Predicting potential sales for your english language school business is a very key process; before you start in business you ought to feel confident in potential sales otherwise there is no point in setting up in the first place. It is unlikely you will be right on the money but if you do not make a realistic attempt your english language school business will likely bomb; forecasting is an crucial ingredient to your business stratgey.
The sum of money your english language school business will achieve each year depends on how many sales of its products or services – but before you set up the process of actually making these sales you should create a sales forecast. The sales forecast for your english language school business will exist on its own virtues – it will of course be a part of your overall english language school business plan.
Why bother with a sales forecast?
A sales forecast is necessary in order to
1. Predict your cash flow – your forecast might predict slow times of business where you may need a cash injection to pay for products or merely to pay the staff for example.
2. Manage Cash flow – central to the success of your business, it is essential that you recognize how sales forecasting contributes to the computation of the cash flow forecast.
3. Plan future resource requirements – for example, you may want a new machine which produces more products.
4. Plan marketing activities – and the consequent economic strategies arising from these.
Without a doubt constructing a sales forecast for your english language school business is important to your business success – you should constantly re-evaluate your sales forecasts – by looking at actual sales to your forecasted sales firstly you can measure if you have done good or not.
So what do you need to consider?
Your sales forecast should show sales by month for at least the next 12 months, and then by year for the following two years. Three years, in total, is generally enough for most business plans.
Things to think about
1. Is there an recognized market for your product or service?
2. What is the magnitude of the market?
3. Is the market growing or declining, and if so,by what % each year?
4. What are the main considerations for this market?
5. What might affect it in future?
6. How do cyclic factors affect purchases of your product or service?
7. What trends or fashions are important to the sector?
Do you know who your customers are?
1. How many customers will in reality pay money for your product or service?
2. Why will they cease buying from someone else to trade from you?
3. What is your pricing strategy and how will it impinge on sales?
4. Do you have the resources to make available the amount of products and services?
5. How many other businesses like yours are out there?
6. Your business will not be exclusive; what happens when new-fangled competitors come into the market once you have done the footing to raise market awareness?
You must be transparent about how your products or/and services match the marketplace. How can you differentiate your business from your competitors’ businesses? Can you adjust your product prices up or down to agree with new customers – can you simply add or amend the services you present to new and existing customers to swell your turnover and profits?
Preparing your english language school business forecast
All english language school businesses need to base their forecasts on certain assumptions regarding potential changes that may take place in the future. These can be quantified and could include:
1. Sector expansion/decline by a certain percentage e.g. 5%.
2. Workers increase to increase production or sales – maybe 25%.
3. A move to a better location that ought to produce a 40% increase in sales.
Preparing your forecast
You should prepare a sales forecast for each item you sell,and forecast:
1. By volume
2. By value
3. By a combination of both volume and value.
So what are the pitfalls when forecasting sales?
1. Make sure your forecast is based on confirmable,realistic and unbiased info.
2. Don’t be tempted to ignore your study if it showed bad results.
3. Don’t make projections only on past performance. Put your business under a microscope – try and imagine what might affect your sales in the future – good or bad.
4. Understand what volume of goods you can produce. Can you produce the amount of sales being forecast with the personnel, equipment and monetary resources available to you?
5. Does the pricing policy you have used in calculating your sales forecast relate to what is really achievable?, or conversely, have the prices been set too low or too high so that either way your forecast is potentially unrealistic?
6. If you have just started up in business, have you thought-out that it possibly will take longer for your business to become well-known, and have you set accordingly realistic sales targets?
7. Have you permitted for the possibility that high sales based on an early promotional surge may drop off, leading to a need for more intensive marketing and higher ongoing costs once opening fascination has spiked?
8. When you elucidate your sales forecasts to prospective backers – are they believable?