business development services 1 what’s your sales forecast? session 5

Business Development Services1

What’s your sales forecast?

Session 5


Competition Review Who else is selling your product/service in this

industry? What makes your business different? How will

your business stand out from the competition?


Collected information on your industry Wrote an industry analysis to support the

feasibility plan Described and identified ways to reach your

customer/target market Defined your customer relationship (B2B and/or

B2C) Researched and analyzed your competition Defined your product/service features, benefits

and unique value proposition

Look how far you’ve come!


Define sales forecasting Practise various methods of forecasting

sales Calculate units sold for your business Write assumptions to support your sales

forecast

Session objectives


What is a forecast? Where do you see forecasting used in

daily life?

Forecasting


Sales forecasting: to predict or calculate how much product or

service you could sell over a period of time 1st Step:

Forecast the number of units you can sell

Sales forecast: definition


Today: forecast number of “units” you can sell over a period of time

Next session: look at strategies to set a price – to see the $$ you can sell

Later, in Session 10 (What are your costs?), you’ll check how much it costs you to make your product/service, and see if this price is realistic

Developing your sales forecast is a step-by-step process


A measurement that describes how sales are made in your business

What are some examples of a unit? It is very important to determine (as soon as

possible) what a “unit” is for your business. Your sales forecast depends on this

measurement.

What do we mean by “unit”


You are the captain of your ship


Sales forecasts help you keep track of how your business is doing

Sales forecasts are the starting point for resource planning (staff, raw materials).

Sales forecasts help you see when your business will be past its capacity to operate, and it’s time to get new space, equipment, etc.

Facts about sales forecasts


A sales forecast is not a guess Sales forecasts are done for a period of

time (month, year, multiple years) Like the weather forecast, sales forecasts

are not perfect Sales forecasts are supported by reasons

(assumptions)

More facts about forecasting


For your sales forecast, you’ll do two things: Session 5: Forecast your sales (how many

“units” you’ll sell) Session 6: Figure out how you will price your

“units”

Sales & pricing


Do you have a product or service business, or both?

To get the best forecast, figure out sales forecast for each product/service sold, or revenue stream

To get the best forecast, do more than one method

If the results from two methods are very different, take a closer look

Sales forecasting: getting started


Sales/sqft is the average sales dollars that a business creates for every square foot of sales space

Popular for retail businesses (clothing, bookstores, etc.)

Method #1: Sales per square foot


Method #2 Top-Down Forecasting

Size of your Industry

Size of your target market

Your customers


You can estimate your market share with: Number of customers in your target market Total sales for your industry or target

market Population information for your area Competitor analysis

Method #2: top-down (cont’d)


Is her forecast realistic? Is it unrealistic? What would you do to improve her forecast?

Maria’s top-down forecast


Method #3: Bottom-up forecasting

Your customers today

Building customers & sales

Building MORE customers & sales


Bottom-up forecasting can give you a more realistic forecast

You start with the number of customers you have now (even if zero)

How many new customers you can get each month, year?

How will you do it? (your assumptions: marketing, sales, etc.)

Method #3: Bottom-up forecasting


Talk to stores that could carry All-Natural Doggie treats. How many could she get in year 1? Year 2?

Can her customers recommend her treats to others?

Can she use social media or other forms of marketing to promote her treats?

What relationships could she create with organizations that serve dog owners? (e.g. dog trainers, shows, daycares, etc.)

How can Maria build her business from the bottom-up?


Steady Sales0

20406080

Slow Progress0

20406080

Big Bang0

20406080

Possible sales patterns


Choose a sales strategy (steady sales, slow progress or big bang).

Develop a bottom-up forecast for 12 months (units, or packages for Maria)

One sales forecast per group Remember that you can make decisions based

on assumptions if you don’t have perfect information

Sales forecasting activity


Taxi service Bookkeeper or accountant Guitar teacher Housecleaner What’s a “unit” for your business?

Service businesses: what would a “unit” be for these businesses?

business development services 1 what’s your sales forecast? session 5

Documents

best forecast

weather forecast

forecast number of units

business different

service business

average sales dollars

perfectsales forecasts

doingsales forecasts