Sales Forecasting

[rdonovan1]

Hi,

I'm new to this forum and I'm hoping that maybe someone might be able to tell me as to how to project sales on a business that you haven't started yet. I've heard that it's possible to do, but I'm not real sure as to how to do it and I'm hoping someone might be able to tell me as to how to do it.

[Steve B]

It's one of those things that's very hard to do, but very necessary to try. My experience is that no matter how realistic I try to be, I still end up overestimating.

[ArcSine]

Find out if there is a well-established trade group or industry association for the business you propose. Such groups frequently have helpful resources for members, such as statistical data compiled from the industry. You might be able to see an analysis of sales and revenues, broken down along parameters such as geographical region, size of company, age of company, sub-specializations within the industry, and so on.

By itself that's not equivalent to a good revenue projection, but it might provide some helpful intel for your forecasting project.

[rdonovan1]

I've been looking at selling on eBay, but I've also been very interested in the Import - Export Business and Real Estate Investing.

[lucas.bowser]

Hi,

I'm new to this forum and I'm hoping that maybe someone might be able to tell me as to how to project sales on a business that you haven't started yet. I've heard that it's possible to do, but I'm not real sure as to how to do it and I'm hoping someone might be able to tell me as to how to do it.

There's no single path in forecasting. We would need a lot more information to offer specific guidance. Different businesses have different characteristics. Growth in sales can happen linearly or step-wise. You could have a slow growth or fast growth business. You can be a critical piece of a supply chain or a luxury. All these factors matter when forecasting.

I forecast a portion of my company's sales on a regular basis. At the end of the day, what you need to forecast a business is the metric you tie it to. For example, I forecast a portion of my company's sales. We're a B2B company with established customer supply contracts. Our production level is tied directly to the production level of our customers, and we are critical to our customer's profitability. I have a pretty good idea of what they will produced every month (minus unplanned outages) for the next year and a half, and therefore have a pretty good idea of what our sales volume will be over that period. Price is trickier to forecast as several of the raw materials are traded commodities, so our price rise and fall with a commodity index. We forecast the commodities, but they are short-term volatile, so the forecast is wrong the second it hits the printer (which isn't a problem because I can always explain why it's wrong.)

We can probably help you more, if you give us an idea of what it is that you will be selling and who you will be selling it to.

[lucas.bowser]

I've been looking at selling on eBay, but I've also been very interested in the Import - Export Business and Real Estate Investing.
Each of these are very different. Do you have any experience with any of them? (Selling professionally on eBay is different that clearing out your garage, so don't count the sale of a couple of items a year as experience.)

How you forecast each of them will be very different. Of the three above, the one that is probably the easiest to forecast is eBay. Figure out what you want to sell. From there you can see how much of it is selling on eBay and at what price. You can also see how may people are selling it and how big your cut of the market might potentially be. I would also include Amazon in this category since it would be another sales outlet and source of market price research.

Unless you have experience in Import-Export, I would steer clear of it until you have some. Work for an Import-Export business to learn the ropes and then strike out on your own. There's a lot more to this one and usually a lot of inventory overhead.

Real Estate investing is an overly broad category to give guidance on for forecasting. What type of real estate investor do you want to be? Residential, Commercial, Industrial, Agricultural? Cash-flow, quick flip, buy-hold (appreciation)? Each requires that you forecast differently and each has a different pay-off horizon.

[huggytree]

experience and hard data from years in business is the only way

0 chance you will be remotely close if figuring it before you even start your business

take an educated guess......odds you will over estimate....possibly dramatically

i keep track of hours worked each month...i put it into a graph and print it yearly....after 5 years in business there's a pattern emerging, for different times of the year, but there's always a stray month that was 200% better or worse than it typically is...

id take an educated guess and plan for the worst