How to Do Financial Projections

Creating a budget for your business startup is a critical aspect of planning for your company’s success. Financial projections help set the tone for a business’ success while making clear goals to help maintain and support a monthly and yearly budget.

Financial projections are also a great way to compare your initial yearly financial projections with the actual outcome relayed on your yearly financial statements. Using this comparative technique, business owners are able to see where they are exceeding expectations or falling short in terms of financial goals. Here, business owners are able to accurately see where they need to feed the company’s success, whether it is making financial adjustments to salaries or increasing marketing and advertising to enhance the brand and allow the company to become more visible to the general public or investors.

All businesses, regardless of their niche, benefit from financial projections and yearly analysis, and the portable restroom rental industry is no exception! In this article, we outline some of the more industry-specific financial projections, budgeting ideas and proposals that will benefit your business.

Create and Manage a Business Sales Forecast

A sales forecast can be as simple as using an Excel spreadsheet to organize and filter specific goals for your company based on a 3-5 year timeline. Sales forecasts should include monthly sales projections, which include both portable restroom rentals from construction and special event rental contracts. Ask yourself these questions:

• How many units will be rented out?
• How many special events will be booked?
• How many long-term construction rentals make sense per month?
• How should pricing reflect different rental needs?

Create an Expense Budget for Monthly and Yearly Expenses

This section is focused on the fixed and variable costs of your business. An example of fixed costs include the monthly rent you pay for storage or rental space to store portable restroom units or to park trucks and stock supplies. A variable cost might include sales, marketing and advertising costs that can increase or decrease during the busy and slow seasons.

Create and Manage Income Statements, Balance Sheets and Cash Flow Statements

• Income statements: Income statements include financial projections generated to investigate the cost of expenses specific to sales, goods and services sold (or rented), and project the monthly goals of the business’ revenue. Income statements created on a monthly basis will serve as a great comparison against actual financial statements generated at the end of your business year.
• Balance sheets: This is a tool specifically for projecting your business’ overall finances including equity, assets and liability.
• Cash flow statements: Depending on how many employees your business has, your cash flow statements will look different from year to year. In your projections, you will compare cash coming in from income versus cash going out as expenses. This is where profit and loss statements are created and explored at the end of a business year.

Include the Slow Season in Your Projections

Many portable restroom rental companies will experience one season that is considered slower than others. It is important to remember to include these projections into your overall financial plan. For example, if your business operates in the Midwest, you’ll want to make realistic projections for the winter season when portable restroom rentals slow down due to the weather. Adequately strategizing for the high and low season will allow your business to accurately reflect your projections with actual financial statements at the end of the year.

Stay Current with Inventory

Staying current with your business’ inventory is important in any industry. For the portable restroom rental industry, staying current with inventory includes checking toilets on a monthly basis to check your unit’s lifecycle. Units that are in great shape will most likely be used for special events while units used for longer periods of time with slight wear and tear can easily occupy a construction site. Inventory checks include equipment, staying current with loans and buying or selling items that you either need or no longer require.

As your business grows, you will want to consider a financial projection readjustment if you need to add more units or accessories like a handwashing station or handicap-accessible units.

Looking to Take Your Portable Restroom Business to the NEXT LEVEL? Download our FREE Guide: “Your Guide to Operating A Portable Restroom Business.”

Thinking About GETTING INTO the Portable Restroom Industry? Download our FREE Guide: “Your Guide to Starting A Portable Restroom Business.”