Monthly Archives: September 2011

Sales Forecasting Success

Sales Forecasting Success from The Startup Garage

Sales Forecasting Success

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One crucial part of a complete business plan is your sales forecast. This component is the basis of a company’s financial projections and should be given high priority when creating a marketing plan. The future direction of the company may rest on the accuracy of your sales forecasting. There are many ways to forecast sales. Lets highlight some of the most common and simple methods for this.

Here are a few things to keep in mind when creating your sales forecast.

– Be conservative, be realistic, unrealistic forecasts can cast doubt on the credibility of entire business plan.

– Break your business down into units.

– Pick one of 3 forecasts methods which best meets your business requirements.

-When building your forecast, make sure to base your numbers off of reasonable assumptions about your company and industry.

– Remember: Sales Forecasting is an Art not a Science! Experience is helpful, but creating totally accurate projections is extremely difficult.

The three sales forecasting methods are: The Build Up Method, The Work Backwards Method, and the Market Share Method.

1: Build Up Method:

First you must predict how many units of each product/service you will sell in month 1. It is often helpful in month one to project by week or even by day. Be conservative. Then project out for the next 12 months individually, and then by month or by year for the next 3-5 years. This method is better used in big industries, many competitors and many potential clients, such as the internet industry.

2: Work Backwards Method:

Just like it sounds, this method has you start at the end of your projections and work backwards. Define your sales goals in the final year. Work backwards to determine which sales goals you would need to reach in each year prior in order to arrive at your final year projections. Determine if this is realistic given the internal and external factors.

3: The Market Share Method

In the Market Share Method, you can calculate your sales goals based on simple industry statistics, including revenue, growth rate, and initial unit cost. This method is better used in an industry with few competitors and few clients (for example, 100 restaurants in a city of 100,000 people, or 10 airplane manufacturers with 50 airlines that buy them).

In conclusion, whether you are trying to secure funding for your business or just trying to get an accurate picture of what your sales will be, you must create a conservative, realistic sales forecast. Doing this properly will give you great insight as to what you should expect from month to month as well as year to year as you operate your business. The benefits of these insights are numerous and will really help you understand your business and industry much better.
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4 Misconceptions by Entrepreneurs for Trying to Raise Funding

Capital Raising Misconceptions from The Startup Garage

4 Misconceptions by Entrepreneurs for Trying to Raise Funding

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Money is the life blood of a business. Therefore, raising money becomes an inevitable task for many entrepreneurs. However, many entrepreneurs might get into some misconceptions about raising money. The following 4 misconceptions are the ones that entrepreneurs usually run into.

I need Venture Capital. The successful rate of raising money from VCs is less than 3%. VCs tend to look for large investments with high growth potential, not traditional small business. They also tend to look for companies that are already launched and growing. Therefore, it is difficult for a prelaunch stage business to raise money from VCs. In fact, the majority entrepreneurs raise money from their family members, friends, smaller private investors, and their own savings.

I can acquire funding very soon. It takes time to find potential investors, and those potential investors take their time to evaluate the return of investment. At the end, the entrepreneur negotiates back and forth with his/her potential investors before they reach an agreement that both sides satisfy with. Therefore, raising fund is a long process, and an entrepreneur should take this into account. Many companies spend months getting their funding together.

My company will make X in its first year. Many entrepreneurs are so confident about their products/services that they expect great returns in the first year. However, an undeveloped customer base can pose a bigger challenge than many entrepreneurs realize. Unexpected obstacles at the early stage can also challenge the businesss ability to generate revenue. Therefore, entrepreneurs should make realistic financial projections for the beginning years of their businesses.
I have no competition. Many first-time entrepreneurs usually misjudge the fierceness of the competition, and assume that their businesses will easily occupy large market shares and quickly generate money. However, competition exists everywhere. As new challengers to established businesses, entrepreneurs should never underestimate their competitors. Investors who hear that you think your business has no competition will see this as a red flag.

A business plan is a necessity if you are looking to raise money from professional investors. It gives you credibility, shows you have a complete strategy and that you have an understanding of all sides of your business. It will also show potential investors when they will get their money back, and the financial opportunity of the investment.

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Top 4 Factors to Consider When Building Your Brand

Building Your Brand from The Startup Garage

Top 4 Factors to Consider When Building Your Brand

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The American Marketing Association (AMA) defines a brand as a name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers. The purpose of branding is to create an identity for your company, to engage with customers and separate yourself from competitors. The following 5 factors can give you some ideas to consider when you build your brand.

Quality Speaks. The quality of your product/service is important to your brand because it is the core value that your customers expect. A high quality product/service is fundamental for success as a new business. When your product/service exceeds your customers expectations, they tend to associate their positive experiences with your brand, are more likely to use your product/service again, and share it with others.

Define Your Brand. This includes creating your companys name, logo, tagline, colors, and phrases. They can define what your company does, explain your mission, and describe what customers will experience. These elements convey brief marketing messages that are easy to remember. When customers need solutions, they tend to be reminded by your logo, phrases, or taglines.

Positionining. Positioning is about your position compared to your competitors in the mind of the customers. Positioning can be achieved through several means such as pricing, service standards, advertising, packaging looks, ect. A successful brand defines a clear position in relative to other businesses in the minds of your customers.

Uniqueness. You want to stand out from your competitors and be memorable. Therefore, uniqueness in brand building is crucial. It could be a unique website image, a unique tagline, or a unique phrase. It is not easy to come up with something unique. But once you do, your creativity pays off, and your brand will be easily remembered by many prospects.

A strong brand will help your business stand out from competitors to become successful, and can be a great tool for a small business. As you build your brand, be sure to pay attention to how it fits with your target market and overall marketing plan. All of these elements should be strategized carefully in your business plan.

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