How to create a financial forecast for a travel accessories wholesaler?
Developing and maintaining an up-to-date financial forecast for your travel accessories wholesaler 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 travel accessories wholesaler 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 travel accessories wholesaler?
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 travel accessories wholesaler becomes handy.
Creating a travel accessories wholesaler 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 travel accessories wholesaler.
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 travel accessories wholesaler 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 travel accessories wholesaler'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 needed to build a travel accessories wholesaler 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 travel accessories wholesaler, 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 travel accessories wholesaler 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 travel accessories wholesaler, 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 travel accessories wholesaler's financial forecast.
The sales forecast for a travel accessories wholesaler
The sales forecast, also called topline projection, is normally where you will start when building your travel accessories wholesaler 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 travel accessories wholesalers), and consider the elements below:
- Seasonal Trends: As a travel accessories wholesaler, your business may experience fluctuations in demand throughout the year. For example, during the summer months, there may be an increase in sales for beach and outdoor accessories, while in the winter months, there may be a higher demand for winter travel gear.
- Economic Conditions: Changes in the economy can also impact the average price and number of monthly transactions for your business. A downturn in the economy may lead to consumers cutting back on travel and therefore, a decrease in sales for your travel accessories.
- Competitive Pricing: The prices of your competitors can also affect your business's average price and number of transactions. If your competitors are offering lower prices for similar travel accessories, it may lead to a decrease in your sales and average price as consumers opt for the cheaper option.
- Trends and Fashion: The travel industry is constantly evolving, and as a result, consumers' preferences for travel accessories may change. Keeping up with the latest trends and fashion in travel accessories can help attract more customers and potentially increase your average price and number of transactions.
- Changes in Travel Regulations: Any changes in travel regulations, such as increased security measures, can also impact your business's sales. For example, if new security regulations require travelers to purchase specific types of accessories, it may lead to an increase in demand for those items, resulting in higher sales and average price for your business.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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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 travel accessories wholesaler
The next step is to estimate the costs you’ll have to incur to operate your travel accessories wholesaler.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your travel accessories wholesaler's operating expenses should normally include the following items:
- Staff Costs: This includes salaries, wages, and benefits for your employees. As a travel accessories wholesaler, you will need a team of salespeople, administrative staff, and warehouse workers to keep your business running smoothly.
- Accountancy Fees: You will need to hire an accountant to help you manage your financial records, prepare tax returns, and provide financial advice. This is an essential expense for any business, including a travel accessories wholesaler.
- Insurance Costs: As a wholesaler, you will need to protect your business from potential risks such as theft, damage, and liability. This may include general liability insurance, property insurance, and workers' compensation insurance.
- Software Licences: To manage your inventory, sales, and finances, you will need to invest in software licenses. This may include accounting software, inventory management software, and customer relationship management (CRM) software.
- Banking Fees: You will need to maintain a business bank account to manage your finances. This may include fees for maintaining the account, wire transfers, and credit card processing fees.
- Rent: If you have a physical location for your business, you will need to pay rent for the space. This expense can vary depending on the location and size of your space.
- Utilities: This includes expenses for electricity, water, and other utilities for your business. As a wholesaler, you may have a warehouse or showroom that requires a significant amount of energy.
- Marketing and Advertising: To attract customers, you will need to invest in marketing and advertising efforts. This may include creating a website, running social media ads, and attending trade shows.
- Travel Expenses: As a travel accessories wholesaler, you may need to travel to trade shows or visit suppliers. This includes expenses for airfare, lodging, and transportation.
- Office Supplies: You will need to purchase office supplies such as paper, ink, and pens to keep your business running. These expenses can add up over time.
- Shipping and Freight Costs: As a wholesaler, you will need to ship your products to customers and receive shipments from suppliers. This includes expenses for shipping, packaging materials, and customs fees.
- Professional Memberships: Joining professional organizations and associations can provide networking opportunities and industry resources. However, there may be membership fees associated with these organizations.
- Legal Fees: You may need to hire a lawyer to help you with contracts, trademark registration, and other legal matters related to your business.
- Taxes: As a business owner, you will need to pay taxes on your profits. This may include income tax, sales tax, and payroll taxes.
- Office Equipment: In addition to supplies, you may need to purchase office equipment such as computers, printers, and furniture to keep your business running smoothly.
This list is not exhaustive by any means, and will need to be tailored to your travel accessories wholesaler's specific circumstances.
What investments are needed to start or grow a travel accessories wholesaler?
Once you have an idea of how much sales you could achieve and what it will cost to run your travel accessories wholesaler, it is time to look into the equipment required to launch or expand the activity.
For a travel accessories wholesaler, capital expenditures and initial working capital items could include:
- Inventory: As a travel accessories wholesaler, you will need to purchase inventory in bulk to meet the demand of your customers. This can include items such as luggage, travel bags, travel-sized toiletries, and other accessories.
- Warehouse Space: In order to store and organize your inventory, you will need to invest in warehouse space. This could include renting or purchasing a warehouse, as well as any necessary equipment for storage and organization.
- Fulfillment and Shipping Equipment: As a wholesaler, you will need to fulfill and ship orders to your customers. This may require investing in equipment such as packaging materials, labeling machines, and shipping software to streamline the process and ensure timely delivery.
- Technology: In today's digital age, having the right technology is crucial for running a successful business. This can include investing in a website, inventory management software, and point-of-sale systems to track sales and manage customer information.
- Office Furniture and Equipment: As a travel accessories wholesaler, you will need a dedicated office space to manage your business operations. This may include purchasing desks, chairs, computers, and other office equipment to create a functional and comfortable workspace.
Again, this list will need to be adjusted according to the specificities of your travel accessories wholesaler.
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 travel accessories wholesaler
The next step in the creation of your financial forecast for your travel accessories wholesaler 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 travel accessories wholesaler?
Now let's have a look at the main output tables of your travel accessories wholesaler's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your travel accessories wholesaler's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a travel accessories wholesaler 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 travel accessories wholesaler'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 projected cash flow statement
A projected cash flow statement for a travel accessories wholesaler 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 travel accessories wholesaler'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 travel accessories wholesaler 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 travel accessories wholesaler's financial forecast?
Using the right tool or solution will make the creation of your travel accessories wholesaler's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial projection software to build your travel accessories wholesaler'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 travel accessories wholesaler 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 travel accessories wholesaler's financial forecast?
Creating an accurate and error-free travel accessories wholesaler 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
- 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 travel accessories wholesaler 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 travel accessories wholesaler, 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 sales for a business?
- Sample financial forecast for business idea
Know someone who owns or is thinking of starting a travel accessories wholesaler? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
