Forecasting Market Stall Trader sales

Forecasting upcoming sales in your Market Stall Trader business is a crucial element of setting up and running a business; it's an essential piece of your Market Stall Trader business plan. It's unlikely that your Market Stall Trader business will be perfect but you need to be capable to make realistic, evidence-based projections in order to map your Market Stall Trader business strategy.

Your sales forecast is the financial projection of the quantity of turnover your Market Stall Trader business will make from the sales of its products or services. Your sales forecast can stand alone, but it will be closely connected to your Market Stall Trader business plan. It is an integral and fundamental section of the planning method and it will be a chief part of your profit and loss account and cash flow forecast.

So why do you need to forecast sales?

A sales forecast is necessary in order to

1. Plan cash flow - that you will need to add into your business plan when seeking funding, and to avoid unexpected cash flow problems by establishing if and when you will need to inject capital or have access to funds.
2. Manage Cash flow - innermost to the success of your business, it is vital that you appreciate how sales forecasting contributes to the computation of the cash flow forecast.
3. Plan future resource requirements - for example, the number of staff considered necessary to manage your orders and provide a certain level of service.
4. Plan marketing activities - this will visibly have a knock on effect to the amount of sales you make as well.

Whatever the situation, it is critical that you research your projected sales regularly and realistically, and take appropriate action to reconsider your strategy. Your sales forecast is the benchmark against which you ought to frequently gauge what in fact happens in your business with regards to sales and the important thing is to appreciate the variances and why they transpire, and to incorporate what you have learned into yet to come forecasts.

So what do you need to consider?

It's by and large considered you ought to look to the next 3 years of your Market Stall Trader business for your sales forecasts - the first year being detailed on a monthly basis

Things to think about

1. Are there any parallel products or services already being provided in the region?
2. What is the size of the market?
3. Is the market growing or declining, and if so,by what percentage each year?
4. What are the key considerations for this market?
5. What might affect it in future?
6. How do cyclic factors influence purchases of your product or service?
7. What trends or fashions are significant to the sector?

Do you know who your customers are?

1. What % will purchase?
2. Will they leave a different supplier to come to you?
3. What is your pricing rule and how will it affect sales?
4. Do you have the capital to offer the amount of products and services?
5. How many competitors do you have?
6. It is doubtful your business is the only one of its kind - what happens to your customers when fresh businesses enter the market?

You must be clear about how your products or/and services fit into the marketplace. How can you differentiate your business from your competitors' businesses? Can you amend your product prices up or down to match new customers - can you effortlessly add or amend the services you present to new and existing customers to increase your turnover and profits?

Preparing your Market Stall Trader business forecast

All Market Stall Trader businesses need to base their forecasts on certain assumptions regarding potential changes that may take place in the future. These can be quantified and could include:

1. Sector expansion/decline by a certain percentage e.g. 5%.
2. Staff increase to increase production or sales - maybe 25%.
3. Different location - more customers - 30% increase in sales.

Preparing your forecast

You ought to prepare a sales forecast for each product you trade,and forecast:

1. By volume
2. By value
3. By a combination of both volume and value.

So what are the pitfalls when forecasting sales?

1. Make sure your forecast is based on realistic, supportable and unbiased information.
2. Do not be tempted to pay no attention to your examination if it showed negative results.
3. Don't make predictions exclusively on historical results. Keep examining at what else might change your sales in the future and alter your forecast correspondingly.
4. Understand what volume of goods you can produce. Can you produce the amount of sales being forecast with the personnel, equipment and financial resources available to you?
5. Are your prices realistic?, or conversely, have the prices been set too low down or too high so that either way your forecast is potentially unrealistic?
6. If you have just started up in business, have you considered that it possibly will take longer for your business to become well-known, and have you set accordingly realistic sales targets?
7. Have you allowed for the possibility that high sales based on an initial promotional rush may drop off, leading to a need for more intensive marketing and higher ongoing expenses once preliminary interest has spiked?
8. When you put in plain words your sales forecasts to prospective investors - are they believable?