Technique number one for a retail business is to look at market statistics and see what the average sales volume per square foot of retail space. You can then apply this ratio to your own store. For other business types, the process is similar: look at average sales for the latest period available for your business sector. This will give you a baseline for your sales, but you don't want to stop here as you may be comparing sales in Chicago to Boston to Kalamazoo and that isn't accurate enough.
The next step in forecasting your sales is to determine for your specific location, how many households needing your goods live within say, 5 miles. How much will they spend on these items annually, and what percentage of their spending will you get, compared to competitors? Do the same for within larger distances (with lower sales forecast figures). (Use distances that make sense for your location and business type.) This step takes some time and research, but gives you additional accuracy.
The final technique is to set a sales budget for each product or service you offer. Use categories of products if you have a larger number and variety offered. If you offer say, four types of goods plus two types of extra cost services, estimate sales revenues for each of the six product/service lines. Make an estimate of where you think you'll be in six months (we should be selling four of these items a day, plus three of these, plus two of these) and calculate the gross sales per day. Then multiply by the number of days you will be open for each month in question. Now scale proportionately from month one to month six; that is, build up from no sales (or few sales) to your six month sales level. Now carry it out from months six through twelve for a complete annual sales forecast. You will be using the numbers from the first two techniques as a guideline as you develop this forecast.
Congratulations. you have now completed the sales portion of your 2012 budget. You will want to check actual to budget at least once a month to see where you are and what adjustments need to be made.
Next week, we will work on the expense side of the budget.
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