Learning how to accurately forecast particular outcomes in your business is all about working your way through any factors that will eventually have an impact on your performance and bottom line. Making a forecast should include working from a position of knowing exactly how to go about delivering results even when it feels as if the universe is conspiring against you.
Forecasts are especially valuable to those who might be looking to back your business or make an investment. Below are some handy hints and guidelines that will help you forecast business outcomes and sales targets more accurately.
Be Credible And Believable
Being credible and believable in your sales forecast is extremely important. Remember that most backers have probably seen hundreds of forecasts by businesses in a similar line of work or commerce than yours. They’ll more likely than not be able to pick up immediately on any discrepancies or castles in the sky.
Pay Attention To Market Share
When drawing up your forecast, it is important to focus extensively on market share. Asking the following questions may be useful in this regard:
- How big is our anticipated market?
- Is our target market growing or becoming smaller?
- If smaller, why?
- At what rate is our target market expanding or contracting?
- What is our competitive edge?
Furthermore, beware of willy-nilly statistics. Most serious investors will have done their own homework about your claims beforehand.
Know Your Customer
When making a forecast, the customer should take centre-stage. Failing to do this will never lead to any sort of success. Since the customer is the person putting money in the bank, the customer must necessarily be made a crucial link in the forecast equation.
Helpful considerations include:
- What is the size of your potential customer base?
- How do customers go about paying for your products and/or services?
- How accessible is your business to customers?
- Have you conducted any customer surveys in the past? If not, why not?
- Are there any seasonal considerations to be taken into account in terms of sales? For example: a business focused locally on swimwear will likely experience comparatively slower sales during the winter months.
- Are the necessary regulatory approvals in place for the sale of your products?
Determining Your Desired Income
Breaking even is an important part of any business, and even when you check this site you’ll see why coming out on top is essential. It wouldn’t make any sense running your business at a loss, after all. When determining the minimum number of sales needed to break even on a monthly basis, be realistic in your calculation.
Remember that a big part of the purpose of even doing a forecast in the first place is to actually achieve the goals set out in that forecast. It helps with budgeting too. The question of how much a business must earn in order to keep afloat in a sustainable manner must always be addressed in a proper manner that is concise, but also easy to understand.
Being transparent with potential backers is the biggest favour you’ll ever pay your business.