How to create a financial forecast for a truck and van rental company?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your truck and van rental company.
Putting together a truck and van rental company 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 truck and van rental company.
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 truck and van rental company?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your truck and van rental company and ensure that it can be financially viable in the years to come.
A financial plan for a truck and van rental company enables you to look at your business in detail - from income to operating costs and investments - to evaluate its expected profitability and future cash flows.
This gives you the visibility needed to plan future investments and expansion with confidence.
And, when your trading environment gets tougher, having an up to date truck and van rental company forecast enables you to detect potential upcoming financing shortfalls in advance, enabling you to make adjustments or secure financing before you run out of cash.
It’s also important to remember that your truck and van rental company's financial forecast will be essential when looking for financing. You can be 100% certain that banks and investors will ask to see your numbers, so make sure they’re set out accurately and attractively.
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 truck and van rental company financial forecast?
A truck and van rental company'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 truck and van rental company, 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 truck and van rental company 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 truck and van rental company 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 truck and van rental company's financial forecast.
The sales forecast for a truck and van rental company
From experience, it is usually best to start creating your truck and van rental company financial forecast by your sales forecast.
To create an accurate sales forecast for your truck and van rental company, you will have to rely on the data collected in your market research, or if you're running an existing truck and van rental company, 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:
- Seasonal Demand: The time of year can greatly impact the average price and number of monthly transactions for your truck and van rental company. During peak moving season, typically from May to September, demand for your services will be higher and you may be able to charge higher prices. However, during slower months, such as January and February, you may need to offer discounts or promotions to attract customers.
- Fuel Prices: Fluctuations in fuel prices can affect the average price of your rentals. When fuel prices are high, you may need to increase your prices to cover the additional cost. This could potentially lead to a decrease in the number of monthly transactions as customers may look for more affordable options. Conversely, if fuel prices drop, you may be able to offer lower prices and attract more customers.
- Competition: The presence of other truck and van rental companies in your area can impact your average price and number of monthly transactions. If there are many competitors offering similar services, you may need to adjust your prices to stay competitive. In a highly saturated market, you may need to offer promotions or discounts to attract customers and maintain your market share.
- Economic Conditions: Economic downturns can have a significant impact on your business's sales forecast. During a recession, individuals and businesses may be less likely to move or need to rent trucks and vans, resulting in a decrease in the number of monthly transactions. Additionally, in a struggling economy, customers may be more price-sensitive, meaning you may need to lower your prices to attract business.
- Fleet Availability: The availability of your fleet can affect your average price and number of monthly transactions. If you have a limited number of trucks and vans available, you may need to charge higher prices to make up for the high demand. On the other hand, if you have a surplus of vehicles, you may be able to offer lower prices and attract more customers. It is important to regularly assess your fleet and adjust your prices accordingly to maximize profitability.
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 truck and van rental company
The next step is to estimate the expenses needed to run your truck and van rental company 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 truck and van rental company's operating expenses should include the following items at a minimum:
- Staff Costs: This includes the salaries, benefits, and training costs for your employees who will be responsible for managing the truck and van rentals. This may also include any bonuses or incentives offered to your staff.
- Vehicle Maintenance: As a truck and van rental company, you will need to regularly maintain and service your vehicles to ensure they are in good condition for your customers. This expense can include routine oil changes, tire replacements, and other repairs.
- Fuel Costs: Since your business relies on the use of vehicles, fuel costs will be a significant operating expense. This includes the cost of gasoline or diesel for your trucks and vans.
- Insurance Costs: It is essential to have insurance coverage for your vehicles to protect your business from any potential accidents or damages. This expense may also include liability insurance to cover any damages caused by your rental vehicles.
- Accountancy Fees: As a business owner, you may need to hire an accountant to help with managing your finances, taxes, and other financial matters. This expense can include fees for bookkeeping, tax preparation, and financial advice.
- Office Rent: You may need to rent office space to manage your truck and van rental operations. This expense can include rent, utilities, and other office-related expenses.
