How to create a financial forecast for a tuk-tuk company?
Creating a financial forecast for your tuk-tuk company, and ensuring it stays up to date, is the only way to maintain visibility on future cash flows.
This might sound complex, but with the right guidance and tools, creating an accurate financial forecast for your tuk-tuk company is not that hard.
In this guide, we'll cover everything from the main goal of a financial projection, the data you need as input, to the tables that compose it, and the tools that can help you build a forecast efficiently.
Without further ado, let us begin!
Why create and maintain a financial forecast for a tuk-tuk company?
The financial projections for your tuk-tuk company 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 tuk-tuk company'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 tuk-tuk company 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 tuk-tuk company, 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 tuk-tuk company 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 tuk-tuk company, 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 tuk-tuk company's financial forecast.
The sales forecast for a tuk-tuk company
The sales forecast, also called topline projection, is normally where you will start when building your tuk-tuk company 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 tuk-tuk companies), and consider the elements below:
- Seasonal tourism: Depending on the location of your tuk-tuk business, there may be peak seasons for tourism. This can affect your average price and number of monthly transactions, as more tourists means more potential customers but also potentially higher competition and fluctuating demand. Consider researching and predicting these seasonal patterns to adjust your pricing and marketing strategies accordingly.
- Economic conditions: Changes in the economy can greatly impact the spending habits of your potential customers. If there is a recession or economic downturn, people may be less likely to spend money on leisure activities like tuk-tuk rides. On the other hand, during times of economic growth, people may be more willing to spend money on experiences like riding in a tuk-tuk. Keep an eye on the overall economic climate and adjust your pricing and marketing accordingly.
- Local events and festivals: If your tuk-tuk business is located in a city or town that hosts regular events and festivals, these can greatly impact your average price and number of monthly transactions. During these events, there may be an influx of tourists or locals looking for transportation options, which can drive up demand for tuk-tuks. Consider partnering with event organizers or offering special discounts during these times to attract more customers.
- Competition: The number of tuk-tuk companies operating in your area can greatly affect your business. If there are many competitors, you may need to lower your prices or offer additional services to differentiate yourself and attract customers. On the other hand, if you are the only tuk-tuk company in the area, you may be able to charge higher prices and have more control over the number of monthly transactions.
- Weather: Extreme weather conditions such as heavy rain or snow can greatly impact the demand for tuk-tuk rides. People may be less likely to use your services during inclement weather, leading to a decrease in both average price and number of monthly transactions. Consider offering promotions or discounts during these times to incentivize customers to still use your services.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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The operating expenses for a tuk-tuk company
The next step is to estimate the costs you’ll have to incur to operate your tuk-tuk company.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your tuk-tuk company's operating expenses should normally include the following items:
- Staff Costs: This includes salaries, benefits, and any other expenses related to your employees who operate the tuk-tuks, such as driver training and uniforms.
- Fuel Costs: As a tuk-tuk company, you will have to budget for the cost of fuel for your vehicles.
- Vehicle Maintenance: Tuk-tuks require regular maintenance to keep them in good working condition, so you will need to factor in expenses for oil changes, tire replacements, and other repairs.
- Accountancy Fees: You may choose to hire an accountant to help you manage your finances and file taxes for your tuk-tuk company.
- Insurance Costs: It is important to have insurance coverage for your tuk-tuks to protect your business from any potential accidents or damages.
- Software Licenses: In today's digital age, you may need to invest in software for managing bookings, tracking expenses, and other administrative tasks.
- Marketing Expenses: To attract customers and promote your tuk-tuk services, you may need to budget for marketing activities such as advertisements, flyers, and social media campaigns.
- Rent/Lease Expenses: If you do not own the tuk-tuks, you will have to factor in the cost of renting or leasing them.
- Utilities: This includes expenses for electricity, water, and other utilities needed to run your tuk-tuk operations.
- Permits and Licenses: Depending on your location, you may need to obtain permits and licenses to operate your tuk-tuk company.
- Office Supplies: You will need basic office supplies such as paper, pens, and printer ink for administrative tasks.
