Sales Forecasting for a New Business
Sales forecasting is a process in which information is organized and evaluated to make an estimate of future sales. It is one of the important tasks which a manufacturing organization has to do. But this task is a bit different in case you have started in a new business. The factors, that can help you to make a sales forecast, include trade suppliers, trade associations, trade publications, competitors and trade directors.
These were some sources that may prove helpful in conducting sales projections but in case of a new business you should know that what process and steps are used to carry out successful sales projections. Here I am giving some steps of conducting a sales forecast for a new business.
Making Customer Profile
The first step is creating customer profile and finding out other tendencies in the industry. To make it easy for you, make some suppositions regarding the customer in your target market. It has been said by the experts that 80% of your sales is derived from only 20% of your customers. If you become successful in identifying these 20% customers then you will be able to develop a profile of your prime market.
Determining Trends in Industry
In order to find out the trends in the market you can take help from trade suppliers about selling trends. You can also get an idea about this by reading trade magazines.
Establishing the Size and Location of Trading Area
In this step, you have to establish an approximate size and location of the area you have planned earlier. You should also determine characteristics of trading area.
First of all, it is necessary to understand that what is meant by your trading area. Its answer lies in two questions:
- How far your customer will have to travel to buy from your shop?
- Where do you want to promote and distribute your products?
As far as estimating the number of individuals is concerned, you can do this with the help of statistical data. A survey regarding family spending will help you to know that how much an average household spends on products and services. In order to help you understand the characteristics of your trading area, Chamber of Commerce, neighboring business owners and newspapers can prove very helpful.
Making a List of Competitors
Having information about the competitors is very important. To get information you can visit their stores and outlets. Now you will be able to conduct an analysis regarding location, customer volumes, prices and quality of their products and services. Other factors to be taken care of include their promotional methods and product positioning.
Using the Research to Estimate Your Sales
You can forecast your sales by analyzing the average sales of the business having same nature, size and area of operations as that of yours company. You must also consider that how your competitors satisfy the need of their customers. You should also determine that are you able to provide better location and services? On the basis of your research, make an estimate of your market share and state it in terms of number of customers you are expecting to capture.
It is always recommended to business people to make a proper sales forecast that will cover up all business costs and generate profits. Having proper documents of sales projections, a sales manager will be able to plan sales activities in a better way. One can make sales projections in different formats. It will be quite helpful to use monthly sales projections template to follow professional format.
I hope that you will find this article helpful to make sales projections for your new business.
