When you are developing sales projections for a startup or small business, you shouldn’t just pull numbers out of thin air, you should have data driven sales assumptions that drive your projections. I have had many people ask what I mean by that, so I thought I would provide 4 actual examples of sales assumptions for a startup or small business.
Sales Assumptions for a Startup Product Business
“Our sales assumptions are based on adding 1 more full-time sales person every six months. We assume each sales person will make 100 calls per month, 20% of those calls will turn into meetings, and they will close on 25% of those meetings. That is an average of 5 new sales per month, and the average customer will purchase 10 units per month every month.”
Sales Assumptions for a Startup Service Business
“Our sales assumptions for our video production startup are based on the actual financial results of two similar companies in other states. We reached out to non-competitive, yet similar video production companies, and asked them for details about their sales during the first 24 months of business. We then took the average of those two company’s sales and used those numbers as our sales projections.”
Sales Assumptions for an Existing Product Business
“Our sales assumptions for our software product are based on advertising results over the last 12 months. Currently, we purchase 1,000 visits a month through Google Adwords advertising and on average 25% of those visitors will sign up for a free trial. Then 25% of those trial users will actually purchase a subscription to our product. Each month 5% of users end their subscription with us. Going forward we intend to increase our Google Adwords spend every 6 months and purchase an additional 500 visits a month.”
Sales Assumptions for an Existing Service Business
“Our sales assumptions for our web design service are primarily driven by our two strategic partnerships. We are a preferred service provider for two major website hosting companies. Each month 50,000 new domains are registered with each of these companies. At the end of the process of registering your domain, the customer is sent to a page that recommends 3 web design companies, which includes our company. Of the 100,000 new domains registered each month, approximately 1% of these customers visit our webpage. That is 1,000 visits per month. Approximately 20% of those visitors purchase a service from us, and the average customer is billed for 5 hours of work. We anticipate adding a third strategic partner in month 6 which will increase our sales by at least fifty percent.”
Of course you can go into much greater depth as you do more research to back up your assumptions, but these are a good starting point for how you should develop your sales projections from the ground up with realistic, data driven assumptions.