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Question added to topic Grow Your BusinessMarch 5, 2011

How Do I Make a Sales Forecast?

I'm looking for guidance for making a sales forecast to present to possible financial backers. I have three years' sales experience, but no marketing background. I'm convinced that the business idea is sound for our initial target area.
You're not the first to ask this, and you won't be the last. There are lots of free, easy-to-use templates for download online that will list the types of data you could include.

Use metrics from your particular business and how it's done in other markets to make assumptions about how your venture might perform in this target area. You'll need to know the local demographics, such as median incomes, average household spending, percentage of the population that's male versus female and other data points. Municipal and marketing-research sites are good places to go digging.

Keep in mind that just because a market needs a product doesn't mean people will buy it if it's available. You'll need to consider pricing strategy according to what the market will bear.

Your goal now should be looking for the data. If you can't find it, contact your local business college and ask whether a student may be interested in doing a short-term internship in market research. Interns can be tenacious in pursuing information since their degree may depend on it. You may also eventually find yourself with a possible employee who already knows your business.

Using your sales experience, think about what it took to sell similar products or services. You'll need to figure how many leads you'll need to generate to make the numbers work.

Work backwards, so when you say, "I got 10 sales from 50 leads," you'll be able to calculate what it might cost to get those 50 leads. Your cost of acquisition is going to make or break much of your plan. If it's too high, the money needed to create a profit will outweigh the actual profit. Financial backers aren't likely to bite.

Think of it this way: How much is it going to cost to get a sale? How much will you spend on marketing to acquire sufficient leads to make one sale? How much profit will this business create when that sale is completed? How much did it cost to get that sale?

Start with those questions, and begin your calculations. Then refine your plan until it makes sense. You'll be well on your way to having a forecast that you can confidently put in front of any investor.

Michael H Kaleikini is a business development consultant and founder of Business Refinement, LLC in Henderson, Nev.

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