Business Plan - Sales Forecast

Each of you are getting to the point in your business plan where it will be time to start estimating how much you will spend on things such as promotion, rent, and inventory. Before doing this, it would make sense to make some sort of estimate on how much your business could potentially bring in gross sales. Estimating sales is difficult for even the most experienced entrepreneur. The list below outlines how we will estimate sales. Obviously, it is not completely accurate, but we need to start somewhere.

Example of how this should be set up:

Sales Forecast

 

Use your spreadsheet you made previously (saved as BP_Financial or Financial Notebook in your Business Plan folder) to illustrate the following steps and calculations:

  1. Click on a new tab at the bottom of your Financial Notebook - name this tab - Sales Forecast
  2. Put in all of the titles across the top
  3. Make a list of each of your competitors (minimum of 5 - can be direct or indirect.
  4. Add your business to the list.
  5. Assign a market share percentage to each business including your business. Be realistic and remember that they should all add up to 100%.
  6. Retrieve the total population of you target market which you have calculated before in the Target Market Estimate Assignment.
  7. Each of your competitors will get a portion of this market so take the percentage you estimated above and multiply it by the total customers in this target market.
  8. As a general rule, 10% of your customers will purchase 90% of your products so take 10% of the number you calculated above.
  9. Estimate how much you think you would spend in a business like the one you are proposing in one month.
  10. Multiply this by the number calculated in #7.
  11. Divide #8 by 2 because new businesses usually only make 50% of their potential profits the first year.
  12. Name this tab - Sales Forecast

When you have completed the spreadsheet, title a Word document as sales forecast and write a short paragraph that describes how you derived your forecast (basically summarize the steps above in paragraph form). Then insert your spreadsheet below the paragraph. Save this file as Sales Forecast in your business plan directory.


 

For Reference - Link to ZM - Climb On - Game On Financing - In the Shared Directory (P) - CHS/handouts/CSB/2010-2011/Business Plan/ZM Finances.xls