How to create a financial forecast for a sports and wellness training center?
Developing and maintaining an up-to-date financial forecast for your sports and wellness training center is key in order to maintain visibility on your business’s future cash flows.
If you feel overwhelmed at the thought of putting together a sports and wellness training center 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 a sports and wellness training center?
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 sports and wellness training center becomes handy.
Creating a sports and wellness training center 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 sports and wellness training center.
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 sports and wellness training center 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 sports and wellness training center'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 a sports and wellness training center financial forecast?
A sports and wellness training center'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 sports and wellness training center.
If you are creating (or updating) the forecast of an existing sports and wellness training center, 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 sports and wellness training center 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 sports and wellness training center 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 sports and wellness training center's financial forecast.
The sales forecast for a sports and wellness training center
From experience, it usually makes sense to start your sports and wellness training center's financial projection with the revenues forecast.
The inputs used to forecast your sales will include the historical trading data of your sports and wellness training center (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 sports and wellness training center'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:
- Seasonal Demand: As the owner of a sports and wellness training center, you may experience fluctuations in demand based on the seasons. For example, during the summer months, your center may see an increase in demand for outdoor activities and classes such as swimming or yoga. However, in the winter, demand for indoor activities like weight training may be higher. This can affect your average price and number of monthly transactions as you may need to adjust prices or offer more classes during peak seasons.
- Competition: The presence of other sports and wellness training centers in your area can also impact your average price and number of monthly transactions. If there are many similar businesses in the area, you may need to adjust your prices to remain competitive. Additionally, if a new center opens up nearby, you may see a decrease in demand and transactions as customers may be trying out the new facility.
- Demographics: The demographic profile of your target market can also affect your sales forecast. For instance, if your center is located in an area with a high population of older adults, you may need to offer classes and services geared towards their specific fitness needs. This can impact your average price as you may need to invest in specialized equipment or instructors, and your number of monthly transactions as you may attract a different clientele.
- Economic Conditions: Economic factors such as a recession or a booming economy can also impact your sales forecast. During a recession, individuals may have less disposable income to spend on fitness and wellness, leading to a decrease in your average price and number of transactions. On the other hand, during a prosperous economic period, you may see an increase in demand and transactions as people have more money to spend on fitness and wellness.
- Technology Advancements: Advances in technology can also affect your sales forecast. For example, the rise of virtual fitness classes and apps may lead to a decrease in demand for in-person classes and services, impacting your average price and number of transactions. Alternatively, investing in new technology for your center, such as state-of-the-art equipment or online booking systems, may attract more customers and increase your average price.
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.
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The operating expenses for a sports and wellness training center
The next step is to estimate the costs you’ll have to incur to operate your sports and wellness training center.
These will vary based on where your business is located, and its overall size (level of sales, personnel, etc.).
But your sports and wellness training center's operating expenses should normally include the following items:
- Staff costs: This includes salaries, benefits, and training for all employees, including trainers, coaches, and administrative staff.
- Accountancy fees: You will need to hire a professional accountant or bookkeeper to manage your finances, prepare tax returns, and ensure compliance with regulations.
- Insurance costs: As a sports and wellness training center, you will need insurance coverage for liability, property, and workers' compensation.
- Software licenses: You may need to purchase software for scheduling appointments, managing memberships, and tracking progress for clients.
- Banking fees: This includes fees for maintaining a business bank account, processing credit card payments, and currency exchange fees if you have international clients.
- Rent/Lease: If you do not own the property where your training center is located, you will need to budget for rent or lease payments.
- Utilities: This includes electricity, water, and gas for your training center.
- Marketing and advertising: You will need to budget for marketing materials, such as brochures and flyers, as well as advertising costs, such as online ads or sponsored events.
- Supplies and equipment: This includes purchasing and maintaining equipment, such as weights, treadmills, and yoga mats, as well as supplies like towels and cleaning products.
- Professional fees: You may need to hire outside professionals, such as physical therapists or nutritionists, to provide services at your training center.
- Professional development: It is important to budget for ongoing training and education for yourself and your staff to keep up with industry trends and best practices.
- Licenses and permits: You may need to obtain licenses and permits to operate your training center, such as a business license or health permits.
- Office expenses: This includes office supplies, furniture, and equipment for your administrative staff.
- Cleaning and maintenance: You will need to budget for regular cleaning and maintenance of your training center to ensure a safe and hygienic environment for your clients.
- Taxes: Don't forget to budget for taxes, including income tax, sales tax, and property tax, which may vary depending on your location.
This list is not exhaustive by any means, and will need to be tailored to your sports and wellness training center's specific circumstances.
What investments are needed to start or grow a sports and wellness training center?
Once you have an idea of how much sales you could achieve and what it will cost to run your sports and wellness training center, it is time to look into the equipment required to launch or expand the activity.
For a sports and wellness training center, capital expenditures and initial working capital items could include:
- Fitness equipment: This includes treadmills, ellipticals, weight machines, and other exercise equipment that will be used in your sports and wellness training center.
- Facility renovations: This may include any necessary renovations to the building, such as installing showers and locker rooms, or creating designated workout areas.
- Technology: This includes items such as computer systems, fitness tracking devices, and audio equipment that will be used to enhance the training experience for your clients.
- Furniture and fixtures: This includes items such as reception desks, waiting area chairs, and other furniture that will be necessary for your sports and wellness training center.
- Security system: This includes cameras, alarms, and other security measures that will help ensure the safety of your clients and the facility.
Again, this list will need to be adjusted according to the specificities of your sports and wellness training center.
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 sports and wellness training center
The next step in the creation of your financial forecast for your sports and wellness training center 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 sports and wellness training center?
Now let's have a look at the main output tables of your sports and wellness training center's financial forecast.
The profit & loss forecast
The forecasted profit & loss statement will enable you to visualise your sports and wellness training center's expected growth and profitability over the next three to five years.
A financially viable P&L statement for a sports and wellness training center 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
The projected balance sheet gives an overview of your sports and wellness training center'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 sports and wellness training center. 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 cash flow projection
The cash flow forecast of your sports and wellness training center 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 sports and wellness training center'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 sports and wellness training center 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 sports and wellness training center'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 sports and wellness training center's financial forecast?
Creating your sports and wellness training center'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 sports and wellness training center'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
Enlisting the help of a consultant or accountant is also a good way to obtain a professional sports and wellness training center 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 sports and wellness training center's financial forecast?
Creating an accurate and error-free sports and wellness training center 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 sports and wellness training center, 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 sports and wellness training center
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 sports and wellness training center.
You have reached the end of our guide. We hope you now have a better understanding of how to create a financial forecast for a sports and wellness training center. 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
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- Sample financial forecast for business idea
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Founder & CEO at The Business Plan Shop Ltd
