business sales forecast
DESCRIPTION
http://www.business.govt.nz/tools-and-templates/educational-resources/estimating-sales ACTIVITY 1 Understanding the concept Read through the Estimating Sales topic hand out and then have the class brainstorm times when a sales estimate can be a vital tool. Answers can include: when seeking investors, when planning growth, when buying-in stock, when hiring staff, when weathering an economic down-turn. ACTIVITY 2 Putting theory into practice The Estimating sales student worksheet presents them with a sales report for a fictitious company and a list of internal and external influences for the coming year. Have them read the material and estimate sales for the year ahead. Students can answer individually or split into groups to outline their answers in a presentation to class. Forecasts should not be overly optimistic or pessimistic, as the plant fire (internal influence) is unlikely to affect capacity and the new competitor’s market share (external influence) is counteracted by an increase in global demand. ACTIVITY 3 Market research For a more in-depth activity, which can be carried out over multiple lesson times, have students research their own business idea for a sales forecast. Students (individually or in groups) should use online resources and carry out surveys for the task, before presenting and justifying their findings in a five minute presentation. Marks can be given for research detail and accuracy in the following fields: - Market parameters - Total market value - Market share Resources - www.business.govt.nz/tools-and-templates/educational-resources/estimating-sales/Student%20handout.doc - www.business.govt.nz/tools-and-templates/educational-resources/estimating-sales/Student%20worksheet.doc - www.business.govt.nz/starting-up/before-you-decide/will-your-business-idea-workTRANSCRIPT
Estimating Sales
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Sales forecasting is used…
- To inspire investor confidence
- To test viability- To judge on-going business
performance- To manage special projects…plus many other uses
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Step 1:Find performance figures for the same trading period last year and use them as a benchmarkApply forthcoming internal and external influences to them to estimate future performance
Estimating sales based on a sales history
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Internal influences can be…
- Staff shortages- Product promotions- Limits to manufacturing
capacity- Changes to processes
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- Economic conditions- Regulation changes- A new competitor joining
the market- Another going under
External influences can be…
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Estimating sales based on a sales history
Step 2:Multiply the units sold estimate by the individual unit price
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Estimating without a sales history
Many entrepreneurs find an external benchmark to act as their “sales history” when forecasting sales for a new business
They use a competitor’s published figures, benchmarking surveys or seek advice from experts, accountants or even consumers
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Estimating without a sales history
Others, requiring more specific analysis, carry out their own, in-depth research.
Canvassing target consumers on spending habits and frequency is often vital to this process
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Estimate scenarios
Many businesses use best-case and worst-case scenarios to find more accurate middle-ground figures for their final estimateOverly-optimistic forecasts can encourage financial risk, while excessively-conservative ones exaggerate performance
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