How to create a financial forecast for a theme park?
Developing and maintaining an up-to-date financial forecast for your theme park 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 theme park 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 theme park?
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 theme park becomes handy.
Creating a theme park 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 theme park.
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 theme park 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 theme park'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 theme park financial forecast?
A theme park'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 theme park, 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 theme park 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 theme park 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 theme park's financial forecast.
The sales forecast for a theme park
From experience, it is usually best to start creating your theme park financial forecast by your sales forecast.
To create an accurate sales forecast for your theme park, you will have to rely on the data collected in your market research, or if you're running an existing theme park, the historical data of the business, to estimate two key variables:
- The average price
- The number of monthly transactions
To get there, you will need to consider the following factors:
- Rising ticket prices: As you consider your sales forecast for the next three years, keep in mind that increasing ticket prices may affect the number of monthly transactions. If prices rise too steeply, it could discourage potential visitors from making a purchase.
- Weather conditions: Weather can have a significant impact on attendance at a theme park. For example, rainy or extremely hot days may deter visitors, resulting in a decrease in average price and number of monthly transactions. On the other hand, pleasant weather can attract more visitors and potentially increase your average price.
- Competing attractions: If there are other popular theme parks or attractions in the area, it may impact your sales forecast. Visitors may choose to spend their money at a different location, resulting in a decrease in your average price and number of monthly transactions.
- Seasonal events: Seasonal events, such as holidays or special promotions, can greatly affect your sales forecast. For example, if you offer special Halloween or Christmas events, it may attract more visitors and potentially increase your average price. However, if these events do not meet expectations, it could result in a decrease in your average price and number of monthly transactions.
- Economic conditions: Economic conditions, such as a recession or a booming economy, can also impact your sales forecast. During tough economic times, consumers may be less likely to spend money on leisure activities, resulting in a decrease in your average price and number of monthly transactions. On the other hand, during a strong economy, consumers may be more willing to spend money on experiences, potentially increasing your average price and number of monthly transactions.
Once you have an idea of what your future sales will look like, it will be time to work on your overhead budget. Let’s see what this entails.
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 theme park
The next step is to estimate the costs you’ll have to incur to operate your theme park.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your theme park's operating expenses should normally include the following items:
- Staff costs: This includes the salaries and wages of all employees, including ride operators, ticket sellers, maintenance workers, and administrative staff.
- Accountancy fees: You will need to hire an accountant to manage the finances of your theme park, including tax filings, budgeting, and financial analysis.
- Insurance costs: Theme parks are high-risk environments, so you will need to have comprehensive insurance coverage for liability, property damage, and other potential risks.
- Software licences: In order to run your theme park efficiently, you will need to invest in software licenses for various purposes, such as ticketing systems, inventory management, and customer relationship management.
- Banking fees: You will incur fees for processing credit card transactions and for maintaining a business bank account.
- Marketing and advertising: In order to attract visitors to your theme park, you will need to invest in marketing and advertising campaigns, such as print ads, social media promotions, and billboards.
- Utilities: Running a theme park requires a lot of energy, so you will need to cover the costs of electricity, water, and other utilities.
- Maintenance and repairs: With so many rides and attractions, maintenance and repairs will be an ongoing expense to keep your theme park safe and operational.
- Security: Theme parks attract large crowds, so you will need to invest in security measures, such as hiring security guards and installing surveillance cameras.
- Food and beverage: Many visitors will want to purchase snacks and meals while at your theme park, so you will need to cover the costs of food and beverage inventory, as well as any staff needed to prepare and serve it.
- Entertainment: To keep visitors entertained, you may need to hire performers, such as musicians, dancers, or costumed characters, along with any associated fees.
- Cleaning and sanitation: Keeping your theme park clean and sanitized is crucial for the health and safety of your visitors, so you will need to budget for cleaning supplies and staff.
- Office supplies: Administrative tasks, such as printing tickets and managing paperwork, will require office supplies, such as paper, ink, and pens.
- Legal fees: In order to protect your theme park from potential legal issues, you may need to hire a lawyer for advice and representation.
- Training and development: It's important to invest in the training and development of your staff to ensure they are knowledgeable and skilled in their roles, which may involve hiring trainers or investing in online courses.
This list is not exhaustive by any means, and will need to be tailored to your theme park's specific circumstances.
What investments are needed to start or grow a theme park?
Your theme park 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 theme park, these could include:
- Rides and Attractions: This includes the costs of purchasing, installing, and maintaining rides and attractions such as roller coasters, water slides, and themed experiences.
- Buildings and Structures: This covers the construction or renovation of buildings and structures within the theme park, such as restaurants, gift shops, and restrooms.
- Landscaping and Theming: The costs associated with creating and maintaining the overall aesthetic and theming of the park, including plants, trees, and decorations.
- Technology and Equipment: This includes the purchase and installation of technology and equipment necessary for park operations, such as ticketing systems, security systems, and maintenance equipment.
- Infrastructure and Utilities: The costs of building and maintaining necessary infrastructure and utilities for the park, such as roads, parking lots, and water and electricity systems.
Again, this list will need to be adjusted according to the size and ambitions of your theme park.
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 theme park
The next step in the creation of your financial forecast for your theme park 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 theme park?
Now let's have a look at the main output tables of your theme park's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your theme park's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a theme park 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 theme park'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 theme park. 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 projected cash flow statement
A projected cash flow statement for a theme park is used to show how much cash the business is generating or consuming.
The cash flow forecast is usually organised by nature to show three key metrics:
- The operating cash flow: do the core business activities generate or consume cash?
- The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
- The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?
Cash is king and keeping an eye on future cash flows is imperative for running a successful business. Therefore, you should pay close attention to your theme park's cash flow forecast.
If you are trying to secure financing, note that it is customary to provide both yearly and monthly cash flow forecasts in a financial plan - so that the reader can analyze seasonal variation and ensure the theme park 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 theme park's financial projections?
Building a theme park 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 theme park'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
Outsourcing the creation of your theme park financial forecast is another possible solution.
This will cost more than using software as you can expect as your price will have to cover the accountant’s time, software cost, and profit margin.
Price can vary greatly based on the complexity of your business. For a small business, from experience, a simple three-year financial forecast (including a balance sheet, income statement, and cash flow statement) will start at around £700 or $1,000.
Bear in mind that this is for forecasts produced at a single point in time, updating or tracking your forecast against actuals will cost extra.
If you decide to outsource your forecasting:
- Make sure the professional has direct experience in your industry and is able to challenge your assumptions constructively.
- Steer away from consultants using sectorial ratios to build their client’s financial forecasts (these projections are worthless for a small business).
Why not use a spreadsheet such as Excel or Google Sheets to build your theme park's financial forecast?
Creating an accurate and error-free theme park 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 forecast templates for inspiration
The Business Plan Shop has dozens of financial forecast examples available.
Our templates contain both a financial forecast and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Our templates are a great source of inspiration, whether you just want to see what a complete business plan looks like, or are looking for concrete examples of how you should model financial elements in your own forecast.
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 theme park.
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 theme park. 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
- Financial forecast for a business idea
- How to create a sales forecast for a business?
Know someone who runs or wants to start a theme park? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
