Driving Range - Capacity Driven Model
Originally published: 01/02/2021 17:07
Last version published: 23/08/2022 15:41
Publication number: ELQ-86360-3
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Driving Range - Capacity Driven Model

Capacity driven 10-year financial model specifically relating to building and operating a driving range.

Description
This model lets the user forecast revenues and expenses based on assumptions that were built to show usage of driving range slots over time. I have done some interesting logic for the expected earned revenue and seasonality, which has never been done.

Step 1 (revenue): 
User inputs some assumptions about their driving range (configurable up to 10 years), including:
-Start month (opening day)-Number of Driving Slots Available-Average Time a Golfer Is At a Slot (minutes)-Total Hours Open per Day-Days Open per Month-Price per ball bucket



The above inputs will show the maximum possible capacity in terms of the total buckets of balls that can be sold in a given day and maximum monthly revenue.


Step 2 (capacity and seasonality): 
User inputs some assumptions about the % of maximum capacity that is reached in each of the twelve months of the year. This accounts for seasonality if your driving range can't be open all 12 months of the year as well as adjusting for slow/busy months. These capacity assumptions are able to be configured in each of the 10 years of the model and there is a helper calculator that can be used to see what kind of maximum daily golfers will be achieved in each of the 10 years based on the assumptions entered in Step 1.


Step 3 (startup expenses)
The first type of expense is going to be startup costs that are variable based on the number of driving range slots that exist in each year. As more are added, purchases are triggered for specific costs related to each slot. They may all be entered at the beginning or you can account for expansion over time. Then the user can define other non-recurring and non-variable startup costs as well as future one-time capital expenditures.


Step 4 (operating expenses)
The final assumption step is to enter all recurring costs. The user can define the start month and monthly cost in each of the 10 years.


Once all of the above areas have been completed, the model will automatically populate on a monthly and annual basis for a period of 10 years. There are a few high level summary tabs for distribution and DCF analysis as well as IRR / equity multiple metrics.


The model has inputs to account for the option of debt and investor funding sources and the % share that goes to owners vs. investors. The executive summary and distribution tabs will show metrics for the project as a whole and for the investor pool and owner pool.


Plenty of visuals were added to make it easy to see the financial forecast key metrics as assumptions change.

This Best Practice includes
1 Excel model and 1 Tutorial Video

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Further information

Forecast driving range revenues, expenses, EBITDA, and cash flow on a monthly and annual basis for up to 10 years.

Driving range that charges per bucket of balls.

If you have a membership fee or other type of revenue generation strategy.


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