Last week, we talked about the market share method for forecasting sales. Now, let’s take a look at the second sales forecasting method: the daily capacity method.
Daily Capacity Method
With method of developing a sales forecast, you estimate what you think you could sell on a daily basis. Let’s go back to Jill and Lauren, the flower shop owners we talked about last week. They could estimate the number of customers coming into their shop to make a purchase of flowers or accessories, and the number of flower arrangements sold over the phone for delivery on a daily basis.
Here’s what their sales worksheet looks like:
|Product/service||Price||Units sold/day||Total Sales|
|Floral arrangements by phone||$75||5||$375|
|Floral arrangements in person||$60||5||$300|
|Accessories, home décor||$35||10||$350|
|Total estimated daily sales||$1,045.00|
Assuming the business will be open six days of the week, every week of the year (or 312 days), Jill and Lauren can estimate their annual sales by multiplying 312 days × $1,045.00 to get $326,040. This estimate should also be adjusted for seasonal sales, economic conditions of the region, and so on.
Both the market share and daily capacity methods of sales forecasting are appropriate. Whichever one you decide to base your forecasting on depends on the quality of your data. Start by talking to people who own similar businesses (though you might not get much help from local competitors – try another part of the city). Talking to people who know the type of business you want to operate will help you validate your annual sales estimates.