How to create a financial forecast for a wedding planning company?
Creating a financial forecast for your wedding planning 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 wedding planning 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 wedding planning company?
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 wedding planning company becomes handy.
Creating a wedding planning company 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 wedding planning company.
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 wedding planning company 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 wedding planning company'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 wedding planning 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 wedding planning 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 wedding planning 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 wedding planning 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 wedding planning company's financial forecast.
The sales forecast for a wedding planning company
From experience, it is usually best to start creating your wedding planning company financial forecast by your sales forecast.
To create an accurate sales forecast for your wedding planning company, you will have to rely on the data collected in your market research, or if you're running an existing wedding planning 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:
- Wedding season: The time of year greatly affects the demand for wedding planning services. During peak wedding season, typically in the summer and early fall, you may see an increase in average price as couples are willing to pay more for their dream wedding. This can also lead to an increase in the number of monthly transactions as more couples are getting married during this time.
- Economic conditions: In a strong economy, couples may be more willing to spend more on their wedding, resulting in a higher average price for your services. However, in a weak economy, couples may be more budget-conscious and opt for a more affordable wedding, leading to a decrease in your average price and potentially a decrease in the number of monthly transactions.
- Trends and styles: Wedding trends and styles can greatly impact the average price of your services. For example, if there is a popular wedding theme or concept that requires more elaborate planning and decorations, you may be able to charge a higher price for your services. On the other hand, if more couples are opting for simple and minimalistic weddings, your average price may decrease.
- Competition: The level of competition in your market can also affect your average price and number of monthly transactions. If there are many other wedding planning companies in your area offering similar services, you may need to adjust your pricing to stay competitive and attract clients. Alternatively, if you are the only wedding planning company in your area or offer unique services, you may be able to charge a higher price.
- Client demographics: The demographics of your target clients can also play a role in your sales forecast. For example, if your target market is primarily upper-class couples, you may be able to charge a higher average price for your services. However, if your target market is more budget-conscious couples, your average price may need to be lower in order to attract clients and increase your 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 wedding planning company
The next step is to estimate the costs you’ll have to incur to operate your wedding planning company.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your wedding planning company's operating expenses should normally include the following items:
- Staff wages: As a wedding planning company, your biggest expense will likely be your staff wages. This includes salaries for your event coordinators, administrative staff, and any other employees you may have.
- Accountancy fees: You will need to hire an accountant to manage your company's financial records, file taxes, and provide financial advice. This is an important expense to ensure the financial health of your business.
- Insurance costs: Insurance is essential for any company, but especially for a wedding planning business. You will need to invest in liability insurance, property insurance, and possibly even event cancellation insurance.
- Software licenses: To effectively manage and plan weddings, you will need to invest in software licenses for project management, accounting, CRM, and other necessary tools.
- Banking fees: Your business will have various banking fees for transactions, wire transfers, and other financial services. Make sure to budget for these fees to avoid any unexpected costs.
- Marketing and advertising: In order to attract clients and grow your business, you will need to invest in marketing and advertising efforts. This could include website development, social media advertising, and print materials.
- Office rent and utilities: You will need a physical office space to meet with clients and plan weddings. This expense includes rent, utilities, and office supplies.
- Professional development: As a wedding planning company, it's important to stay up-to-date with industry trends and skills. Budget for attending conferences, workshops, and other professional development opportunities.
- Travel expenses: Depending on the location of your weddings, you may need to budget for travel expenses including flights, accommodations, and transportation.
- Client entertainment: You may need to take clients out for meals or drinks to discuss wedding plans. Budget for these expenses to maintain good relationships with your clients.
- Office equipment: You will need basic office equipment such as computers, printers, and office furniture. Make sure to budget for these upfront costs and any future maintenance or replacements.
- Legal fees: It's important to have a lawyer on retainer to handle any legal matters that may arise. This could include contract reviews, trademark applications, or any other legal needs for your business.
- Event supplies: As a wedding planning company, you will need to purchase event supplies such as linens, decor, and other materials. Budget for these expenses to ensure you can provide high-quality services to your clients.
- Telephone and internet: Communication is key for a wedding planning business, so budget for monthly expenses for telephone and internet services.
- Professional memberships: You may want to join professional organizations or associations to network and gain industry knowledge. Budget for membership fees and any associated costs.
This list is not exhaustive by any means, and will need to be tailored to your wedding planning company's specific circumstances.
What investments are needed to start or grow a wedding planning company?
Once you have an idea of how much sales you could achieve and what it will cost to run your wedding planning company, it is time to look into the equipment required to launch or expand the activity.
For a wedding planning company, capital expenditures and initial working capital items could include:
- Office Space: As a wedding planning company, you will need a dedicated office space to meet with clients and store important documents. This could include rent, utilities, and furniture.
- Technology: In today's digital age, having the right technology is crucial for a successful wedding planning company. This could include computers, printers, software, and other necessary equipment.
- Transportation: As a wedding planner, you will likely have to travel for meetings, venue visits, and other wedding-related tasks. This could include purchasing a company vehicle or renting transportation services.
- Inventory: Depending on your business model, you may need to purchase inventory such as wedding decorations, linens, and other supplies. This could also include storage space for these items.
- Website Development: In order to attract clients and showcase your services, you will need to invest in a professional website. This could include hiring a web designer, purchasing a domain name, and hosting fees.
Again, this list will need to be adjusted according to the specificities of your wedding planning 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 wedding planning company
The next step in the creation of your financial forecast for your wedding planning 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 wedding planning company?
Now let's have a look at the main output tables of your wedding planning 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 wedding planning 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 wedding planning company will look different than for a startup.
The projected balance sheet
Your wedding planning company's forecasted balance sheet enables you to assess your financial structure and working capital requirements.
It is composed of three types of elements: assets, liabilities and equity:
- Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
- Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
- 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 wedding planning 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 wedding planning 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 wedding planning 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 wedding planning company's financial projections?
Building a wedding planning 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 wedding planning company's projections
The modern and easiest way is to use professional online financial forecasting 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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional wedding planning 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 wedding planning 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 wedding planning 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 wedding planning 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 wedding planning 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 wedding planning 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 project sales for a business?
- Example of financial forecast for business idea
Know someone who runs a wedding planning company? Share our business guide with them!
Founder & CEO at The Business Plan Shop Ltd
