Creators of the board game The Contender: The Game of Presidential Debate raised $140k on Kickstarter but ended up $40k in debt due to inaccurately predicting future sales. This caused them to order more games than they could sell and ultimately caused them to go into the red for some time.
So how do you predict sales? Forecasting is as much art as it is science, finding a right method that is accurate will greatly enhance the efficiency and profitability of any business: over-ordering materials, under-allocating resources, etc. all undermine a company’s operations.
The selection of a method depends on many factors—the context of the forecast, the relevance and availability of historical data, the degree of accuracy desirable, the time period to be forecast, the cost/ benefit (or value) of the forecast to the company, and the time available for making the analysis.
When a company forecasts for a particular product, it must consider the stage of the product’s life cycle for which it is forecasting. The availability of data and the possibility of establishing relationships between the factors depend directly on the maturity of a product, and hence the life-cycle stage is a prime determinant of the forecasting method to be used.
All my business plans come with projected financial statements. I use a combination of industry growth data, historical sales data (if my client has any), seasonal adjustments, advertising expenditures, and other factors pertinent to my specific clients.
Which method is right for you? Send me an email and let’s figure out how to plan for your company’s future.