can be difficult if a business is just starting out and has no prior
sales record. Referencing the competition’s sales records might be
next to impossible unless your business has trusted friends or
contacts in related fields.
So what do you
do? Tap into information from competition if that is a possibility,
for starters. Perhaps befriending a storeowner who deals with
products similar to yours is a place to start. They may be willing
to help out. Joining an organization such as the Chamber of Commerce
might enable you to network with people who can trust you just
because of the commonality of the organization. Obtain the average
sales information over a certain period of time and perform the
math. Write in the understanding that your business will not be as
successful up front if just starting out.
If you are an
expert in that field, consider your purchase record. If you are not
an expert, ask people you know who are, or, as stated above, network
and find people who are experts.
method of forecasting sales is to conduct customer surveys. This can
be done in several ways. One is to mail surveys. You can obtain a
mailing list for a price. The only problem with this is the cost,
and typically few people cooperate. A survey also can be done by
phone, or in person by conducting a “man on the street” interview of
shoppers, if applicable, outside your competitors’ stores. Email
surveys also can be conducted. Your questions should be succinct and
few, and perhaps you can offer a discount for answering. The
questions should deal with how often the customer purchases a
certain item, the reason, and the amount of that item that is
purchased at one visit.
for a service business is not much different. Call or meet with
people who offer the same or a similar service, ask clients of your
competition. In some ways it is easier to obtain information for a
service business, because you can make a call or a visit and obtain
information as though you are interested in using the service. For
example, if you plan on opening a recruiting company, you can
contact existing companies and ask them how they operate, what fee
they charge, and whom they charge. This might feel underhanded, but
it is information that is readily made available to the public. And
it might be a better option than letting your competition know you
want their information, which might lead to poor or no information,
or ill feelings.
The Internet is a
good source for a lot of research, including obtaining sales
forecasting methods or information for your product or service.
Do multiple sales
forecasts for the best results. It is also a good idea to forecast
on a monthly basis. Shorter term forecasting is more flexible and
takes into consideration seasonal swings. It also makes you look
more professional with bankers or investors.
investors will want to see that you have done your homework. Figure
out the prospective average sale for your business based on the
information gathered. In your prospective, include expenses you plan
on incurring, and deduct them from your expected income. Consider
cash versus credit payments, and bad debts (if items will be
provided with the intent to pay upon receipt of invoice).
questions bankers or investors will ask you if you approach them for
money. They may wish to find out the process by which you will earn
the income you state you will earn, and how you will deal with
unforeseen circumstances such as failing economy. If your item is
seasonal, take that into consideration. Also consider your market.
Are you selling swim goggles all year, but you sell online, and your
clientele includes people who live in warm states like Florida? Or
do you own a small local store in Michigan? Bankers or investors
will want to be sure your product is viable. If it is something
unique, they will want to know more about it and want to see that
you have done your research about the need. If it is something well
known, they will ask you how your product is different, and why you
think yours will sell if there are thousands like it out there