How to create a financial forecast for an RV storage 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 RV storage company.
Putting together an RV storage 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 RV storage 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 an RV storage 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 RV storage company becomes handy.
Creating an RV storage 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 RV storage 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 an RV storage 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 RV storage 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 used as input to build an RV storage company financial forecast?
A RV storage company'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 RV storage company.
If you are creating (or updating) the forecast of an existing RV storage company, 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 RV storage company 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 RV storage company 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 RV storage company's financial forecast.
The sales forecast for an RV storage company
From experience, it is usually best to start creating your RV storage company financial forecast by your sales forecast.
To create an accurate sales forecast for your RV storage company, you will have to rely on the data collected in your market research, or if you're running an existing RV storage 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 number of monthly transactions may vary depending on the season, with more RV owners looking for storage during peak travel times such as summer and holidays.
- Competition: The presence of other RV storage companies in the area may affect your average price, as customers may compare prices and choose the most affordable option.
- Economic conditions: Economic downturns may lead to a decrease in the number of RV owners who can afford to store their vehicles, resulting in a decrease in monthly transactions.
- Maintenance and security: The quality of your storage facility and services may affect your average price, as customers may be willing to pay more for a secure and well-maintained storage space for their valuable RVs.
- Tourism trends: The popularity of RV travel and camping may impact the demand for RV storage, with an increase in monthly transactions during times when RV travel is trending.
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 an RV storage company
The next step is to estimate the expenses needed to run your RV storage 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 RV storage company's operating expenses should include the following items at a minimum:
- Staff costs: This includes wages, salaries, and benefits for employees such as storage attendants, maintenance workers, and administrative staff.
- Accountancy fees: You will need to hire an accountant to manage your financial records and ensure compliance with tax laws and regulations.
- Insurance costs: As an RV storage company, you will need to have insurance to protect your business from liability and property damage.
- Software licenses: You may need to purchase software licenses for programs such as a customer database, billing software, or security systems.
- Banking fees: You will have to pay fees for maintaining a business bank account, processing transactions, and using online banking services.
- Rent or property taxes: If you do not own the land or building where you store RVs, you will need to pay rent or property taxes.
- Utilities: This includes electricity, water, and gas for heating and cooling the storage facility.
- Maintenance and repairs: You will need to budget for regular maintenance and repairs of your storage units, driveways, and security systems.
- Advertising and marketing: To attract customers and promote your business, you will need to invest in advertising and marketing efforts such as flyers, social media ads, or a website.
- Supplies: You will need to purchase supplies such as locks, security cameras, office supplies, and cleaning products for your storage facility.
- Legal fees: In case of any legal issues or contracts, you may need to hire a lawyer, which will incur legal fees.
- Taxes: You will need to pay various taxes such as income tax, property tax, and sales tax.
- Training and development: To ensure your employees are well-trained and knowledgeable about your business, you may need to invest in training and development programs.
- Security services: To protect your customers' RVs and your business, you may need to hire security services for surveillance and monitoring.
- Customer service: You may need to invest in customer service training and tools to ensure a positive experience for your customers.
This list is, of course, not exhaustive, and you'll have to adapt it according to your precise business model and size. A small RV storage company might not have the same level of expenditure as a larger one, for example.
What investments are needed to start or grow an RV storage company?
Once you have an idea of how much sales you could achieve and what it will cost to run your RV storage company, it is time to look into the equipment required to launch or expand the activity.
For an RV storage company, capital expenditures and initial working capital items could include:
- RV Storage Units: This includes the cost of purchasing or building the storage units themselves. This can also include any necessary renovations or upgrades to the units, such as climate control or security features.
- Security Equipment: As an RV storage company, it is crucial to invest in security equipment to protect your customers' valuable vehicles. This can include cameras, alarms, and access control systems.
- Office and Maintenance Equipment: This category includes the purchase of office equipment, such as computers and furniture, as well as maintenance equipment, such as lawn mowers and snow plows. These items are necessary for the day-to-day operations of your business.
- Land and Building: If you are building your RV storage company from the ground up, you will need to consider the cost of purchasing land and constructing a building. Even if you are leasing a property, there may still be costs associated with renovations and improvements.
- Utilities and Infrastructure: This includes the cost of connecting your RV storage company to utilities such as electricity, water, and internet. It can also include any necessary infrastructure such as roads, parking lots, and drainage systems.
Again, this list will need to be adjusted according to the specificities of your RV storage 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 RV storage company
The next step in the creation of your financial forecast for your RV storage 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 an RV storage company?
Now let's have a look at the main output tables of your RV storage 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 RV storage 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 RV storage company will look different than for a startup.
The projected balance sheet
Your RV storage 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 cash flow forecast
Your RV storage company's cash flow forecast shows how much cash your business is expected to consume or generate in the years to come.
It is best practice to organise the cash flow forecast by nature to better explain where cash is used or generated by the RV storage company:
- Operating cash flow: shows how much cash is generated by the operating activities
- Investing cash flow: shows how much will be invested in capital expenditure to maintain or expand the business
- Financing cash flow: shows if the business is raising new capital or repaying financiers (debt repayment, dividends)
Keeping an eye on (and regularly updating) your RV storage company's cash flow forecast is key to ensuring that your business has sufficient liquidity to operate normally and to detect financing requirements as early as possible.
If you are trying to raise capital, you will normally be asked to provide a monthly cash flow forecast in your RV storage company's financial plan - so that banks or investors can assess seasonal variation and ensure your business 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 RV storage company's financial forecast?
Creating your RV storage company's financial forecast may sound fairly daunting, but the good news is that there are several ways to go about it.
Using online financial forecasting software to build your RV storage 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.
Calling in a financial consultant or chartered accountant
Outsourcing the creation of your RV storage 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 RV storage company's financial forecast?
Creating an accurate and error-free RV storage 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 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 RV storage company, 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 RV storage company
Takeaways
- A financial forecast shows expected growth, profitability, and cash generation metrics for your RV storage 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 an RV storage 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 revenues for a business?
- Financial forecast for a business idea
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Founder & CEO at The Business Plan Shop Ltd
