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Like a broken record - business plan question

by Ben Roy
12 replies
Ok, I'm asking different questions every time so it's not *really* like a broken record. But I have been harping on the business plan thing lately since I'm trying to write one. Which brings me to the actual question:

How do I estimate sales? I'm trying to put together the financial documents and really struggling with this aspect of it. I've spent a lot of time reading the boards, looked at lots of WSOs, checked out tons of products, watched launches, etc. But I don't really know how many of any of these products are being sold. One? Twenty? A hundred? A thousand?

Anyone have advice on how I could gather some of that type of information?
#broken #business #plan #question #record
  • Profile picture of the author Kristian
    Originally Posted by hummusx View Post

    Ok, I'm asking different questions every time so it's not *really* like a broken record. But I have been harping on the business plan thing lately since I'm trying to write one. Which brings me to the actual question:

    How do I estimate sales? I'm trying to put together the financial documents and really struggling with this aspect of it. I've spent a lot of time reading the boards, looked at lots of WSOs, checked out tons of products, watched launches, etc. But I don't really know how many of any of these products are being sold. One? Twenty? A hundred? A thousand?

    Anyone have advice on how I could gather some of that type of information?
    I'm not sure anyone can answer this question without knowing

    A) Your traffic source
    B) Traffic volume
    C) Product(s)

    I'll try to help if you can be more specific.
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    • Profile picture of the author angela99
      Re "How do I estimate sales?"

      I don't want to shock you, but the answer is...

      YOU MAKE A GUESS

      Develop scenarios: If you sell N number of project X over 12 months, you will make $__

      Guessing is all you can do, and it's all that's necessary. There's a reason it's called a "plan". :-)
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      • Profile picture of the author Bev Clement
        Why do you need to know what the sales are going to be for your business plan? They are only needed for submission of the plan for financial companies.
        Look at other businesses doing the same thing and have a guesstimate that's what we accountants do all the time.
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        • Profile picture of the author Ben Roy
          Originally Posted by Bev Clement View Post

          Why do you need to know what the sales are going to be for your business plan? They are only needed for submission of the plan for financial companies.
          Look at other businesses doing the same thing and have a guesstimate that's what we accountants do all the time.
          You're dead on Bev, but I can't look up any of that information because none of these business are public. The businesses are "Bev Clement" and "Frank Kern" and "Steve Wagenheim". There isn't any published data for those businesses for me to look at.

          And there is one other thing you need financial data for (besides financing): business partners.
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          • Profile picture of the author Bev Clement
            I've missed the previous threads where you asked about business planning. But, I don't understand why you would need to know what the sales are you hope to get at this stage.

            All the business plans I have written for online people have never included estimated sales. They have included what a person would hope to earn, and then ways to get that figure.

            Most offline ones I have written have been based on a certain amount of facts which accountants have available to them.
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            • Profile picture of the author Ben Roy
              Originally Posted by Bev Clement View Post

              I've missed the previous threads where you asked about business planning. But, I don't understand why you would need to know what the sales are you hope to get at this stage.

              All the business plans I have written for online people have never included estimated sales. They have included what a person would hope to earn, and then ways to get that figure.

              Most offline ones I have written have been based on a certain amount of facts which accountants have available to them.
              Let's say you're a developer that I'm aquainted with and I show up on your doorstep with a business idea. I explain what I want to do, how it appeals to customers, and about how long I think it'll take to build, etc.

              "Ok, great", you say. "My hourly rate is XXX, so that comes out to a total of YY,YYY to build that."

              "Uhhhhh yeah, I was thinking maybe we could work together on this and split the profits," I'd have to say, because I don't have $50k to shell out for this work.

              "Yeah, I might be open to that. How much money will we make?"

              And now I pull out the spreadsheet with how many sales I *want* to get? That's not going to go far. I need to be able to compare it with some other product, service, whatever and back up my numbers. Of course I can't be held to the figures, because they're still just estimates, but at least there's some methodology to arriving at them.

              I can also work the other direction, as someone suggested. I need to make 800k in the first year after launch, so how many sales does that come out to. In that scenario though, I still need to be able to tell my associates "yes, that target is in the realm of possibilities" or "no, even the big guys couldn't move that much volume."
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          • Profile picture of the author Frank Donovan
            Originally Posted by hummusx View Post

            You're dead on Bev, but I can't look up any of that information because none of these business are public. The businesses are "Bev Clement" and "Frank Kern" and "Steve Wagenheim". There isn't any published data for those businesses for me to look at.
            I'm a bit confused. Bev, Frank and Steven each have very different business models. Which model are you going to choose?

            As far as sales projections are concerned, decide what you want to earn; decide how long it will take you to get to that figure; then divide that time up into months/years for individual sales estimates.

            So, if your target is to earn, say, $250k per year within 3 years, break that down into month 1, month 3, month 6, year 1, year 2 etc.

            Then that's your sales estimate. As Bev said, you only need to justify your estimate if you're seeking finance from a bank or using your business as collateral in some other way.

            Frank
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      • Profile picture of the author Ben Roy
        Originally Posted by angela99 View Post

        Re "How do I estimate sales?"

        I don't want to shock you, but the answer is...

        YOU MAKE A GUESS

        Develop scenarios: If you sell N number of project X over 12 months, you will make

        Guessing is all you can do, and it's all that's necessary. There's a reason it's called a "plan". :-)
        Well, that's true but not exactly true. You have to take a guess that you think has some chance of being correct. It makes a big difference, too. If I were trying to open up a Home Depot I'd need to plan to sell a lot more hammers than if I were trying to open up a Hank's Hardware. Either way though, I'd probably check to see how many people lived in the city the store was opening in, I'd likely be able to get some idea of how many hammers people bought in a year, and I could work from there.

        From where I'm sitting, I have exactly ZERO idea of how many subscribers Niche Rocket has, or how many copies of "OMG YOU CAN MAKE $123,355,239,598 SITTING IN YOUR CHAIR AT HOM" were sold when the WSO ran. Without knowing how many people live in the city (IM business) or how many hammers the average person owns and or buys (at least 1 per household, right? Probably like 2-3 is more realistic and like 1 per few years?), I can't take an educated guess. And a random guess isn't a plan at all.

        I'm not asking for someone to give me a number for MY product, I'm just trying to figure out how to gather the supporting data I need to formulate my guesses.
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  • Profile picture of the author imfreelance
    I would take the conversion numbers and base how much traffic you plan to drive towards the site to arrive at about how many sales per month.

    So if it takes 100 people to visit the site to accomplish a sale, then average around how much traffic you get to the site based on your current and planned marketing tactics. IE - 200 visitors a day = 2 sales a day x 30 days = 60 sales per month.

    If you are selling a product for $10, your estimated income will be $600 a month.

    I hope that made sense.
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  • Profile picture of the author Ben Roy
    Oh yeah, and just to clarify - I'm not writing up a business plan for article marketing in my spare time. It's much larger than that. I wouldn't be going to all this trouble so I have an estimate of how many copies of "Potty Train Your Dog Now!" I'm going to sell or anything like that.
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  • Profile picture of the author Chris Lockwood
    Guessing future sales (especially for products you haven't released yet) is about as accurate as guessing the winning lottery numbers. I'm not sure why you need that for a business plan, and I wouldn't trust any numbers I saw in such a plan.

    I don't know too many people online who even have a business plan, not that having one is bad.

    Even top marketers don't know how many sales they will make, unless they set a limit they are pretty sure they can meet.
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