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sales forecast for startup business

If you’re starting a clothing shop, forecast the key categories of clothing that you sell, like outerwear, casual wear, and so on. Direct costs are also called the cost of goods sold (COGS) and per-unit costs. Nobody wants to forecast decreasing sales, but if that’s likely, you need to deal with it by cutting costs or changing your focus. Lately, a lot of businesses offer their buyers subscriptions, such as monthly packages, traditional or online newspapers, software, and even streaming services.

  • Startups often struggle initially with pricing, especially when establishing product-market fit.
  • In turn, this allows for identifying areas where more focus is needed, and weak spots in the business model can be detected before they snowball.
  • And if you run a subscription-based business, we have a guide dedicated to building a sales forecast for that business model.
  • If something shifts in the market your forecast can be rendered inaccurate rather quickly.

Miscellaneous Expenses

The process can also help you spot new income opportunities and hone in on the most profitable business models. Finally, sales forecasts help with finding investors for your business. If you’re looking for financial support to start your business, any investor you approach will likely be interested in the amount of money you expect the business to make. If you’ve created a sales forecast, you’ll be able to provide this information.

sales forecast for startup business

Audience and ideal customer

A cash flow projection, part of your business plan, shows how money flows in and out over time. If you’re starting a startup, it’s crucial to create financial projections that include an expense budget. They provide a clear picture of your expected revenue growth and operating expenses. If you have an accurate sales forecast, you’ll be able to set realistic sales goals. You’ll want your goals to be realistic, as this will give the clearest picture of how well your company is doing and if significant changes are needed. Therefore our financial projections give us an insight as to how certain parts of the business (like our sales forecast) will start driving other aspects of the business (like our staffing plan).

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Investors usually expect startups to grow fast and gain significant market share rapidly. It is difficult to create a sales forecast with a steep growth curve if every sales has to be rationalized and if its point of departure is the maximal capacity of your company. The whole reason why external financing is needed is often to expand capacity and grow faster than a company would organically. Below you’ll see an example of a software company’s six-month sales forecast template for two products. Product one is a software application, and product two is a software accessory. When you’re first creating a forecast, it’s important to establish benchmarks that determine how much you normally sell of any given product to how many people.

sales forecast for startup business

  • From there you can make any changes necessary to ensure it has a successful rollout and that you have enough stock.
  • For instance, in a bicycle retail store business plan, the owner works with five lines of sales, as shown in the illustration here.
  • This means those projections should be taken with a pinch of salt, but they are better than nothing.
  • One of the key elements to building a successful startup is having a solid sales forecast.
  • All we’re focused on here is determining whether the business is operationally profitable and that we’re capturing all of our future revenue and future expenses.

Putting both products in the same chart can help the company see that their lower-cost product—the software accessory—brings in more revenue than their higher-cost product. The company can then use this insight to create more low-cost products in the future. A more generalized way to estimate your future sales revenue for the year is to multiply your total sales accounting services for startups revenue from the previous year. An automotive company, for example, could analyze factors like economic conditions, competitor activity, and past sales data to forecast future car sales. Once you have defined your sales cycle, you can use it to help with sales forecasting. Identify the market segments that you are targeting with your product or service.


What Is Forecasting?

Adjust for external factors




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