Predicting possible sales for your Tent and Marquee Hire business is a very worthy process; you should have a strong idea before you commence your business of your likely sales. It is doubtful you will be right on the money but if you do not make a realistic attempt your Tent and Marquee Hire business will likely not succeed; forecasting is an essential component to your business stratgey.
Your sales forecast is the financial projection of the quantity of revenue your Tent and Marquee Hire business will create from the sales of its products or services. Your sales forecast can stand alone, but it will be closely connected to your Tent and Marquee Hire business plan. It is an essential and fundamental piece of the planning process and it will be a major part of your profit and loss account and cash flow forecast.
So why do you need to forecast sales?
It is needed so you can
1. Plan cash flow – that you will need to include in your business plan when seeking funding, and to avoid out of the blue cash flow problems by establishing if and when you will need to inject capital or have access to funds.
2. Manage Cash flow – central to the success of your business, it is essential that you recognize how sales forecasting contributes to the computation of the cash flow forecast.
3. Plan future resource requirements – for example, the quantity of personnel needed to manage your orders and provide a certain level of service.
4. Plan marketing activities – and the consequent fiscal strategies arising from these.
Whatever the situation, it is critical that you investigate your expected sales frequently and realistically, and take proper action to re-examine your strategy. Your sales forecast is the standard alongside which you should frequently quantify what truly happens in your business in terms of sales and the important thing is to recognize the variances and why they transpire, and to incorporate what you have learned into yet to come forecasts.
So what do you need to consider?
It’s usually considered you should look to the next 3 years of your Tent and Marquee Hire business for your sales forecasts – the first year being detailed on a monthly basis
Things to think about
1. Are there any related products or services already being provided in the region?
2. What is the extent of the market?
3. Is this an growing/contracting market and if so; by what percentage?
4. What are the major factors that are at this time influencing that market?
5. What may well affect it in future?
6. Is your business cyclic?
7. What trends or fashions are appropriate to the sector?
Who are your customers going to be?
1. What percentage will purchase?
2. Will they desert a different supplier to come to you?
3. What is your pricing strategy and how will it affect sales?
4. Can you actually supply the products and services that you are predicting?
5. How many other businesses like yours are out there?
6. It’s not likely your business is the only one of its kind – what happens to your customers when fresh businesses enter the market?
You must be transparent about how your products or/and services match the marketplace. Practically every business has some competitor(s) – how can you hoover up your competitors customers? How can you prevent your competitors taking your customers? Just how adaptable with regard to pricing and the assortment of products or services to be had can you be?
Preparing your Tent and Marquee Hire business forecast
All Tent and Marquee Hire businesses need to base their forecasts on certain assumptions regarding potential changes that may take place in the future. These can be quantified and could include:
1. Sector growth/decline by a certain percentage e.g. 5%.
2. Staff increase to increase production or sales – maybe 25%.
3. Different location – more customers – 30% increase in sales.
Preparing your forecast
You should prepare a sales forecast for each product you sell,and forecast:
1. By volume
2. By value
3. By a combination of both volume and value.
So what are the pitfalls when forecasting sales?
1. Make sure your forecast is based on certifiable,realistic and unbiased information.
2. Do not be tempted to pay no attention to your research if it showed bad results.
3. Don’t make predictions only on historical results. Keep looking at what else might impinge on your sales in the future and amend your forecast appropriately.
4. Understand what volume of goods you can produce. Can you produce the amount of sales being forecast with the equipment,personnel and financial resources available to you?
5. Are your prices realistic?, or conversely, have the prices been set too low down or too high so that either way your forecast is potentially unrealistic?
6. If you have just started up in business, your business may take longer than you imagine to get established, and have you set accordingly realistic sales targets?
7. Have you allowed for the possibility that high sales based on an opening promotional surge may drop off, leading to a need for more intensive marketing and higher ongoing expenses once initial interest has peaked?
8. Can you identify and justify the assumptions you have made in reaching the forecast, and explain them to interested parties if necessary?