Creating a sales forecast for a new business & product.
Discussion
What you have been asked to do is completely impossible and whichever number you come up with will definitely be wrong.
Having said that you need to have a stab at it and you need to be realistic. I have been asked similar a similar question a few times and I normally start off with trying to work out what the person asking want to hear.
No one is going to be too upset if you pick a number which turns out to be too low.
There will be disappointment however if you pick a number and only achieve 50% of it, even if that's not a bad result.
On the other hand, if you tell them that you only expect to sell 4 a year then they will quite rightly think you are yanking their chains.
So you need a number that is high enough to keep them interested but not so high they think you are a fantasist.
Having said that you need to have a stab at it and you need to be realistic. I have been asked similar a similar question a few times and I normally start off with trying to work out what the person asking want to hear.
No one is going to be too upset if you pick a number which turns out to be too low.
There will be disappointment however if you pick a number and only achieve 50% of it, even if that's not a bad result.
On the other hand, if you tell them that you only expect to sell 4 a year then they will quite rightly think you are yanking their chains.
So you need a number that is high enough to keep them interested but not so high they think you are a fantasist.
You need some data sets from initial selling efforts before you can look too far forward in forecasting.
You need to look at your own conversions (how many times do I have to do X before I make a sale). If you're working through distribution channels you need to pilot it and work with them closely to understand their conversion rates.
Once you know how much effort generates a sale, you can work out whether the product is likely to be profitable as an overall project and how much you need to scale your own and distribution sales efforts for the business to reach its necessary performance level.
It might be that for it to be a viable business you need to supplement your original product with a range of other products under a single branding that will increase yours and your distributors' chances of cross-selling to what I expect is a relatively niche marketplace of consumers.
You need to look at your own conversions (how many times do I have to do X before I make a sale). If you're working through distribution channels you need to pilot it and work with them closely to understand their conversion rates.
Once you know how much effort generates a sale, you can work out whether the product is likely to be profitable as an overall project and how much you need to scale your own and distribution sales efforts for the business to reach its necessary performance level.
It might be that for it to be a viable business you need to supplement your original product with a range of other products under a single branding that will increase yours and your distributors' chances of cross-selling to what I expect is a relatively niche marketplace of consumers.
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