your swimming pool store 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 swimming pool store?
Now let's have a look at the main output tables of your swimming pool store's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your swimming pool store's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a swimming pool store should normally show:
- Sales growing above inflation
- Stable or expanding (ideally) profit margins
- A net profit
This will of course depend on the stage of your business: a new venture might be loss-making until it reaches its breakeven point in year 2 or 3, for example.
The projected balance sheet
The projected balance sheet gives an overview of your swimming pool store'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 swimming pool store. 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 swimming pool store'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 swimming pool store:
- 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 swimming pool store'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 swimming pool store'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 swimming pool store's financial projections?
Building a swimming pool store 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 projection software to build your swimming pool store'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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional swimming pool store 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 swimming pool store's financial forecast?
Creating an accurate and error-free swimming pool store financial forecast with a spreadsheet is very technical and requires a deep knowledge of accounting and an understanding of financial modelling.
Very few business owners are financially savvy enough to be able to build a forecast themselves on Excel without making mistakes.
Lenders and investors know this, which is why forecasts created on Excel by the business owner are often frowned upon.
Having numbers one can trust is key when it comes to financial forecasting and to that end using software is much safer.
Using financial forecasting software is also faster than using a spreadsheet, and, with the rise of artificial intelligence, software is also becoming smarter at helping us analyse the numbers to make smarter decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and keeping your projections up to date as the year progresses is manual, tedious, and error-prone. Whereas financial projection 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 swimming pool store, 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 swimming pool store
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your swimming pool store.
- 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 swimming pool store. 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
- How to project revenues for a business?
- Financial forecast template for a business idea
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Founder & CEO at The Business Plan Shop Ltd
