How to create a financial forecast for an animal shelter?
Developing and maintaining an up-to-date financial forecast for your animal shelter is key in order to maintain visibility on your business’s future cash flows.
If you feel overwhelmed at the thought of putting together an animal shelter 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 an animal shelter?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your animal shelter and ensure that it can be financially viable in the years to come.
A financial plan for an animal shelter 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 animal shelter 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 animal shelter'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 an animal shelter financial forecast?
A animal shelter's financial forecast needs to be built on the right foundation: your assumptions.
The data required to create your assumptions will depend on whether you are a new or existing animal shelter.
If you are creating (or updating) the forecast of an existing animal shelter, then your main inputs will be historical accounting data and operating metrics, and your team’s view on what to expect for the next three to five years.
If you are building financial projections for a new animal shelter startup, you will need to rely on market research to form your go-to-market strategy and derive your sales forecast.
For a new venture, you will also need an itemised list of resources needed for the animal shelter to operate, along with a list of equipment required to launch the venture (more on that below).
Now that you understand what is needed, let’s have a look at what elements will make up your animal shelter's financial forecast.
The sales forecast for an animal shelter
The sales forecast, also called topline projection, is normally where you will start when building your animal shelter 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 animal shelters), and consider the elements below:
- Seasonal Demand: The demand for adoptions may vary throughout the year depending on factors such as holidays, school schedules, and weather. For example, during the summer months, families may have more time to adopt a pet, leading to a higher number of monthly transactions. On the other hand, during the winter holidays, people may be more focused on traveling and spending time with family, resulting in a decrease in adoptions.
- Economic Conditions: Economic factors such as unemployment rates, inflation, and consumer confidence can have a significant impact on the average price of adoptions. In a struggling economy, potential adopters may be hesitant to spend money on a new pet, leading to a decrease in average price. On the other hand, in a thriving economy, people may be more willing to pay higher prices for pets, resulting in an increase in average price.
- Competition: The presence of other animal shelters in the area can affect both the average price and number of monthly transactions. If there are multiple shelters in the same area, this may lead to price competition, causing the average price to decrease. Additionally, if there are many shelters in the area, this may also lead to a decrease in the number of monthly transactions as potential adopters have more options to choose from.
- Animal Intake: The number of animals coming into the shelter can affect the average price and number of monthly transactions. If the shelter is constantly at full capacity, this may lead to a decrease in the number of monthly transactions as there are fewer animals available for adoption. On the other hand, if there is a low intake of animals, this may result in an increase in the average price as the shelter may have more in-demand breeds available.
- Community Events: Hosting or participating in community events such as adoption fairs or fundraisers can have a positive impact on both the average price and number of monthly transactions. These events can attract more potential adopters, resulting in an increase in the number of transactions. Additionally, these events can also create a sense of goodwill and community support, which may lead to an increase in the average price as people are more willing to pay for a pet from a shelter they have a connection with.
After the sales forecast comes the operating expenses budget, which we will now look into in more detail.
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 an animal shelter
The next step is to estimate the costs you’ll have to incur to operate your animal shelter.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your animal shelter's operating expenses should normally include the following items:
- Staff costs: Salaries, wages, and benefits for shelter employees, including animal care staff, administrative staff, and management.
- Animal care supplies: Food, bedding, cleaning supplies, and other necessary items for the animals in the shelter.
- Medical expenses: Veterinary care, medication, and other medical supplies for sick or injured animals.
- Utilities: Electricity, water, and gas for the shelter building.
- Rent or mortgage: The cost of leasing or owning the shelter building.
- Insurance: Liability insurance to protect the shelter in case of accidents or injuries.
- Accountancy fees: Accounting services to manage the shelter's financial records and taxes.
- Software licenses: Fees for software used to manage the shelter's operations, such as animal management systems or accounting software.
- Marketing and advertising: Costs associated with promoting the shelter and its animals, including print and digital advertising, flyers, and events.
- Training and education: Ongoing training and education for staff and volunteers to improve the care and management of animals in the shelter.
- Office supplies and equipment: Paper, pens, and other necessary items for day-to-day operations, as well as larger equipment such as computers and printers.
- Banking fees: Charges associated with maintaining bank accounts and processing transactions.
- Maintenance and repairs: Costs to keep the shelter building and equipment in good working condition.
- Transportation: Expenses related to transporting animals to and from the shelter, such as vehicle maintenance and fuel costs.
- Legal fees: Costs for legal services, such as drafting contracts or handling any legal issues that may arise.
This list is not exhaustive by any means, and will need to be tailored to your animal shelter's specific circumstances.
What investments are needed to start or grow an animal shelter?
Your animal shelter 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 an animal shelter, these could include:
- Shelter Building: This includes the cost of purchasing or constructing the physical building that will house the animal shelter. This can also include any renovations or repairs needed to make the building suitable for the shelter's needs.
- Animal Housing and Equipment: This includes the cost of purchasing or building animal enclosures, kennels, cages, and other equipment needed to safely house and care for the animals in the shelter.
- Medical Equipment and Supplies: This includes the cost of purchasing medical equipment such as exam tables, scales, and surgical supplies, as well as any ongoing expenses for medications and veterinary services for the animals in the shelter.
- Transportation Vehicles: This includes the cost of purchasing or leasing vehicles such as vans or trucks to transport animals to and from the shelter, as well as for adoption events and emergency rescue situations.
- Office and Administrative Equipment: This includes the cost of computers, phones, furniture, and other necessary equipment for office and administrative tasks, such as record-keeping, fundraising, and volunteer management.
Again, this list will need to be adjusted according to the size and ambitions of your animal shelter.
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 animal shelter
The next step in the creation of your financial forecast for your animal shelter 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 an animal shelter?
Now let's have a look at the main output tables of your animal shelter's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your animal shelter's expected growth and profitability over the next three to five years.
A financially viable P&L statement for an animal shelter 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 animal shelter'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 cash flow projection
The cash flow forecast of your animal shelter 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 animal shelter'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 animal shelter 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 animal shelter'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 animal shelter's financial forecast?
Using the right tool or solution will make the creation of your animal shelter's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial projection software to build your animal shelter'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 animal shelter 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 animal shelter's financial forecast?
Creating an accurate and error-free animal shelter 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 projection templates for inspiration
The Business Plan Shop has dozens of financial forecasting templates available.
Our examples contain both the financial forecast, and a written business plan which presents, in detail, the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own animal shelter, looking at our template is always a good way to get ideas on how to model financial items and what to write when creating a business plan to secure funding.
Takeaways
- A financial projection shows expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial forecast up-to-date is the only way to maintain visibility on future cash flows.
- Using financial forecasting software makes it easy to create and maintain up-to-date projections for your animal shelter.
You have reached the end of our guide. We hope you now have a better understanding of how to create a financial forecast for an animal shelter. Don't hesitate to contact our team if you have any questions or want to share your experience building forecasts!
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 projections
- How to project revenues for a business?
- Financial forecast for a business idea
Know someone who runs or wants to start an animal shelter? Share our financial projection guide with them!
Founder & CEO at The Business Plan Shop Ltd
