Business Plan Sample: Forecasting

FORECASTING

Sales Forecast

Our ratio of sales to inquiries of the adventure travel vacations sold to date, while operating within the outdoor clothing shop, has been one in three. For the purposes of our sales forecast, we are assuming that only one in five inquiries will actually result in an adventure vacation being booked. This is a very conservative estimate.

We expect there to be a steady buildup of clients coming from the clothing shop to talk to us about vacations (see Table 3 below). However, the number of new inquiries generated by our promotional activity will also build up during the year, gradually overtaking inquiries from the clothing shop. This is a trend we expect to continue. Based on the projection below, we are forecasting to sell 660 adventure travel vacations next year at an average price of $3549. Once insurance and other service sales are added in, we expect to generate a gross profit of $268,783 over the first 12 months.

Table 3. Sales Forecast Projection

In Year Two we are forecasting a gross profit of $624,318, and in Year Three we plan to reach $986,846.

Cash Flow Projections

The Cash Flow projections for Year One (see Appendix 2) show that after the owner has put in $41,750, the business will need additional short-term financing of about $83,500. For the last two months of the year, we are forecasting a positive cumulative cash flow and a year-end cash surplus of $19,935.

In our Cash Flow projection, we have assumed the whole $83,500 additional financing has come from a bank loan. We have allowed for interest on the full amount for the whole period. In practice we would hope to finance part of this at least by a line of credit equal to the money actually required. In this way we believe we have made a prudent, conservative provision.