How to calculate and determine the expected sales for your new project?

How to Determine Expected Sales in Your Project?

I will discuss this topic through the most important points as usual. But first, I would like to clarify that everything in the project depends on expected sales, such as hiring, space allocation, production lines, and even all expenses, all of which should serve to achieve those sales. This is obvious. What is the point of expenses that are not linked, directly or indirectly, to boosting the project’s sales?

All projects are measured by their sales impact and growth. Even investors ask about sales, as do banks, suppliers, and the list goes on. Sales are the lifeblood of the project.

Don't make the mistake many project owners make, which is not planning for sales or delegating this task to the accountant. It is not an accounting process at all. Pay attention!

Also, don’t worry; the process of forecasting sales is not complicated, and it doesn't have to be 100% accurate. It is a predictive process based on several factors, and usually, it needs adjustment and follow-up every period, such as every three months.

To calculate expected sales, create a list of your products or services in a table, and record the sales for the month and the total sales for the year for each unit you will sell. You can also aggregate the monthly sales for all units and the annual sales for all months. Include all products if there are 10 or fewer; if there are more, we recommend grouping them into main categories.

Example of units: restaurants by meal, lawyers by hour or case, hotels by room, supermarkets with multiple products can be categorized: dairy and cheeses, canned goods, meats and frozen foods, sweets, baked goods… Don’t complicate the matter more than necessary. It’s a process you’ll do every quarter, so it shouldn’t be too complex.

Since the project is new, forecasting sales will be very difficult, but in the future, it will be easier due to the availability of information about previous months. Some of the best sources of information I’ve found that might help in forecasting average sales for a new project include:

• Talking to suppliers: They have great experience in this field and are familiar with many customers, and you might get great information from them.
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• Consulting specialists: Look for an expert in the field, and you will get information you might not have imagined.
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• Job interviews: Through job interviews, especially with employees who have previous experience in the same field and at the same level of the project.
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• Look into the project’s financial indicators, and you might be able to forecast sales based on expenses and the breakeven point, which is considered a life-or-death indicator for the project.

It is important to link sales forecasting to production capacity. For example, how can you expect to sell 100,000 units if your production line, at full capacity, produces only 1,000 units? That would be a fantasy, not a sales forecast.

Finally, it’s necessary to consider the appropriate price and whether this price achieves the optimal return on investment. As you know, income will be = number of units * unit price. Will this generate profit? Is the selling price higher than the cost? Here, we’re not talking about the cost of goods sold, but all types of costs.