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Business Development Services1
What’s your sales forecast?
Session 5
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Competition Review Who else is selling your product/service in this
industry? What makes your business different? How will
your business stand out from the competition?
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Collected information on your industry Wrote an industry analysis to support the
feasibility plan Described and identified ways to reach your
customer/target market Defined your customer relationship (B2B and/or
B2C) Researched and analyzed your competition Defined your product/service features, benefits
and unique value proposition
Look how far you’ve come!
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Define sales forecasting Practise various methods of forecasting
sales Calculate units sold for your business Write assumptions to support your sales
forecast
Session objectives
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What is a forecast? Where do you see forecasting used in
daily life?
Forecasting
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Sales forecasting: to predict or calculate how much product or
service you could sell over a period of time 1st Step:
Forecast the number of units you can sell
Sales forecast: definition
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Today: forecast number of “units” you can sell over a period of time
Next session: look at strategies to set a price – to see the $$ you can sell
Later, in Session 10 (What are your costs?), you’ll check how much it costs you to make your product/service, and see if this price is realistic
Developing your sales forecast is a step-by-step process
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A measurement that describes how sales are made in your business
What are some examples of a unit? It is very important to determine (as soon as
possible) what a “unit” is for your business. Your sales forecast depends on this
measurement.
What do we mean by “unit”
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You are the captain of your ship
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Sales forecasts help you keep track of how your business is doing
Sales forecasts are the starting point for resource planning (staff, raw materials).
Sales forecasts help you see when your business will be past its capacity to operate, and it’s time to get new space, equipment, etc.
Facts about sales forecasts
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A sales forecast is not a guess Sales forecasts are done for a period of
time (month, year, multiple years) Like the weather forecast, sales forecasts
are not perfect Sales forecasts are supported by reasons
(assumptions)
More facts about forecasting
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For your sales forecast, you’ll do two things: Session 5: Forecast your sales (how many
“units” you’ll sell) Session 6: Figure out how you will price your
“units”
Sales & pricing
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Do you have a product or service business, or both?
To get the best forecast, figure out sales forecast for each product/service sold, or revenue stream
To get the best forecast, do more than one method
If the results from two methods are very different, take a closer look
Sales forecasting: getting started
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Sales/sqft is the average sales dollars that a business creates for every square foot of sales space
Popular for retail businesses (clothing, bookstores, etc.)
Method #1: Sales per square foot
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Method #2 Top-Down Forecasting
Size of your Industry
Size of your target market
Your customers
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You can estimate your market share with: Number of customers in your target market Total sales for your industry or target
market Population information for your area Competitor analysis
Method #2: top-down (cont’d)
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Is her forecast realistic? Is it unrealistic? What would you do to improve her forecast?
Maria’s top-down forecast
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Method #3: Bottom-up forecasting
Your customers today
Building customers & sales
Building MORE customers & sales
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Bottom-up forecasting can give you a more realistic forecast
You start with the number of customers you have now (even if zero)
How many new customers you can get each month, year?
How will you do it? (your assumptions: marketing, sales, etc.)
Method #3: Bottom-up forecasting
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Talk to stores that could carry All-Natural Doggie treats. How many could she get in year 1? Year 2?
Can her customers recommend her treats to others?
Can she use social media or other forms of marketing to promote her treats?
What relationships could she create with organizations that serve dog owners? (e.g. dog trainers, shows, daycares, etc.)
How can Maria build her business from the bottom-up?
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Steady Sales0
20406080
Slow Progress0
20406080
Big Bang0
20406080
Possible sales patterns
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Choose a sales strategy (steady sales, slow progress or big bang).
Develop a bottom-up forecast for 12 months (units, or packages for Maria)
One sales forecast per group Remember that you can make decisions based
on assumptions if you don’t have perfect information
Sales forecasting activity
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Taxi service Bookkeeper or accountant Guitar teacher Housecleaner What’s a “unit” for your business?
Service businesses: what would a “unit” be for these businesses?
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