Three Weeks And Counting — How to Estimate Revenue

There are three weeks until the 20 February deadline to submit your plan to the SBDC if you want them to provide feedback on your plan (the deadline to submit your plan to the Lalani Center is March 7^th).  Sounds like a long time, but the time will pass quickly so I hope you are making good progress with your plan.

As I mentioned in the seminars, the financial projections are often a weakness in business plans.  The SBDC can be of great help as you develop the financials so I encourage you to work with them (before Feb 20) on your financials. 

The trickiest part for many is estimating the revenue, which requires you to estimate how much you’ll sell and at what price.  The marketing portions of the business plan should help you with these topics.  How much will you sell?  It depends (among many other things too) on how large your market is, how you intend to attract customers, and your competitors.  Pick a number for how much you’ll sell and then explain it to others.  If you can convince people that your sales projection is reasonable then you are off to a good start.

The other component is how much you’ll charge.  Pricing, too, can be tricky but if there are established competitors selling the same or similar products, adjusting off of their price points is a logical starting point.  Is yours a premium product, then you should be charging more.  Again, explain how you priced your product to someone else and see what they think.

Having decided on a number for how much you’ll sell (and this is typically done month-by-month for the first 2 years) and at what price computing revenue is straightforward.  Computing revenue is usually harder than projecting costs, so developing the financials moves along quickly after you’ve projected your revenue.

Several teams have not yet picked up their copies of the executive summaries—they are missing out on potentially important feedback from the judges.  Swing by the Lalani Center to pick up those executive summaries.

Good luck going forward!