Predicting future sales for your Pet Shop business is a very essential process; you should have a strong idea before you commence your business of your likely sales. It is not likely you will be right on the money but if you do not make a realistic effort your Pet Shop business will likely go bankrupt; forecasting is an vital component to your business stratgey.
Your sales forecast is the fiscal projection of the quantity of revenue your Pet Shop business will take home from the sales of its products or services. Your sales forecast can stand alone, but it will be closely connected to your Pet Shop business plan. It is an essential and fundamental piece of the planning process and it will be a foremost part of your profit and loss account and cash flow forecast.
So why do you need to forecast sales?
A sales forecast is necessary in order to
1. Predict your cash flow – your forecast might predict slow times of business where you may need a cash injection to pay for products or just to pay the staff for example
2. Manage Cash flow – fundamental to the success of your business, it is vital that you appreciate how sales forecasting contributes to the computation of the cash flow forecast.
3. Plan future resource requirements – for example, the quantity of staff considered necessary to manage your orders and provide a certain level of service.
4. Plan marketing activities – and the consequent financial strategies arising from these.
Without a doubt constructing a sales forecast for your Pet Shop business is key to your business success – you ought to continually re-evaluate your sales forecasts – by looking at actual sales to your forecasted sales firstly you can measure if you have done good or not.
So what do you need to consider?
It’s usually considered you ought to look to the next three years of your Pet Shop business for your sales forecasts – the 1st year being detailed on a monthly basis
Things to think about
1. Is there an recognized market for your product or service?
2. How big is the sector?
3. Is this an growing/contracting market and if so; by what percentage?
4. What are the main considerations for this market?
5. Have you seen any factors that may influence it in the future?
6. Is your business seasonal?
7. What trends or fashions are appropriate to the sector?
Do you know who your customers are?
1. What % will purchase?
2. Will they desert a different supplier to move toward you?
3. What is your pricing strategy and how will it affect sales?
4. Can you in fact make available the products and services that you are predicting?
5. How many competitors do you have?
6. It is not likely your business is the only one of its kind – what happens to your customers when new-fangled businesses enter the market?
You must be transparent about how your products or/and services match the marketplace. Practically every business has a quantity of competitor(s) – how can you hoover up your competitors customers? How can you put a stop to your competitors taking your customers? Just how accommodating with regard to pricing and the scope of products or services offered can you be?
Preparing your Pet Shop business forecast
All Pet Shop businesses need to base their forecasts on certain assumptions regarding potential changes that may take place in the future. These can be measured and could include:
1. An expectation of market expansion/decline by a certain percentage, for example 10%.
2. Planned expansion in the number of staff to generate an expected 20% increase in production.
3. A move to a different location that should produce a 40% increase in sales.
Preparing your forecast
You ought to prepare a sales forecast for each item you trade,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 verifiable, realistic and unbiased info.
2. Don’t be tempted to pay no attention to your investigation if it showed bad results.
3. Do not make predictions exclusively on historical results. Put your business under a microscope – try and imagine what might impinge on your sales in the future – good or bad.
4. What is the upper limit of products you can make in a day?. 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 or too high so that either way your forecast is potentially unrealistic?
6. If you have just started up in business, have you considered that it might take longer for your business to become reputable, and have you set accordingly realistic sales goals?
7. Have you allowed for the chance that high sales based on an early promotional surge may drop off, leading to a need for more intensive marketing and higher ongoing expenses once initial awareness has peaked?
8. When you elucidate your sales forecasts to prospective investors – are they believable?