Estimate the sales or revenue your business will capture.
Forecasting for Businesses with Many Products
Here are a few suggestions to help you create a reliable sales forecast.
- You can project sales by groups of products or by product lines to reduce the number of line items in your sales forecast.
- You can get away from projecting by product by using the average sale as your unit. For example, if your market research reveals that three out of every ten visitors to your business will spend an average of $50 on your products or services, you can use this as your unit and project sales based on the expected number of visitors.
- After determining your break-even point, you can base your sales projection on the average sales per day. For example, take $500 per day times 6 days per week–followed by adjustments for holidays and special occasions–and you can eventually arrive at a meaningful sales forecast.
View the Example: Sales Forecast Summary
Action
To complete this Element you will need to have completed most of your primary and secondary market research. Your basic blocks for building your sales forecast are your product and service units and the corresponding unit prices (created in Step 44).
If you are using the Biz4Caster™, the directions within the template will guide you through preparing your entire Financial Section. If you do not have Biz4Caster™, you can either use the form included in this step or create your own spreadsheet. Whether you are using a pencil and calculator or a sophisticated spreadsheet program, your process will be as follows:
- Decide which will be your first month in operation and enter the month at the top of each of the twelve columns for your first twelve months of business.
- Down the left-hand column, enter the name of each unit.
- In column two, enter your unit price for each of the units entered in the first column.
- For each unit, forecast the number of units you will sell for each month.
- For each month, multiply the projected number of units times the unit price.
- Total the sales dollars forecasted in each column to arrive at the total sales for each month.
- Total the sales dollars forecasted in each row to arrive at the total sales for each individual unit for your first year.
- Total all sales across the bottom row or down the right-hand column to arrive at the total sales for your first year.
- Repeat steps one through eight as necessary, until you have a realistic and achievable sales forecast.
- Once you are satisfied with your first-year forecast, estimate your growth for Year Two.
- Once you are satisfied with your second-year forecast, estimate your growth for Year Three.
- Enter your sales for Years One, Two, and Three into a summary table in your business plan (see the Sales Forecast Summary Example Above).