How to Estimate Sales Forecasting in a Business Plan

Sales forecasting is one of the difficult and time-consuming steps in writing a business plan. This step becomes even more difficult when you are writing your first ever business plan and do not have previous sales experience to guide you. In fact, it is of the key components that most investors and lenders pay attention to. Even if this is not your full plan yet, forecasting sales is still important to develop your business goals and reports. In this article we will discuss a few key steps to help you calculate sales forecasting in a business plan.

1) Identify your market

The first step to begin with is to research about all your competitors that operate in the same geographical market with a similar customer base. Try to find out how big is your overall market and make sure your revenues will grow year by year, no matter if you are new in the market. The first step sales managers usually combine with all marketing and advertising strategies pursuing more accurate and predictable results.

There are three basic methods for forecasting sales in a new start business.

a. Marked based

This method focuses on specific location and number of competitors around you. You should measure how many households around for example, one miles to you, would choose your products over your competitors’. Additionaly try to find out also those of five miles far from you and use distances that will make sense to your location.

b. Value based

The second method would need you to calculate total value for each sales category, or in other words what you business has to sell. Business charts are much more than just pretty pictures; especially when you are putting them in your business plan. You should always create charts with this value based technique to illustrate and evaluate the projected numbers.

c. Resource based

The next important step is measure the maximum revenue your business can achieve given the present resources.This is a great indicator to show to your future investors how your company will produce and sell in case of limited resources available at your hand.

2) Prepare your sales forecast

Once you have the clear picture comparing these three sales forecasting methods mentioned above, it is time to prepare it in a format which any bank manager, or investor, will understand. You should now instill confidence by your explicitly demonstrated ability to analyze and pivot your tactics and strategy and show your reader your assumptions about growth rate. This really gives the investor the ability to assess you the entrepreneur – which is where the decision is going to inevitably end up.