How to create a financial forecast for a tennis and racket sports store?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your tennis and racket sports store.
Putting together a tennis and racket sports store 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 tennis and racket sports store.
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 tennis and racket sports store?
The financial projections for your tennis and racket sports store act as a financial blueprint to guide its growth with confidence and ensure its long-term financial viability.
To create them, you will need to look at your business in detail - from sales to operating costs and investments - to assess how much profit it can generate in the years to come and what will be the associated cash flows.
During challenging market conditions, maintaining an up-to-date financial forecast enables early detection of potential financial shortfalls, allowing for timely adjustments or securing financing before facing a cash crisis.
Your tennis and racket sports store's financial forecast will also prove invaluable when seeking financing. Banks and investors will undoubtedly request a thorough examination of your financial figures, making precision and presentation essential.
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 tennis and racket sports store 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 tennis and racket sports store, 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 tennis and racket sports store 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 tennis and racket sports store, 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 tennis and racket sports store's financial forecast.
The sales forecast for a tennis and racket sports store
From experience, it usually makes sense to start your tennis and racket sports store's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your tennis and racket sports 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 tennis and racket sports 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:
- The launch of a new line of high-end tennis rackets by a popular brand could drive up the average price of rackets sold in your store, as customers may be willing to pay a premium for the latest and greatest equipment.
- A local tournament or event being held in your area could lead to an increase in the number of monthly transactions, as players may need to stock up on supplies or purchase new equipment for the competition.
- An economic downturn could lead to a decrease in the average price of products sold in your store, as customers may be more price sensitive and opt for lower-priced options.
- The emergence of a new trend in the tennis and racket sports industry, such as the popularity of a new training method or the rise of a particular brand, could impact both the average price and number of monthly transactions in your store.
- A change in supplier prices for certain products, such as tennis balls or strings, could affect the average price of these items in your store and potentially impact the number of transactions as customers may seek out better deals elsewhere.
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 tennis and racket sports store
The next step is to estimate the costs you’ll have to incur to operate your tennis and racket sports store.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your tennis and racket sports store's operating expenses should normally include the following items:
- Staff costs: This includes salaries, benefits, and any training or development programs for your employees. As a tennis and racket sports store, you may also need to budget for hiring part-time or seasonal staff during peak seasons.
- Rent: The cost of your physical retail space is a significant expense for any business. Calculate this based on the square footage you need and the average rental rate in your area.
- Inventory: As a retailer, you need to constantly restock your store with new products. Keep track of your inventory turnover rate to ensure you have enough stock without having excess that may go unsold.
- Marketing and advertising: In order to attract customers to your store, you will need to invest in marketing and advertising efforts. This can include social media ads, flyers, or sponsoring local tennis tournaments.
- Utilities: This includes electricity, water, and any other utility bills associated with running your store. Make sure to budget for regular maintenance and repairs to keep your store in top shape.
- Accountancy fees: As a business owner, you will need to hire an accountant to help you with tax preparation and other financial matters. Make sure to budget for their services.
- Insurance costs: Protect your business and your assets by investing in insurance. This can include general liability insurance, property insurance, and worker's compensation insurance.
- Software licenses: You may need to invest in software to help you manage your inventory, point-of-sale system, and other aspects of your business. Make sure to budget for the initial purchase as well as ongoing subscription fees.
- Banking fees: This includes any fees associated with your business bank account, such as transaction fees, monthly maintenance fees, and overdraft fees.
- Equipment maintenance: If you have any equipment in your store, such as cash registers or credit card machines, you will need to budget for regular maintenance and repairs.
- Professional fees: This can include legal fees for any contracts or agreements, consulting fees for business advice, or fees for any other professional services you may need.
- Office supplies: As a retailer, you will need basic office supplies such as paper, pens, and printer ink. Make sure to budget for these items to keep your store running smoothly.
- Credit card processing fees: If you accept credit card payments, you will need to budget for the fees associated with each transaction. These fees can add up, so make sure to factor them into your expenses.
- Taxes: As a business owner, you will need to pay taxes on your profits. Make sure to set aside a portion of your revenue to cover these expenses.
- Shipping and delivery: If you offer online sales or ship products to customers, you will need to budget for shipping and delivery costs. These can include postage, packaging materials, and any fees associated with using a shipping service.
This list is not exhaustive by any means, and will need to be tailored to your tennis and racket sports store's specific circumstances.
What investments are needed to start or grow a tennis and racket sports store?
Your tennis and racket sports store 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 tennis and racket sports store, these could include:
- Inventory: This includes the cost of purchasing inventory such as tennis rackets, balls, apparel, and other equipment to be sold in your store.
- Store Fixtures and Displays: These are the physical structures and shelves used to display and organize the products in your store. This may include racks, shelves, hangers, and mannequins.
- Point of Sale (POS) System: A POS system is essential for processing sales and tracking inventory. This includes hardware, software, and any necessary licenses or subscriptions.
- Store Renovations: If you are opening a new store or renovating an existing one, you may need to budget for expenses such as construction, painting, flooring, and lighting.
- Equipment and Machinery: This includes any large equipment or machinery needed to operate your store, such as cash registers, computers, and security systems.
Again, this list will need to be adjusted according to the size and ambitions of your tennis and racket sports 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 tennis and racket sports store
The next step in the creation of your financial forecast for your tennis and racket sports 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 tennis and racket sports store?
Now let's have a look at the main output tables of your tennis and racket sports store's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your tennis and racket sports store's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a tennis and racket sports 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
Your tennis and racket sports store's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- 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 tennis and racket sports 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 tennis and racket sports 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 tennis and racket sports 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 tennis and racket sports 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 tennis and racket sports store's financial forecast?
Creating your tennis and racket sports store'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 tennis and racket sports 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.
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 tennis and racket sports store 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 tennis and racket sports store's financial forecast?
Creating an accurate and error-free tennis and racket sports store 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 tennis and racket sports store, 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 tennis and racket sports store 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 tennis and racket sports store, 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 revenues for a business?
- Financial forecast for a business idea
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Founder & CEO at The Business Plan Shop Ltd
