Sales Forecasting for Beginners

[Baconbonce]

After recently being made redundant, I'm currently looking at starting my own business and have started on the business plan.

I'm becoming stuck when trying to forecast initial sales and sales going forward.

Now from what I understand, it's going to be pretty much an educated guess for a new start-up, but am looking for any tips or advice on how to go about this.

For reference, the business is an IT services/consultancy - I know, I know - so, the "product" I'm selling is a service at either an hourly or daily rate.

Any assistance appreciated.

Thanks in advance

Paul

>> Edited by Baconbonce on Tuesday 27th September 14:15

[Pot Bellied Fool]

It's going to be nothing more than an educated guess based on your knowledge of the marketplace you're in I'm afraid and much will depend if you've already got some regular work promised to you (this is the holy grail when starting off - it makes all the difference!). So think about your contacts, how well known are you in that area/sector and so on. Anything you can do to help you hit the ground running is a big brucie bonus.

Do you (or can you find out) how much sales time others in the same industry sector have to put in to get x hours billable? If it's 1:1 for example, then you're only going to have 2.5 days chargeable per week (ignoring the fact that the self employed typically never switch off!) before you've looked at other time overheads...

But don't forget to factor in time for travelling, marketing, selling, paperwork, more paperwork, accounts, Gummermint form filling, more paperwork and times when the phone simply doesn't ring for a week or two when doing your forecast.

Then when it's all done...

Cut the income by a half & double the overheads. Does it still work? If so then you stand a chance!

You can also expect to suffer from feast & famine syndrome. You start off with no customers, do loads of marjketing, get really busy but that leaves you with no time for marketing so the work then dries up, you then market again, it picks up again, leaving no time to go sell for the future... and so you oscillate wildly until you develop a core of stable customers that need less sales time & help even it out somewhat.

Good Luck with it all.

[groomi]

Everything PBF says is spot on.

It may also be uselful to do a cashflow forecast too. Again, it will be largely guesswork, but useful to see when your large expenses are due (insurance, VAT etc.) and how you need to try to see out the peaks and troughs. It may highlight a particular time many expenses are due at once - in which case, can you change when some payments are due, or extend the overdraft etc.

Just my 2p.

Good luck

[Baconbonce]

Thanks for the advice guys - made good reading.