Question

Quite often, there are no enough track-records for early stage ventures. Explain how to forecast the sales for new ventures.

Answer 1

Sales forecast is the backbone of your business plan. People measure a business and its growth by sales, and your sales forecast sets the standard for expenses, profits and growth. Forecasting is mainly educated guessing. So don't expect to get it perfect; just make it reasonable. Sales forecast in a business plan should show sales by month for the next 12 months--at least--and then by year for the following two to five years. Three years, total, is generally enough for most business plans.

The following are the some important things can be used to forecast sales

• Develop a Unit Sales Projection: start by forecasting unit sales per month. Not all businesses sell by units, but most do, and it's easier to forecast by breaking things down into their component parts. Product-oriented businesses obviously sell in units, but so do a lot of service businesses.
• Use past Data If you have it: Whenever you have past sales data, your best forecasting aid is the most recent past. There are some statistical analysis techniques that take past data and project it forward into the future. You can get just about the same results by projecting your two most recent years of sales by month on a line chart and then visually tracking it forward along the same line. Statistical tools are a nice addition, but they're rarely as valuable in a business plan as human common sense, particularly if it's guided by analysis.
• Use factors for a new Product: Having a new product is no excuse for not having a sales forecast. Firstly, findout the important decision factors or component of sales.
• Break the purchase down into factors: forecast sales in a restaurant by looking at a reasonable number of tables occupied at different hours of the day and then multiplying the percent of tables occupied by the average estimated revenue per table. Some people project sales in certain kinds of retail businesses by investigating the average sales per square foot in similar businesses.
• Be sure to Project prices: The next step is prices. You've projected unit sales monthly for 12 months and then annually, so you must also project your prices. A third section then multiplies units times price to calculate sales.

The above the main important factors to forecast sales of a new start up business ventures.