Forecasting Sales

April 13, 2006

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To get an accurate read on how much money you'll need to keep your business running in the first 90 days, you'll need to figure out how much revenue your business will produce in those 90 days.

In an ideal world, the revenues would take care of all your expenses (and then some), and you wouldn't have to figure out how much more you'll have to pay to keep the business going. It might happen, but it's not likely to within the first few months of operation.

Before we take a look at some ways to estimate revenues, a word of caution. Estimating your sales will be an inexact science. Don't count too heavily on your projections and, if you're going to err, err on the conservative side in predicting how much business you'll do in your first 90 days.

Depending upon the type of business, there are a number of potential forecasting methods which should provide at least a ballpark estimate. For example, the National Restaurant Association and trade publication annual industry surveys provide a wealth of information about potential sales by type of restaurant food, price range, location, demographics, geographic marketing area, type of restaurant (e.g., fast food vs. family-style), and other statistics, along with average operational costs, gross margin, and earnings before taxes. Other trade associations, consultants, and the Internet are excellent sources.

Here are some sources you can use to estimate your sales: