Forecasting Spa sales

Forecasting upcoming sales in your Spa business is a crucial part of setting up and running a business; it is a fundamental piece of your Spa business plan. It's not likely that your Spa business will be right but you should be capable to make credible, evidence-based projections in order to plan your Spa business strategy.

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

Why bother with a sales forecast?

A sales forecast is necessary in order to

1. Plan cash flow - that you will need to include in your business plan when seeking investment, and to avoid unanticipated cash flow troubles by establishing if and when you will need to inject capital or borrow 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 personnel needed to manage your orders and provide a certain level of service.
4. Plan marketing activities - this will noticeably have a knock on effect to the sum of sales you make as well.

Quite clearly constructing a sales forecast for your Spa business is crucial to your business success - you ought to constantly re-evaluate your sales forecasts - by looking at real sales to your forecasted sales firstly you can measure if you have done well or not.

So what do you need to consider?

Your sales forecast should show sales by month for at least the next 12 months, and then by year for the following two years. Three years, in total, is generally enough for most business plans.

Things to think about

1. Are there any related products or services already being provided in the region?
2. What is the volume of the market?
3. Is the market growing or declining, and if so,by what % each year?
4. What are the major factors that are presently influencing that market?
5. What may perhaps have some bearing on it in future?
6. How do recurrent factors influence purchases of your product or service?
7. Are there fashions in your business?

Do you know who your customers are?

1. What % will buy?
2. Why will they stop trading from someone else to buy from you?
3. How much will you charge?
4. Do you have the resources to make available the quantity of products and services?
5. How many competitors do you have?
6. Your business will not be distinctive; what happens when fresh competitors enter the market once you have done the groundwork to raise market awareness?

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 modify your product prices up or down to match new customers - can you easily add or transform the services you offer to new and existing customers to increase your turnover and profits?

Preparing your Spa business forecast

You need to make certain future assumptions for your Spa business in order to create a sales forecast

1. An expectation of market expansion/decline by a certain percentage, for example 10%.
2. Personnel increase to increase production or sales - maybe 25%.
3. A move to a better location that should produce a 40% increase in sales.

Preparing your forecast

You ought to prepare a sales forecast for each item you sell,and forecast:

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

So what are the pitfalls when forecasting sales?

1. Make sure your forecast is based on supportable,realistic and unbiased info.
2. Do not be tempted to look right through your examination if it showed bad results.
3. Do not make predictions exclusively on the basis of historical performance. Put your business under a microscope - try and imagine what might affect your sales in the future - good or bad.
4. Make sure you understand your capacity limits. Can you produce the amount of sales being forecast with the equipment,personnel and monetary 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. Is your business just starting out?, your business may take longer than you believe to get reputable, and have you set accordingly realistic sales goals?
7. Once opening sales have dropped off after your business launch, have you allowed for the increased marketing costs your company might incur?
8. When you give reasons for your sales forecasts to prospective backers - are they believable?