Sales forecasting can be difficult if a business is just starting out and has no prior sales record. Referencing the competition’s sales records might be next to impossible unless your business has trusted friends or contacts in related fields. 

So what do you do? Tap into information from competition if that is a possibility, for starters. Perhaps befriending a storeowner who deals with products similar to yours is a place to start. They may be willing to help out. Joining an organization such as the Chamber of Commerce might enable you to network with people who can trust you just because of the commonality of the organization. Obtain the average sales information over a certain period of time and perform the math. Write in the understanding that your business will not be as successful up front if just starting out.

If you are an expert in that field, consider your purchase record. If you are not an expert, ask people you know who are, or, as stated above, network and find people who are experts.

Another typical method of forecasting sales is to conduct customer surveys. This can be done in several ways. One is to mail surveys. You can obtain a mailing list for a price. The only problem with this is the cost, and typically few people cooperate. A survey also can be done by phone, or in person by conducting a “man on the street” interview of shoppers, if applicable, outside your competitors’ stores. Email surveys also can be conducted. Your questions should be succinct and few, and perhaps you can offer a discount for answering. The questions should deal with how often the customer purchases a certain item, the reason, and the amount of that item that is purchased at one visit.

Predicting sales for a service business is not much different. Call or meet with people who offer the same or a similar service, ask clients of your competition. In some ways it is easier to obtain information for a service business, because you can make a call or a visit and obtain information as though you are interested in using the service. For example, if you plan on opening a recruiting company, you can contact existing companies and ask them how they operate, what fee they charge, and whom they charge. This might feel underhanded, but it is information that is readily made available to the public. And it might be a better option than letting your competition know you want their information, which might lead to poor or no information, or ill feelings.

The Internet is a good source for a lot of research, including obtaining sales forecasting methods or information for your product or service.

Do multiple sales forecasts for the best results. It is also a good idea to forecast on a monthly basis. Shorter term forecasting is more flexible and takes into consideration seasonal swings. It also makes you look more professional with bankers or investors.

Bankers or investors will want to see that you have done your homework. Figure out the prospective average sale for your business based on the information gathered. In your prospective, include expenses you plan on incurring, and deduct them from your expected income. Consider cash versus credit payments, and bad debts (if items will be provided with the intent to pay upon receipt of invoice).

Consider what questions bankers or investors will ask you if you approach them for money. They may wish to find out the process by which you will earn the income you state you will earn, and how you will deal with unforeseen circumstances such as failing economy. If your item is seasonal, take that into consideration. Also consider your market. Are you selling swim goggles all year, but you sell online, and your clientele includes people who live in warm states like Florida? Or do you own a small local store in Michigan? Bankers or investors will want to be sure your product is viable. If it is something unique, they will want to know more about it and want to see that you have done your research about the need. If it is something well known, they will ask you how your product is different, and why you think yours will sell if there are thousands like it out there already.