The Sales ForecastThe 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