How to create a financial forecast for an independent library?

Creating a financial forecast for your independent library, 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 independent library 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 an independent library?
The financial projections for your independent library 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 independent library'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.
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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.

What information is used as input to build an independent library financial forecast?
A independent library'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 independent library, 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 an independent library 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 independent library 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 independent library's financial forecast.
The sales forecast for an independent library
From experience, it is usually best to start creating your independent library financial forecast by your sales forecast.
To create an accurate sales forecast for your independent library, you will have to rely on the data collected in your market research, or if you're running an existing independent library, 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:
- Your library's location and surrounding demographics can greatly impact the average price of transactions. For example, if your library is located in an affluent neighborhood, you may be able to charge higher prices for your services and materials.
- The current economic climate can also affect your library's average price and number of transactions. In times of recession, people may be more hesitant to spend money on non-essential items, which could lead to a decrease in transactions and a need to lower prices to remain competitive.
- The popularity of e-books and digital media can also impact the average price and number of transactions at your library. As more people turn to digital resources, there may be a decrease in physical transactions and a need to adjust prices to remain profitable.
- The availability of alternative sources for books and materials, such as online retailers or other libraries, can also affect your average price and number of transactions. If customers have access to cheaper or more convenient options, they may be less likely to use your services and you may need to adjust prices to remain competitive.
- The size and quality of your library's collection can also play a role in your average price and number of transactions. A larger and more diverse collection may attract more customers and allow you to charge higher prices, while a smaller or outdated collection may lead to lower prices and fewer 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.
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The operating expenses for an independent library
The next step is to estimate the expenses needed to run your independent library 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 independent library's operating expenses should include the following items at a minimum:
- Staff costs: This includes salaries, benefits, and payroll taxes for the library staff. It also includes any temporary or contract staff you may hire for specific projects.
- Rent and utilities: You will need to budget for rent or mortgage payments for the library building, as well as utilities such as electricity, water, and heating.
- Accountancy fees: It is important to have a professional accountant handle your financial records and tax filings. This may include annual fees for tax preparation, bookkeeping, and other financial services.
- Insurance costs: As a library, you will need to have insurance to protect your building, collections, and staff. This may include property insurance, liability insurance, and workers' compensation insurance.
- Software licenses: In order to effectively manage your library operations, you may need to purchase software licenses for library management systems, cataloging tools, and other digital resources.
- Collection development: This includes the cost of purchasing new books, magazines, and other materials for your library's collection. You may also need to budget for interlibrary loan fees and subscription costs for digital resources.
- Marketing and advertising: In order to attract patrons to your library, you may need to invest in marketing and advertising efforts. This can include creating promotional materials, hosting events, and advertising in local media outlets.
- Maintenance and repairs: It is important to keep your library building and equipment in good condition. This may include regular maintenance tasks, as well as unexpected repairs for things like plumbing, HVAC systems, and computers.
- Professional development: Investing in ongoing training and development opportunities for your staff is crucial for maintaining a high-quality library. This may include attending conferences, workshops, and online courses.
- Security and safety: You will need to ensure the safety of your patrons and staff by investing in security measures such as cameras, alarms, and emergency response systems.
- Office supplies: As with any business, you will need to budget for basic office supplies like paper, ink, pens, and other materials necessary for day-to-day operations.
- Cleaning services: It is important to keep your library clean and sanitary for the health and well-being of your patrons and staff. This may include hiring a professional cleaning service or purchasing cleaning supplies.
- Training and educational materials: In order to provide educational and cultural programs for your community, you may need to invest in training materials, books, and other resources.
- Telecommunications: In today's digital age, it is important to have a reliable internet connection and phone service for your library. This may include monthly fees for internet and phone plans.
- Banking fees: In order to manage your finances, you may need to pay fees for banking services such as checking accounts, credit card processing, and online banking.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small independent library might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow an independent library?
Once you have an idea of how much sales you could achieve and what it will cost to run your independent library, it is time to look into the equipment required to launch or expand the activity.
For an independent library, capital expenditures and initial working capital items could include:
- Computers and other technology equipment for staff and public use
- Furniture and shelving for the library space
- Renovations or construction for building improvements
- Security systems, such as cameras and alarms
- Audiovisual equipment, including projectors and screens
Again, this list will need to be adjusted according to the specificities of your independent library.
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 independent library
The next step in the creation of your financial forecast for your independent library 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 independent library?
Now let's have a look at the main output tables of your independent library's financial forecast.
The projected profit & loss statement
The projected profit & loss shows how profitable your independent library is likely to be in the years to come.

For your independent library to be financially viable, your projected P&L should ideally show:
- Sales growing above inflation (the higher the better)
- Profit margins which are stable or expanding (the higher the better)
- A net profit at the end of each financial year (the higher the better)
This is for established independent libraries, there is some leniency for startups which will have numbers that will look a bit different than existing businesses.
The projected balance sheet
The projected balance sheet gives an overview of your independent library'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 independent library. 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 an independent library 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 independent library'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 independent library 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 independent library's financial forecast?
Using the right tool or solution will make the creation of your independent library's financial forecast much easier than it sounds. Let’s explore the main options.
Using online financial forecasting software to build your independent library'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.
Calling in a financial consultant or chartered accountant
Outsourcing the creation of your independent library 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 independent library'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 independent library 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 independent library'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 projection templates for inspiration
The Business Plan Shop has dozens of financial forecast templates available.
Our examples contain a complete business plan with a financial forecast and a written presentation of the company, the team, the strategy, and the medium-term objectives.
Whether you are just starting out or already have your own independent library, looking at our financial forecast template is a good way to:
- Understand what a complete business plan should look like
- Understand how you should model financial items for your independent library

Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your independent library.
- 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 an independent library. 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 turnover forecast for a business?
- Sample financial forecast for business idea
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