How Much Will You Sell? Projecting Revenue For Your Start-Up

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forecast word on a thermometer measuring your prediction, estimate, expectation or projection for budget and financial purposes such as earnings, profit or other money measurement The reasons we have for starting our own business aren’t limited to financial ones. When we make the decision to build a company from the ground up, we’re doing it, in part, because we want to dedicate our time and energy to something for which we have an unparalleled amount of passion – and, not to mention, skill.

But facts must be faced: part of the temptation to go solo and start our own enterprise stems from the idea of, once things get off the ground, the significantly higher amount of income we’ll see from our efforts. It’s a natural aspect of entrepreneurship.

It’s also one that comes with a certain amount of work. Projecting revenue for a business that doesn’t exist yet is difficult, and it can be a bit of a struggle for those new to the self-starter scene.

There’s an article over at the Small Business BC Blog, written by Jessica Oman, entitled How Much Will You Sell? Projecting Revenue For Your Start-Up, that offers some advice on this subject for new entrepreneurs. She breaks the art of projecting your revenue down into “Idealistic” and “Realistic” forecasts, with pros and cons for both. She also shies away from outright advising new business owners on what to do, as this does not have a one-size-fits-all solution. Rather, Miss Oman offers a look at the positives and negatives of different perspectives on the issue, allowing readers to make their own decisions based on their own specific situations.

Here’s a snippet from the article:

The Idealistic Revenue Forecast

Pros: Big revenue targets can be motivating – especially if you make them public. By claiming to your friends, your mom, or even the bank that you can achieve a hockey-stick growth forecast, you’re on the hook to make sure you do it. 

Cons: Many entrepreneurs forget to acquire the resources they need for fast revenue growth. If too many orders come in and you don’t have staff or inventory to fill them, you could be looking at a PR nightmare. Also, to get lots of sales, you have to do a lot of marketing – and there’s a time and money cost to that. So if you’re not prepared to do some spending, idealistic forecasts could leave you looking pretty silly at year-end.

If you’re looking for fast, aggressive and major growth, you need to be prepared to invest for it. Finding yourself understocked through opening week is nothing short of a disaster, and would take a lot to recover from, especially if you’ve been putting a lot of effort into marketing your business.

The article goes on to talk about “Realistic” revenue forecasts, and is a great read for anyone who is looking to start their own shop but has some work to do regarding the financials and what they expect to make over the first heady days of opening up. We’d recommend giving it a read if you’re in that situation and are looking for some insight.

What do you think? Do you agree with Miss Oman’s viewpoints on the subject? Did you find this article useful? Your thoughts are always welcome, so let us know!

Copyright: iqoncept / 123RF Stock Photo

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Juliet Aurora

About the Author:

Juliet Aurora is the President and CEO of AIS Solutions. She has been in the Accounting and Finance space for more years than she will ever admit. When she isn’t acting as the Sensei for her team of Bookkeeper Kninjas, you will find her working tirelessly to advocate the accreditation of bookkeeping in Canada. Her vision is for AIS Solutions to become the standard against which all other bookkeepers and bookkeeping firms are measured. Juliet can be contacted by email or by calling 1 888 575 5385.
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