- Banking Fees: You may incur fees for bank account maintenance, ATM withdrawals, and other banking services for your tuk-tuk company.
- Vehicle Wash and Cleaning: To maintain a professional image and keep your tuk-tuks in good condition, you will need to budget for regular washing and cleaning expenses.
- Tolls and Parking Fees: If your tuk-tuks operate in urban areas, you may have to pay for tolls and parking fees.
- Vehicle Registration and Taxes: You will need to renew vehicle registration and pay taxes on your tuk-tuks to comply with government regulations.
This list is not exhaustive by any means, and will need to be tailored to your tuk-tuk company's specific circumstances.
What investments are needed to start or grow a tuk-tuk company?
Your tuk-tuk company 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 tuk-tuk company, these could include:
- Tuk-tuk vehicles: This is the most obvious and essential capital expenditure for a tuk-tuk company. You will need to purchase or lease tuk-tuk vehicles to operate your business. The number of vehicles you need will depend on the size of your company and the demand for your services.
- Vehicle maintenance and repairs: In addition to the initial cost of purchasing or leasing tuk-tuks, you will also need to factor in the ongoing expenses of maintaining and repairing your vehicles. This includes regular oil changes, tire replacements, and any unexpected repairs that may arise.
- Vehicle accessories and equipment: Tuk-tuk vehicles require certain accessories and equipment to operate efficiently and safely. Some examples include GPS systems, safety belts, and first aid kits. These items may seem small, but they can add up in terms of cost.
- Vehicle insurance: As with any vehicle, it is important to have insurance for your tuk-tuks to protect your company from potential accidents or damages. This is a necessary expense for any tuk-tuk company and should be factored into your expenditure forecast.
- Office and storage space: Depending on the size of your company, you may need to rent or purchase office and storage space to store your tuk-tuks and other equipment. This is an important expense to consider, as it will directly impact your company's operations and efficiency.
Again, this list will need to be adjusted according to the size and ambitions of your tuk-tuk 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 tuk-tuk company
The next step in the creation of your financial forecast for your tuk-tuk 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 tuk-tuk company?
Now let's have a look at the main output tables of your tuk-tuk 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 tuk-tuk 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 tuk-tuk company will look different than for a startup.
The projected balance sheet
Your tuk-tuk company'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 tuk-tuk 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 tuk-tuk 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 tuk-tuk 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 tuk-tuk company's financial forecast?
Using the right tool or solution will make the creation of your tuk-tuk company's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial projection software to build your tuk-tuk company'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 tuk-tuk company 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 tuk-tuk company's financial forecast?
You and your financial partners need numbers you can trust. Unless you have studied finance or accounting, creating a trustworthy and error-free tuk-tuk company financial forecast on a spreadsheet is likely to prove challenging.
Financial modelling is very technical by nature and requires a solid grasp of accounting principles to be done without errors. This means that using spreadsheet software like Excel or Google Sheets to create accurate financial forecasts is out of reach for most business owners.
Creating forecasts in Excel is also inefficient nowadays:
- Software has advanced to the point where forecasting can be done much faster and more accurately than manually on a spreadsheet.
- With artificial intelligence, the software is capable of detecting mistakes and helping decision-making.
Spreadsheets are versatile tools but they are not tailor-made for reporting. Importing your tuk-tuk company's accounting data in Excel to track actual vs. forecast is incredibly manual and tedious (and so is keeping forecasts up to date). It is much faster to use dedicated financial planning tools like The Business Plan Shop which are built specially 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 forecast shows expected growth, profitability, and cash generation metrics for your tuk-tuk company.
- Tracking actuals vs. forecast and having an up-to-date financial forecast is key to maintaining visibility on your future cash flows.
- Using financial forecasting software is the modern way of creating and maintaining financial projections.
We hope that this guide helped you gain a clearer perspective on the steps needed to create the financial forecast for a tuk-tuk company. Don't hesitate to contact us if you 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
- Financial forecast example
- How to create a sales forecast for a business?
- Example of financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
