You have an interesting new business and you’re working your business plan, thinking about seeking investors when you come to the sales forecast. How do you validate a sales forecast when you’re talking about something new? Of course there’s no data. So now what?
I’ve been on both sides of the table on this one – as an entrepreneur, seeking investment and an angel investor, and as a business plan contest judge, evaluating new business plans. I’ve also spent a lot of years in the middle –as consultant to investors and as consultant or co-founder for the entrepreneurs. Given that background, here are some thoughts that might help you validate sales.
1. Sales are the best validation by far. Real, actual sales, even if they’re just a single involved customer, or a small account. Sales means people or companies are spending money to buy what you’re selling. That’s light years ahead of blank projections.
2. A buy-in by a potential large customer or distribution channel is also a good validation. Getting them involved with a prototype, beta programme, or early investment is great.
3. Overall market demographics. How many of your potential customers (the more carefully defined, the better) are there? How do they divide into meaningful, measurable groups? This injects reality into your forecast. Know the top numbers in the market.
4. Avoid the small-piece-of-a-huge-market gambit. This is the top-down forecast that starts with how much money is spent on say, home entertainment, then projects that your business will get some tiny piece, like half a percent. That is never convincing. Don’t do it. It’s deadly.
5. Break a forecast down into pieces. Divide and conquer. For example, if you’re forecasting a web application, show it as a function of projected inbound traffic, clicks from paid search and visitors from organic search, then conversions, subscriptions, renewals and attrition.
Granularity makes a forecast feel more solid. As another example, if you’re forecasting a restaurant business, break it down into chairs and tables and meals served, drinks, dinners, lunches, by day of the week and, at least as a sample point, hours of the day.
6. Always acknowledge capacity issues. The restaurant has chairs and tables, and the web application has bandwidth and users. Don’t ever get caught forecasting beyond capacity.
7. Look for patterns from other situations, similar products or business offerings, similar markets. There are introduction patterns available for televisions, colour televisions, personal computers, faxes, cellphones, etc. Is your business going to be like any of them?
8. Never pretend there won’t be competition, even for the newest of the new. If you can’t find anybody competing already where you want to go, look harder. Look for how people are already solving the need.
Before I did the early business plan templates I started publishing in 1984, there was nobody else in the market but I was competing with books, classes and magazine articles. I could also anticipate that if my stuff caught on, others would appear in the same market.
9. Distrust the data analysis. I had great success once with an epidemiology model, predicting penetration of personal computers in Latin America would behave like the spread of disease; one user infecting others, with different economic strata having different propensity for infection.
But even that, and most of the mathematical analytical methods, are always subject to the problem of using the past to predict the future. They’re good as background, to temper your thinking and educate your guessing. But they don’t stand alone very well. Do all the analysis, get as much data as you can, but be realistic. The best forecast is a well educated guess.
10. Review and revise forecasts frequently. Write down your assumptions and track how they’ve changed over time. Your forecast is just the first step in a process.
Free SWOT Analysis Template
While all SWOT analysis templates comprise the same basic elements, ie Strengths, Weaknesses, Opportunities and Threats, the information you slot under each heading can make or break your planned product or solution launch.
Are you unsure of what to put into your SWOT analysis, or even what a SWOT analysis is? The following guide will assist you in setting up an ideal SWOT analysis and clear up any misconceptions:
21 Free Sample Business Plans
Writing a business plan can be a daunting process. Sample business plans can be very helpful in providing a format for you to build your business plan on.
Here you’ll find free sample business plans for every conceivable type of business.
Go through our collection of free sample business plans – we have one for almost every industry.
However, don’t just copy the sample business plan. The purpose of writing a business plan is to actually research and find out more about the business venture that you have in mind. It also allows you to stress test all of your business assumptions to ensure they hold up to real market conditions.
Business Plan Categories
Find 11 sample business plans here to launch your travel or transport business.
Educational Website Business Plan: Learn from education business, One Week At A Time’s business plan example, and create an educational website of your own.
Related: Business Plan Format Guide
Find 8 sample business plans here to help you launch your computers or internet business.
Find 4 sample business plans here to help you launch your construction or engineering business.
Find 13 sample business plans here to help you launch your consulting business.
16. Food and Farming
Find 7 sample business plans here to help you launch your food or farming business.
Find 4 sample business plans here to help you launch your health and beauty business.
Find 3 sample business plans here to help you launch your hospitality business.
Find 8 sample business plans here to help you launch your manufacturing business.
Find 2 sample business plans here to help you launch your medical or health care business.
Find 2 sample business plans here to help you launch your non-profit organisation.
10. Online Business
Find 2 sample business plans here to help you launch your online business.
Offering any dry cleaning home delivery service has to first start with a detailed business plan. Start your own business now with this sample business plan.
Find 5 sample business plans here to help you launch your services business.
Find 2 sample business plans here to help you launch your pets or animal services business.
Find 13 sample business plans here to help you launch your professional services business.
Are you looking to start your own magazine? Starting out as a magazine publisher will require a business plan similar to this one.
Would you prefer to start up your own newsletter? Use this sample business plan if you are starting up a business that offers newsletter publishing services.
4. Real Estate
Find 8 samples business plans here to help you launch your real estate business
Find 10 sample business plans here to help you launch your restaurant or bar business.
Find 3 sample business plans here to help you launch your retail business.
Find 10 sample business plans here to help you launch your sports and fitness business.
SWOT Analysis Examples
It’s not necessary to hire an expert to do a SWOT analysis for your business, you can quite easily do it yourself after checking out a few SWOT analysis examples online.
Seeing how a SWOT analysis can be implemented in a variety of ways is useful when you are busy with your business plan research and preparation; here are three SWOT analysis examples illustrating how this approach can be tailored to suit pretty much all areas of your business.