In this class we’re going to pull together the numbers of a business plan. Using hands-on with Business Plan Pro, we will forecast sales and estimate starting costs, and we will estimate our ongoing expenses, to show how the plan comes together with projected profits and loss, balance sheet, and cash flow.

OVERVIEW

Forecasting is more art than science.  Like the weather forecast, it’s a mixture of research, experience, and educated guessing.  You can do it. Whether you like numbers or not, there are some basic estimates you just have to make. Think of it as lists of educated guesses.

DEFINITION

Sales Forecast: The level of sales a single organization expects to achieve based on a chosen marketing strategy and assumed competitive environment. The process of estimating what your business’s sales are going to be in the future.

Costs of Goods Sold (Costs of Sales): The cost of materials and production of the goods or services a business sells.

• 3 Weeks to Startup, Chapter 16, Managing the Money
• The Plan-As-You-Go Business Plan, Chapter 5, pages 126-131; 148-161
• The Plan-As-You-Go Business Plan, pages 129-155, sales forecast

The reading provides a lot of detail and background. In addition, here are some additional Online Resources that might help:

• This three-minute piece on youtube.
• The Forecast Your Sales chapter of the online book on business planning, www.hurdlebook.com.

As with other assignments, please deliver this as either a BPDX or a PDF file, attached to an email, with your name included in the file name. It has to include the following:

1. An explanation. Not a lot of words, necessarily, but at least a paragraph or two explaining the main assumptions. Why is it this and not double, or half of this? If you built it based on some assumptions (good idea), like for example chairs and tables and occupancy in a startup restaurant, then please share those assumptions with me.
2. Sales by month for the first 12 months of your plan, summed into a total for the first year, and by year for the second and third year. These should usually (but not always) be broken into units and price (revenue) per unit.
3. Direct costs by month for the first 12 months of your planned, summed into a total for the first year, and then by year for the second and third year.

You can find examples of the table required in these places:

• The chapter on Sales Forecast in the Plan As You Go book. Beginning of page 131, continuing through page 154. Also online, just click here.
• The Forecast Your Sales chapter in Hurdle: the Book on Business Planning. Also online, just click here.

And don’t forget, as well, that there are about 500 examples in the sample business plans free online at www.bplans.com.

• PAYG, pages 129-155, sales forecast

Forecasting is more art than science.  Like the weather forecast, it’s a mixture of research, experience, and educated guessing.  You can do it. We’ll do case studies and sample today and prepare you for your next assignment, due next week, a sales forecast.

This is hands on, with numbers, and examples, how to forecast sales and estimate starting costs. Whether you like numbers or not, there are some basic estimates you just have to make. Think of it as lists of educated guesses. You don’t have to.

If you should happen to miss this class, the reading provides a lot of detail and background, and there are also some additional links that might help:

• This three-minute piece on youtube.
• The Forecast Your Sales chapter of the online book on business planning, www.hurdlebook.com.
• The sales forecasting discussion in the Plan-as-you-go Business Plan book.