- Marketing Expenses: To attract customers and promote your business, you may need to invest in marketing efforts such as advertising, social media marketing, and website development.
- Software Licenses: As a truck and van rental company, you may need to invest in software to manage reservations, track vehicle maintenance, and other business operations. This expense can include licensing fees and subscription costs.
- Banking Fees: You will need to have a business bank account to manage your finances, and this may come with various fees such as transaction fees, overdraft fees, and monthly maintenance fees.
- Vehicle Registration and Licensing: Your rental vehicles will need to be registered and licensed, which can be an ongoing expense. This includes registration fees, license plate fees, and other associated costs.
- Toll and Parking Fees: As your vehicles will be on the road frequently, you will need to budget for toll fees and parking fees when they are used by your customers.
- Cleaning and Sanitizing Expenses: It is essential to keep your rental vehicles clean and sanitized for the safety and satisfaction of your customers. This expense can include cleaning supplies, equipment, and staff wages.
- Repairs and Maintenance: In addition to regular vehicle maintenance, unexpected repairs may arise, and you will need to budget for these expenses.
- Training and Development: To ensure your staff is equipped to handle customer inquiries and manage the rental process efficiently, you may need to invest in training and development programs.
- Customer Service Expenses: Providing excellent customer service is crucial for the success of your truck and van rental company. This expense can include hiring staff dedicated to customer service, training, and customer satisfaction surveys.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small truck and van rental company might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow a truck and van rental company?
Creating and expanding a truck and van rental company also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for a truck and van rental company could include elements such as:
- Trucks and vans: These are the main assets of your truck and van rental company and will likely make up a significant portion of your capital expenditures. These vehicles will be used daily for rentals and will require regular maintenance and updates to ensure they are in good working condition.
- Rental software and technology: In order to efficiently manage your truck and van rental business, you will need to invest in rental software and technology. This may include a reservation system, fleet management software, and other tools to streamline your operations and improve customer experience.
- Office equipment and supplies: As with any business, you will need to invest in basic office equipment and supplies such as computers, printers, furniture, and office supplies. These items are necessary for day-to-day operations and should be factored into your expenditure forecast.
- Maintenance and repairs: In addition to regular maintenance for your vehicles, you will also need to budget for unexpected repairs or replacements. This may include things like engine repairs, tire replacements, or other unexpected issues that may arise with your trucks and vans.
- Facility upgrades: If you own or lease a physical location for your truck and van rental company, you may need to invest in upgrades or renovations to improve the appearance and functionality of your space. This could include things like new signage, painting, or other improvements to attract customers and maintain a professional image.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your truck and van rental 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 truck and van rental company
The next step in the creation of your financial forecast for your truck and van rental 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 truck and van rental company?
Now let's have a look at the main output tables of your truck and van rental company's financial forecast.
The forecasted profit & loss statement
The profit & loss forecast gives you a clear picture of your business’ expected growth over the first three to five years, and whether it’s likely to be profitable or not.
A healthy truck and van rental company's P&L statement should show:
- Sales growing at (minimum) or above (better) inflation
- Stable (minimum) or expanding (better) profit margins
- A healthy level of net profitability
This will of course depend on the stage of your business: numbers for an established truck and van rental company will look different than for a startup.
The projected balance sheet
The projected balance sheet gives an overview of your truck and van rental company'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 truck and van rental company. 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 truck and van rental company 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 truck and van rental company'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 truck and van rental company 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 truck and van rental company's financial projections?
Building a truck and van rental 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 forecasting software to build your truck and van rental company's projections
The modern and easiest way is to use an online financial forecasting tool 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 projection 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 truck and van rental 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 truck and van rental company's financial forecast?
Creating an accurate and error-free truck and van rental 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 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 truck and van rental company 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 truck and van rental company, 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
- Example of financial forecast for business idea
- How to create a sales forecast for a business?
Know someone who owns or is thinking of starting a truck and van rental company? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
