How to create a financial forecast for a track driving club?
Developing and maintaining an up-to-date financial forecast for your track driving club 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 track driving club 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 track driving club?
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 track driving club becomes handy.
Creating a track driving club 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 track driving club.
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 track driving club 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 track driving club'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 track driving club financial forecast?
A track driving club'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 track driving club, 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 track driving club 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 track driving club 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 track driving club's financial forecast.
The sales forecast for a track driving club
From experience, it is usually best to start creating your track driving club financial forecast by your sales forecast.
To create an accurate sales forecast for your track driving club, you will have to rely on the data collected in your market research, or if you're running an existing track driving club, 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:
- Average Price: The type and condition of the race track can greatly affect the average price of your club's track driving experiences. A well-maintained and challenging track may command a higher price compared to a smaller or less exciting track.
- Monthly Transactions: Seasonal changes can have a significant impact on the number of monthly transactions for your track driving club. For example, colder months may see a decrease in sales due to unfavorable weather conditions for driving.
- Average Price: The type and availability of vehicles offered by your club can also impact the average price of your experiences. Exotic or high-performance cars may be in higher demand and can justify a higher price point.
- Monthly Transactions: The reputation and marketing efforts of your track driving club can greatly influence the number of monthly transactions. A strong word-of-mouth reputation and effective marketing strategies can attract more customers and increase sales.
- Average Price: The level of customization and personalization offered by your club can also affect the average price of your experiences. Customized packages or options for customers to personalize their driving experience may justify a higher price point.
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 track driving club
The next step is to estimate the expenses needed to run your track driving club on a day-to-day basis.
These will vary based on the level of sales expected, and the location and size of your business.
But your track driving club's operating expenses should include the following items at a minimum:
- Staff costs: Includes salaries, benefits, and payroll taxes for track instructors, maintenance staff, and administrative personnel.
- Accountancy fees: Covers the cost of hiring a professional accountant to manage your club's financial records and tax filings.
- Insurance costs: Includes liability insurance for the track, as well as insurance for any vehicles owned by the club.
- Software licenses: Fees for software programs used for managing memberships, bookings, and track maintenance.
- Banking fees: Covers the cost of maintaining a business bank account and any fees associated with electronic transactions.
- Marketing and advertising expenses: Includes costs for creating and distributing promotional materials, as well as advertising on social media and local publications.
- Utilities: Covers the cost of electricity, water, and other utilities needed to operate the track facility.
- Track maintenance: Includes expenses for repairing and maintaining the track surface, barriers, and other safety equipment.
- Equipment rental: Covers the cost of renting or leasing any necessary equipment, such as vehicles, tools, or timing systems.
- Supplies: Includes expenses for purchasing necessary supplies for track operations, such as fuel, oil, and cleaning products.
- Professional services: Covers fees for hiring outside professionals, such as lawyers or consultants, for specific projects or tasks.
- Training and development: Includes expenses for staff training and development programs to improve skills and knowledge.
- Office expenses: Covers the cost of office supplies, equipment, and furniture for managing administrative tasks.
- Event expenses: Includes costs associated with hosting events, such as catering, equipment rental, and entertainment.
- Miscellaneous expenses: Covers any other miscellaneous expenses related to the operation of the track club.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small track driving club might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a track driving club?
Your track driving club 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 track driving club, these could include:
- Track Maintenance Equipment: This includes items such as lawnmowers, weed whackers, and other landscaping tools to maintain the track and surrounding areas.
- Timing and Scoring System: This system is used to accurately track lap times and scoring during races and events.
- Safety Barriers: These are essential for protecting drivers and their vehicles in case of a crash. Options include tire barriers, concrete barriers, and armco barriers.
- Track Upgrades and Repairs: As the track ages, it will require upgrades and repairs to maintain safety and ensure a smooth driving surface. This could include repaving, resurfacing, or adding new features to the track.
- Clubhouse and Facilities: A clubhouse and other facilities such as restrooms, showers, and a kitchen may be necessary for members to use during events and races.
Again, this list will need to be adjusted according to the size and ambitions of your track driving club.
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 track driving club
The next step in the creation of your financial forecast for your track driving club 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 track driving club?
Now let's have a look at the main output tables of your track driving club's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your track driving club is likely to be in the years to come.
For your track driving club 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 track driving clubs, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
The projected balance sheet gives an overview of your track driving club'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 track driving club. 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 projection
The cash flow forecast of your track driving club 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 track driving club'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 track driving club 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 track driving club'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 track driving club's financial forecast?
Creating your track driving club'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 track driving club'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 track driving club 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 track driving club's financial forecast?
Creating an accurate and error-free track driving club 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 track driving club, 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 track driving club
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 track driving club 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 track driving club, 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
- Sample financial forecast for business idea
- How to project revenues for a business?
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Founder & CEO at The Business Plan Shop Ltd
