The Sales Forecast The Financial Plan: Forecasting Results

The Sales Forecast  Perhaps the most important set of numbers in the business plan  A great number of business decisions are made according to this forecast How much inventory to hold How much material to order How many staff to hire

The Sales Forecast  The key to valuing a business  Will determine whether or not bankers will lend and investors will invest

Forecasting Guidelines  Check how others have fared  Estimate market share  Consider customers  Be aware of order cycles and seasonality  Relate the sales forecast to activity

Check how others have fared  Gather knowledge of similar businesses Research filed company accounts Research trade magazines Talk to founders of indirect competitors  Your overall projections will have to be believable – record references

Work out market share  How big is the market for your product?  Is it growing or contracting? At what rate?  An entry market share of more than a few percent would be most unusual Internet booksellers still only account for less than 2% of book sales

Consider your customers  How many potential customers do you know who are likely to buy from you?  How much might they buy? Interview a sample of perspective customers Issue a press release or advertisement to gauge response Exhibit at trade shows to obtain customer reactions

Order cycles and seasonality  Are there high points and low points in the industry? 80% of toys are sold in just 3 months of the year, leaving 9 very flat months If you were selling toys, this would have a significant impact on your cash flow projections