How to create a financial forecast for an Uber cab?
If you are serious about keeping visibility on your future cash flows, then you need to build and maintain a financial forecast for your Uber cab.
Putting together an Uber cab 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 Uber cab.
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 Uber cab?
Creating and maintaining an up-to-date financial forecast is the only way to steer the development of your Uber cab and ensure that it can be financially viable in the years to come.
A financial plan for an Uber cab 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 Uber cab 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 Uber cab'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 Uber cab financial forecast?
A Uber cab'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 Uber cab.
If you are creating (or updating) the forecast of an existing Uber cab, 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 Uber cab 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 Uber cab 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 Uber cab's financial forecast.
The sales forecast for an Uber cab
From experience, it usually makes sense to start your Uber cab's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your Uber cab (which can be used as a starting point for existing businesses) and the data collected in your market research (which both new ventures and existing businesses need to project their sales forward).
Your Uber cab's sales forecast can be broken down into two key estimates:
- The average price
- The number of monthly transactions
To assess these variables accurately, you will need to consider the following factors:
- Competition: The presence of other ride-sharing companies such as Lyft and Grab in your area may affect the demand for your Uber cab. If these competitors offer lower prices or better services, it could lead to a decrease in your average price and number of monthly transactions.
- Economic Conditions: The state of the economy can also impact your Uber cab's sales forecast. During a recession, people may be less likely to use ride-sharing services, resulting in a decrease in your number of monthly transactions. On the other hand, during a booming economy, there may be an increase in demand for your services, leading to a higher average price and number of monthly transactions.
- Gas Prices: Fluctuations in gas prices can also affect your Uber cab's average price and number of monthly transactions. An increase in gas prices may lead to higher operating costs, causing you to increase your prices, which could result in a decrease in demand. Alternatively, if gas prices decrease, you may be able to offer lower prices to customers, leading to an increase in demand.
- Weather: Extreme weather conditions such as heavy rain or snowstorms can impact your Uber cab's sales forecast. These conditions may discourage people from using ride-sharing services, resulting in a decrease in your number of monthly transactions.
- Regulations: Changes in regulations related to ride-sharing services can also affect your Uber cab's average price and number of monthly transactions. For example, if new regulations require you to increase your prices or impose restrictions on your operations, it could lead to a decrease in demand and sales. On the other hand, if regulations become more lenient, it could result in an increase in demand and sales.
Once you have a sales forecast in place, the next step will be to work on your overhead budget. Let’s have a look at that now.
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 Uber cab
Once you know what level of sales you can expect, you can start budgeting the expenses required to operate your Uber cab on a daily basis.
Expenses normally vary based on how much revenue you anticipate (which is why, from experience, it is always better to start your forecast with the topline projection), and where your business is based.
Operating expenses for an Uber cab will include some of the following items:
- Fuel Costs: As an Uber cab driver, you will need to cover the cost of fuel for your vehicle. This can vary depending on the type and efficiency of your car, as well as the distance driven.
- Maintenance and Repair: Regular maintenance and occasional repairs are necessary to keep your Uber cab in good working condition. This includes oil changes, tire replacements, and other general upkeep costs.
- Staff Costs: If you have hired any staff to help with your Uber cab business, such as a dispatcher or mechanic, you will need to factor in their wages and benefits as an operating expense.
- Accountancy Fees: As a business owner, you may choose to hire an accountant to help with your taxes and financial records. This is a necessary expense to ensure your business is compliant with all regulations.
- Insurance Costs: As an Uber cab driver, you will need to have commercial auto insurance to protect yourself and your vehicle in case of an accident. This can be a significant expense, but it is essential for your business.
- Software Licenses: Uber provides drivers with access to their app, which is essential for connecting with passengers and completing trips. However, there may be additional software or tools you choose to use that require a license fee.
- Banking Fees: As a business owner, you will likely have a separate business bank account that incurs fees for transactions and other services. These costs should be factored into your overall operating expenses.
- Vehicle Registration and Licensing: In order to operate as an Uber cab, you will need to register your vehicle and obtain any necessary licenses or permits. These fees can vary depending on your location.
- Mobile Phone and Data Plan: Your mobile phone is a vital tool for your Uber cab business, as it allows you to stay connected with passengers and navigate to pick-up and drop-off locations. Be sure to include the cost of your phone and data plan in your operating expenses.
