Wednesday, September 7, 2016

Sales and Revenue Model - The Art of Sales Forecasting

Sales Forecasting Basics

Here's a revelation: in forecasting sales for your business, you can't do it in a vacuum. What does this mean: well, put simply, there's no way for you to compute and calculate sales forecasts without understanding the sales potential of your product and / or service. You must ask yourself the following questions: 
  • How relevant are my products and / or services in the marketplace? 
  • What is the anticipated response of my target market to my products and / or services? 
  • How can I capture and quantify this market response? 
  • How 'sticky' are my products and / or services to my target market? 
In answering these questions, you will get a solid picture of your sales forecast on a daily, weekly, monthly, and annual basis. You will learn the demographics and psychographics of your target market. Another way to gain information for your sales forecast is to search out and learn about your closest competitors. 

Believe it or not, a competiting business gives you the oppotunity to learn so much about your sales forecast and overall sales potential. You can conduct covert operations as a customer and learn the intimate details of what makes your target market 'buy' without the hassle of doing a lot of research at the local Chamber of Commerce or public library. Now, I do recommend these research sources for refining characteristics of your target market, but only after you've immersed yourself into the 'live action' of a competing business. Not only will you retrieve answers to the aforementioned questions, but you will also gain insight into the following emotional triggers your target market utilizes to buy: 
  • What's the impact of the business on my senses such as taste, feeling, sight, hearing, and smelling? 
  • What's the velocity of business on a daily and weekly basis? 
  • How long has this competitor been relevant and why? 
  • Why motivates customers to buy and continue to buy?