What are different methods of sales forecasting
Sales planning - this is how you calculate your sales correctly in the financial plan
Definition and explanation
As the first important part of the financial plan, you create a sales forecast for your company. As part of this, you determine how many products or services you are likely to sell and at what price. The sales forecast is usually made for the next three to five years. On the one hand, sales planning is used by banks as a basis for granting loans and subsidies.
On the other hand, planning is important for you as the founder yourself: In this way, you will be able to track whether sales are developing as expected, especially in the first few months after founding the company, and you can analyze where deviations occur. After all, the sales forecast is the basis for all other parts of the financial plan such as liquidity planning and profitability calculation. Deviations in sales development can quickly lead to liquidity bottlenecks and increase your capital requirements. In addition, you gain an overview of all fixed and variable costs with a sales plan.
The sales planning is therefore the basis for the contribution margin accounting and the profit and loss account (P&L)
How to calculate your sales
The basic factors in calculating your sales are price and quantity. You have already set your prices as part of the price calculation before you start planning your sales. Then you have to assess how much demand for your products or services is. Please note: Your company needs time to be successful in the market. As a rule, your sales curve will initially only point slowly upwards. Very few companies can already cover all costs in the first year, usually the breakeven point is only reached in the second year or even later. Marketing measures, regular customers and other factors can increase your sales year on year. Also include comparative figures from your industry in your considerations when calculating sales.
Be very detailed with the analysis for the first 1 to 2 years and estimate your sales for each month. An annual sales overview is then sufficient. Also, keep in mind that there are many different factors that play a role in calculating your sales. These include, for example:
- Pre-orders, specific customer inquiries, etc.
- Sales fluctuations, e.g. B. through Christmas sales, economic crises, etc.
- Price increases, discount campaigns, new competitors, etc.
- Start-up difficulties and slow increase in sales after the establishment
Of course, you cannot consider all indicators in your sales planning. But be aware that the sales trend is not always linear and as previously planned. Seasonality in particular is a factor that founders often fail to take into account when calculating sales.
Practical example of gastronomy: This is how you proceed when calculating sales
You open a restaurant. After doing a market analysis, you have set the prices for your food and drinks. Based on these prices and the assumed purchasing behavior of your guests, you calculate that a guest will bring you an average of 30 euros. Now consider:
- How high are my capacities?
- How many guests come on the weekend, how many during the week?
- How many guests can I expect on average in my restaurant every day?
- When is my day off?
In this way you can calculate your planned sales for the first month: Basically, you can entertain up to 50 guests a day. With 25 open days, for example, assume 500 guests in the first month. The turnover is then 15,000 euros. Their utilization is 40%.
Marketing measures such as flyers, discount campaigns, etc. should increase your monthly number of visitors by 50 percent within the starting year, then to 750. According to this sales planning, the monthly sales after 12 months are 22,500 euros. Your utilization has already reached 60%, which should be a good value.
At the beginning of the second year, you would also like to add a beer garden to your restaurant in order to increase capacity. This means that you can serve 20 more guests every day. However, please note:
- You can only use the outdoor area seasonally in summer.
- More capacity does not automatically mean more visitors, visitors may just move from inside to outside.
- Not all guests in the beer garden eat something, some will only order drinks. This affects the average sales per customer when you calculate sales.
In your sales analysis, record exactly in which months you are expecting an increased number of visitors (approx. May to September). In this way, you go through the first few years after the foundation and think step by step how your sales can develop.
Other models for calculating sales
Depending on the business model and industry, there are different models for sales planning. We provide you with various methods in our online financial plan. These include, for example:
That is why realistic sales planning is important
Make sure you calculate realistically when making your sales forecast. Many founders are very optimistic about their numbers. They hope that this will give them advantages in bank discussions and cheap loans. The bank employees do their homework and will see through unrealistic assessments. In the worst case, they will cut your funding completely.
Also, don't lie to yourself. Many companies have failed because of incorrect sales forecasts. But don't stack deep in terms of your sales either. As a result, banks may only grant you loans with high interest rates. These interest expenses will weigh heavily on your company. You should therefore make every effort to plan your sales in a realistic manner.
The calculation of the break-even point can help you with sales planning; this is also very popular with lenders. With the BEP you can determine when your company is self-supporting.
Tools for your sales calculation
So that you can carry out the sales planning in the financial plan professionally and as error-free as possible, we provide you with various aids. In the past, Excel was mainly used to create the financial plan. However, since this is often very complex, we have developed an online solution that significantly simplifies financial planning.
Conclusion: This is how the sales analysis works
Do not be naive when creating the sales forecast in the financial plan. The sales calculation is the starting point for all other components of the financial plan and is particularly important for your own company assessment and for bank discussions. Therefore, always pay attention to a realistic calculation. Use a market and industry analysis to determine your sales volume. You must have already set your prices at this point. Include seasonal fluctuations and other influencing factors on the possible development (e.g. advertising measures) of your customer numbers in the sales plan.
As a rule, you plan the development and sales development of your most important sales items for a period of 3 to 5 years, initially calculating in great detail on a monthly basis and later on an annual basis. Don't just assume growth of X over time if you want to calculate sales. The effort is worth it, because with a realistic financial plan you also increase the chances of getting the loan and have a better basis for planning your own. Our online financial plan guides you step by step to your sales forecast and does the sales calculation for you.
After sales planning, the financial plan continues with cost planning. This is divided into variable costs, which are often directly dependent on sales, and fixed costs. You then also include the start-up costs and investments before all values flow together in the liquidity planning and profitability calculation.
Start your financial plan now
As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.
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