- Marketing and Advertising: While Uber may provide some marketing and advertising for your services, you may also choose to invest in your own promotional efforts. This can include online ads, flyers, or other forms of advertising.
- Toll Fees: Depending on your location, you may need to pay tolls to access certain areas or highways. These costs should be factored into your operating expenses.
- Cleaning and Sanitization: As an Uber cab driver, it is your responsibility to keep your vehicle clean and safe for passengers. This may include regular car washes, vacuuming, and disinfecting after trips.
- Customer Service: In order to maintain a high level of customer satisfaction, you may need to invest in customer service tools or training. This could include a dedicated phone line or software to manage customer inquiries and complaints.
- Roadside Assistance: In case of a breakdown or other emergency on the road, it is wise to have a roadside assistance plan in place. This can help cover the costs of towing or other services in case of an unexpected event.
- Depreciation: While not a direct expense, it is important to account for the depreciation of your vehicle over time. This will help you understand the true cost of operating your Uber cab business.
This list will need to be tailored to the specificities of your Uber cab, but should offer a good starting point for your budget.
What investments are needed to start or grow an Uber cab?
Creating and expanding an Uber cab also requires investments which you need to factor into your financial forecast.
Capital expenditures and initial working capital items for an Uber cab could include elements such as:
- Vehicle Purchase: As an Uber cab driver, you will need to invest in a vehicle to use for your ridesharing business. This includes purchasing the car itself, as well as any necessary upgrades or modifications to make it suitable for Uber.
- Vehicle Maintenance: In order to keep your Uber cab in good working condition, you will need to budget for regular maintenance and repairs. This includes oil changes, tire rotations, and any unexpected repairs that may arise.
- Technology Expenses: As an Uber cab driver, you will need to have a smartphone and data plan in order to use the Uber app and communicate with passengers. You may also need to purchase additional technology such as a phone mount or a hands-free device for safety and convenience.
- Vehicle Insurance: As with any vehicle, insurance is a necessary expense for an Uber cab. This includes liability insurance to protect yourself and your passengers in case of an accident, as well as comprehensive coverage to protect your vehicle.
- Licensing and Permit Fees: Depending on your location, you may need to obtain special licenses or permits to operate an Uber cab. These fees can vary and should be included in your expenditure forecast.
Again, this list is not exhaustive and will need to be adjusted according to the circumstances of your Uber cab.
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 Uber cab
The next step in the creation of your financial forecast for your Uber cab 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 Uber cab?
Now let's have a look at the main output tables of your Uber cab'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 Uber cab'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 Uber cab will look different than for a startup.
The projected balance sheet
The projected balance sheet gives an overview of your Uber cab'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 Uber cab. 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 Uber cab 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 Uber cab'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 Uber cab 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 Uber cab's financial forecast?
Creating your Uber cab'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 Uber cab'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.
Hiring a financial consultant or chartered accountant
Hiring a consultant or chartered accountant is also an efficient way to get a professional Uber cab 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 Uber cab's financial forecast?
Creating an accurate and error-free Uber cab financial forecast with a spreadsheet is very technical and requires a deep knowledge of accounting and an understanding of financial modelling.
Very few business owners are financially savvy enough to be able to build a forecast themselves on Excel without making mistakes.
Lenders and investors know this, which is why forecasts created on Excel by the business owner are often frowned upon.
Having numbers one can trust is key when it comes to financial forecasting and to that end using software is much safer.
Using financial forecasting software is also faster than using a spreadsheet, and, with the rise of artificial intelligence, software is also becoming smarter at helping us analyse the numbers to make smarter decisions.
Finally, like everything with spreadsheets, tracking actuals vs. forecasts and keeping your projections up to date as the year progresses is manual, tedious, and error-prone. Whereas financial projection 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 Uber cab, 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
- Having a financial forecast enables you to visualise the expected growth, profitability, and cash generation for your business over the next three to five years.
- Tracking actuals vs. forecast and keeping your financial projections up-to-date is the only way to get a view on what your Uber cab future cash flows may look like.
- Using financial forecasting software is the mordern and easy way to create and maintain your forecasts.
This is the end of our guide on how to build the financial forecast for an Uber cab, we hope you found it useful. Don't hesitate to contact us if you want to share your feedback or 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
- Example of financial forecast
- How to create a sales forecast for a business?
- Financial forecast template for a business idea
Know someone who owns or is thinking of starting an Uber cab? Share our forecasting guide with them!
Founder & CEO at The Business Plan Shop Ltd
