HOW MUCH BUSINESS WILL MY FIRM GET?

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The answer is SALES FORECAST which is a critical component in business plan. SALES FORECAST is an estimate of how much money a business will bring in over a given period. Typically, a business plan included at least three years of annual sales forecast to determine the sales. The process of developing your sales forecast will be closely associated with the work to determine market potential and should follow the same principle of using secondary sources first.

Quick Note: Market potential provides information of how much money a group of potential customers will spend on a particular product or service.

However, the sales forecast can provide more accurate result if we use more sources of information to prepare the forecast. The following sources are the most likely which can be used:

·        Industry Statistics

Library information on specific industries that used to determine market potential can be used to understand correlations of sales which is describes as a known facts about an industry that can be expressed as a ratio of the industry’s sales.

·        Customer buying intentions

With help of primary research as questionnaires for the market potential, you can basically intent customers to be the potential customers and offer the service or product with particular price.

·        How long it takes to get new customers

If your business is new, you will be aware about how many hours of selling or how many calls it takes to generate single new customers. However, the test marketing which is a process of trying to sell product or service to a limited number of customers and carefully measuring factors like customer feedback and how long it takes to make a sale. The investors are more likely interested in how easy you can get a new customer with your product or service which shows the speeding operation of your company in the market. But the fact is that it takes more time to make a new customer than serving the existing one.

·        Expert opinion

The other best way is to confirm the expert’s opinion because interviewing several people who have expertise in your particular industry can help you to guess the sales forecast range for you business plan.

·        How much business the competition gets

The idea is to monitor the sales forecast of you direct competitor for the same particular industry. It will give you an idea of your estimate sales forecast as you have same potential customers.

·        All the business out there

This explains the idea of all the business in the market related to your industry can also help you to estimate the sales forecast of your company.

·        The amount of business the firm can handle

Usually the most business can handle 100% of their capacity which helps keep other people estimating about your sales forecast in perspectives. Mostly the capacity is determined by the fact is the firm can handle the expenses to grow his industry.