How to create a financial forecast for a tanker cleaning company?
Creating a financial forecast for your tanker cleaning company, 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 tanker cleaning company 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 tanker cleaning 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 tanker cleaning company becomes handy.
Creating a tanker cleaning 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 tanker cleaning 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 tanker cleaning 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 tanker cleaning 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 tanker cleaning company financial forecast?
A tanker cleaning company'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 tanker cleaning company.
If you are creating (or updating) the forecast of an existing tanker cleaning company, 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 tanker cleaning company 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 tanker cleaning company 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 tanker cleaning company's financial forecast.
The sales forecast for a tanker cleaning company
The sales forecast, also called topline projection, is normally where you will start when building your tanker cleaning 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 tanker cleaning companies), and consider the elements below:
- Seasonal changes in demand: As the demand for oil and gas fluctuates throughout the year, so does the need for tanker cleaning services. During high demand periods, such as winter, you may see an increase in the number of monthly transactions as more tankers are being used and require cleaning.
- Fuel prices: As fuel prices rise, transportation costs for tankers also increase. This can result in higher prices for your cleaning services, which may lead to a decrease in the number of monthly transactions as companies look for cheaper alternatives.
- Environmental regulations: Changes in environmental regulations can have a significant impact on your tanker cleaning business. If new regulations are implemented, requiring stricter cleaning standards, you may need to invest in new equipment or processes, which could increase your average price for services.
- Competition: The presence of other tanker cleaning companies in your area can affect your average price and number of monthly transactions. If you are facing stiff competition, you may need to lower your prices to remain competitive or offer promotions to attract customers, which could impact your average price and number of transactions.
- Technological advancements: The introduction of new technology in the industry, such as automated cleaning systems, could change the way you do business. If your competitors adopt these technologies, it could put pressure on you to also invest in them, which could impact your average price and monthly transactions.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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The operating expenses for a tanker cleaning company
The next step is to estimate the costs you’ll have to incur to operate your tanker cleaning company.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your tanker cleaning company's operating expenses should normally include the following items:
- Staff costs: This includes salaries, wages, benefits, and any other expenses related to your employees who will be responsible for cleaning tankers.
- Accountancy fees: You may need to hire an accountant or use accounting software to manage your company's finances and ensure compliance with tax laws.
- Insurance costs: As a tanker cleaning company, you will need to have insurance to protect your business from any potential liabilities or accidents.
- Software licenses: To operate efficiently, you may need to invest in software licenses for programs that can help with scheduling, invoicing, and other administrative tasks.
- Banking fees: You may incur fees for bank transactions, such as wire transfers or credit card processing, when receiving payments from clients.
- Cleaning supplies: This includes all the necessary supplies and equipment needed to clean tankers, such as brushes, sponges, hoses, and cleaning solutions.
- Transportation costs: You will need to factor in the cost of transporting your employees and equipment to and from job sites.
- Fuel expenses: If your company owns its own vehicles, you will need to budget for fuel costs to operate them.
- Maintenance and repairs: As with any equipment, your cleaning supplies and vehicles will require regular maintenance and occasional repairs.
- Marketing and advertising: To attract clients, you may need to invest in marketing and advertising efforts, such as creating a website, printing business cards, or attending industry events.
- Training and development: It is important to continuously train and develop your employees to ensure they have the necessary skills and knowledge to clean tankers effectively.
- Rent or lease payments: If you do not own a building, you will need to budget for rent or lease payments for a facility to store your equipment and supplies.
- Utilities: This includes expenses for electricity, water, and other necessary utilities for your business operations.
- Legal fees: You may need to consult with a lawyer for legal advice or assistance with contracts or other legal matters.
- Taxes and licenses: As a business owner, you will need to pay taxes and obtain any necessary licenses or permits to operate a tanker cleaning company.
This list is not exhaustive by any means, and will need to be tailored to your tanker cleaning company's specific circumstances.
What investments are needed to start or grow a tanker cleaning company?
Once you have an idea of how much sales you could achieve and what it will cost to run your tanker cleaning company, it is time to look into the equipment required to launch or expand the activity.
For a tanker cleaning company, capital expenditures and initial working capital items could include:
- Tanker Trucks: This is perhaps the most essential capital expenditure for a tanker cleaning company. These trucks are specifically designed to transport and clean large tankers, and they can be quite expensive. You will need to consider the purchase price, as well as ongoing maintenance and repair costs.
- Cleaning Equipment: In addition to tanker trucks, you will also need various cleaning equipment to effectively clean the tanks. This can include high-pressure washers, pumps, hoses, and other specialized tools. These items can be costly, so it is important to budget for them in your expenditure forecast.
- Waste Disposal Equipment: As a tanker cleaning company, you will also need to properly dispose of any waste or residue from the tankers you clean. This may require purchasing specialized equipment such as vacuum trucks, sludge pumps, or disposal tanks. Make sure to include these items in your expenditure forecast.
- Facility Upgrades: If you plan to operate out of a physical location, you may need to make certain upgrades to ensure it is suitable for your business. This could include installing a water treatment system, upgrading electrical or plumbing systems, or building additional storage space for equipment and supplies.
- Safety Gear and Supplies: As a tanker cleaning company, safety should be a top priority. This may require purchasing safety gear such as protective clothing, respirators, gloves, and goggles. You may also need to invest in safety training for your employees and proper signage for your facility.
Again, this list will need to be adjusted according to the specificities of your tanker cleaning 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 tanker cleaning company
The next step in the creation of your financial forecast for your tanker cleaning 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 tanker cleaning company?
Now let's have a look at the main output tables of your tanker cleaning company's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your tanker cleaning company is likely to be in the years to come.
For your tanker cleaning company 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 tanker cleaning companies, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
Your tanker cleaning company'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 projection
The cash flow forecast of your tanker cleaning company 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 tanker cleaning company'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 tanker cleaning company 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 tanker cleaning company'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 tanker cleaning company's financial projections?
Building a tanker cleaning company 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 tanker cleaning 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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional tanker cleaning company 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 tanker cleaning company's financial forecast?
Creating an accurate and error-free tanker cleaning 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 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 tanker cleaning company, 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
- A financial projection shows expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial forecast up-to-date is the only way to maintain visibility on future cash flows.
- Using financial forecasting software makes it easy to create and maintain up-to-date projections for your tanker cleaning company.
You have reached the end of our guide. We hope you now have a better understanding of how to create a financial forecast for a tanker cleaning company. Don't hesitate to contact our team if you have any questions or want to share your experience building forecasts!
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 projections
- How to create a sales forecast for a business?
- Financial forecast for a business idea
Know someone who runs or wants to start a tanker cleaning company? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
