Part of every Budget is a start-up revenue forecast for a new business. You estimate the sales of the next few years as realistically as possible. We will show you which methods you can use to calculate sales and which factors are relevant. It is important that your planned values are plausible so that you can convince banks and investors.
Definition and explanation
As the first important part of your financial plan, you create a start-up revenue forecast for your business. Use this to determine how many products or services you expect to sell at what price. Typically, the revenue forecast for the next three to five years is made. On the one hand, turnover planning serves as the basis for banks to lend and grant.
On the other hand, planning is important for you as a founder: you are able to track whether sales are developing as expected and can analyse where deviations occur, especially in the first few months after the company is founded. Finally, the revenue forecast is the basis for all other parts of the financial plan, such as liquidity planning and profitability accounting. Deviations in sales trends can quickly lead to liquidity bottlenecks and Increasing capital requirements. In addition, you gain an overview of all fixed and variable costs.
How to calculate start-up revenue forecast
The basic factors for calculating your start-up revenue forecast are price and quantity. You have already received your prices within the price calculation before you start forecasting sales. Then you have to assess how much your products or services are in demand. Note that your company needs time to succeed in the market. As a result, your sales curve will usually initially show only slowly upwards. Very few establishments can cover all costs in the first year, usually the profit threshold is not reached until the second year or even later. Through marketing measures, won regular customers and other factors, you can increase your sales from year to year. Include comparison figures from your industry in your considerations when calculating revenue.
Go into great detail in the analysis for the first 1 to 2 years and estimate your sales for each month. After that, an annual turnover overview is sufficient. Also keep in mind that many different factors play a role when you want to calculate your revenue. These include, for example:
- pre-orders, specific customer enquiries, etc.
- fluctuations in sales, e.g. due to Christmas sales, economic crises, etc.
- Price increases, discount promotions, new competitors, etc.
- Start-up difficulties and slow increase in sales after the foundation
Of course, you can’t include all the indicators in your revenue forecast. Be aware, however, that sales are not always linear and as previously planned. Seasonality in particular is a factor that founders often do not take into account when calculating sales.
This is why realistic sales planning is important
Be sure to calculate realistically when you create your revenue forecast. Many founders are very optimistic about their numbers. They hope this will bring benefits in bank calls and cheap loans. But bank employees are doing their homework and will see through unrealistic assessments. In the worst case, they will cut you subsidies completely.
Also, don’t lie to yourself. Many companies have already failed to make a false revenue forecast. But don’t stack deep in terms of your revenue. As a result, banks can only lend to you at high interest rates. These interest expenses will place a heavy burden on your company. Therefore, make every effort to achieve realistic sales planning.
To assist you with sales planning, you can use the Calculation of the Break Even Point help; this is also very popular with lenders. With the BEP, you can determine when your company is self-sufficient.
Tools for your forecast
In order to enable you to carry out the sales planning in the financial plan professionally and as error-free as possible, we provide you with various tools. In the past, Excel was mainly used to create the financial plan. However, as this is often very complex, we have developed an online solution that significantly simplifies financial planning.
Bankable financial plan
With our online solution, you can create a detailed and plausible sales forecast yourself easily and quickly. This is how you convince investors.
Conclusion: This is how the sales analysis is successful
Do not wear rose-coloured glasses when you create sales forecasts in the financial plan. Your generated revenue calculation is the starting point for all other components of the financial plan and is particularly important for your own company assessment and for bank calls. Therefore, always pay attention to a realistic calculation. Use a market and industry analysis to determine your sales volume. You must have already set your prices at this time. Include seasonal fluctuations and other factors influencing the possible development (e.g. advertising) of your customer numbers in the sales plan.
As a rule, you plan the change and sales development of your most important sales items for a period of 3 to 5 years, whereby you still calculate in great detail on a monthly basis and later on an annual basis. Do not simply imply a growth of X over time if you want to calculate sales. The effort is worth it, because with a realistic financial plan you also increase the chances of credit and have a better own planning basis.
After the sales planning, the financial plan first proceeds with the cost planning. This is divided into variable costs, which are often directly dependent on sales, and fixed costs. Then you also take the Start-up costs and investments before all values in the liquidity planning and profitability calculation are merged.