qprev_HBB Manual 2.qxd - Small Business BC

• Estimates of market share of your maincompetitors (this can be given as a percentageof total market share).• Estimates of market share projected for thebusiness, for each of four quarters (every threemonths) in the first year of operation – includetwo figures, the number of items and the dollarvalue.Forecast Your SalesForecasting sales is the starting point forfinancial projections, and the basis of businessbudgeting. List all the products or services yourbusiness plans to sell, and the units of sale foreach. Units are set by the business.A unit for an adventure tour company maybe one package tour of two weeks. For acraftsperson, a unit may be one wooden item. Aunit for a service provider such as a researchercould be one hour of time, or a completedcontract. Beginning to think in “units” is part oflearning to work with the building blocks offinancial forecasting. Decide now – if youhaven’t already – what the sales units are foryour business.A sales forecast can be done for your total sales –the number and dollar value of units the businesshopes to sell in the first year. If you haveidentified two or three MAIN target customergroups, a more useful approach may be toforecast sales separately for each of these targetgroups.Sale price per unit (worked out as part ofpricing, see page 45)Total sales (number of units sold multiplied bysale price per unit)A business doesn’t do just one sales projection,unless it only has one product and one targetmarket. Marketing is usually more demanding ofa business. Your sales forecasts will end uptotalling a final number of units and a dollaramount that the business expects to sell, but thisshould be made up of separate projections foreach product/service and each maintarget group.If you are trying to do a sales forecast for abusiness that you haven’t started yet, industryinformation from your research will be a guide tosales forecasting. Look for recent figuresfor average industry sales, or average sales forfirms similar to yours. If industry informationisn’t available, use your ingenuity. Consultsomeone connected to the industry who canat least help you make a “best guess” for sales.Use information you can obtain on similarbusinesses in related industries.Scrutinize Your PricesThe three ways to set prices are:• Pricing to the market• Cost approach to pricing• Break-even approach.For each product/service and customer group,making a sales forecast involves monthlyestimates for a year:Number of units sold (sub-totals for targetmarkets and one overall total)solutions for small business home-based business 77