Small Business Development Center
At Chemeketa Center for Business & Industry
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Category Archives: Reinvention

Projecting sales is important for any business

By Chemeketa SBDC

Even if you have an existing business, you should be forecasting – projecting your sales. You may use actual numbers if you have historical financial records. But what do you do if you have nothing to refer back to? You will need to determine how many potential customers are there, how many of these potential customers are likely to buy from you, decide the average sale per customer and then project this out for the year. Try this:

First: Determine the total number of potential customers living in your territory. (Don’t forget: the more clearly you can define your customer, the more realistic your research!) If you sell to the general public, you need to find the information from the new U.S. Census data for your market area. You can find this information on the web or at the library (http://www.census.gov).

If you sell to other businesses, there are many potential sources of information; one of the best is a trade association that represents your industry. You can also find this information through a web search or at the public library. Once you have determined the total number of potential customers living within your geographical area, you have the base to begin narrowing down your target market.

Second: Determine the number that will likely buy from you. You need to be realistic. Consider your competition (both in number and quality), consider that some of the people will not buy from you or your competition, and consider that some people will find substitutes for your product. What percentage of the total available population will you be able to attract?

Third: Determine your average customer sales per year. How many purchases will your average customer make in a year? How much will they spend on each purchase? Is this a repeat business or once and only once. Does the average customer buy the same product/service or will they need other complimentary services? Trade associations are good sources of information to help answer these questions.

Fourth: Determine your annual sales volume. You have determined the number of customers and determined the average amount each customer will spend per year. Multiply these two numbers together to calculate your expected annual sales volume.

Finally: Evaluate the annual sales volume figure. Does the number you calculated make sense? If not, go back and work the numbers again. What assumptions have you made about your customers? How accurate or risky are these assumptions?

You can guess, and this is not a bad place to start. But then you need to back up your assumptions with actual figures to gain the greatest degree of reality for your projections.

 


Business Reinvention

By Chemeketa SBDC

It’s January again, and time to take stock and make plans. How’s your business doing as we head into the new year? Has the economy turned your business model upside down? Does something need to change or you’ll go out of business? Are you restless and know you want something else?  Something more, something less? If something isn’t quite right, it’s probably time to reinvent.

But what does reinvention mean? The good news is that it doesn’t mean you have to throw the whole thing out and start over from scratch. Reinvention needs to be big enough that it’s transformational, not just a small series of tweaks here and there. Yes, you will be making major changes, and no, you don’t have to do them all at once. If you know your current business practices aren’t working, or you feel lackluster even if they are, trust your instincts and investigate that.

The first step in the process is to look at every aspect of your business and ask what needs a makeover. What is it that you really want? What parts of your business are not leading you in that direction? This could be your marketing, your products or services, your employment structure or employees, your size, or anything else that is getting in the way. Where are your biggest headaches coming from? What will give you the results you are looking for? Do some brainstorming and list every idea that might help. Get out of your comfort zone, consider all possibilities no matter how farfetched they may seem. Think big.

Then prioritize these areas in terms of what will give you the greatest return for your investment—your time and money. Ask for help from other business owners, your employees, a business coach, or anyone who you think will add value to your conversations and your processes.

Next, create a master plan for how and when the changes will happen. Decide what you will start with and when you will move on to the next item on the list. Make sure to include who will be doing what, how much things will cost, and the results you expect when you make the changes. A realistic timeline is important; a rollout that is too fast will shock the system and may backfire.

Then garner support from family and business associates for the new plan. Major changes can get derailed if you don’t have enough energy behind them, so build a supportive team. Change, even desired change, can be uncomfortable, so go easy on yourself and the others involved.

It is important to chart your progress as you move forward, so create a series of metrics to do this. Focus on the benefits of the new arrangement (you’ll need to continually focus on this to stay on task). And celebrate milestones when you achieve them.

And, if in your investigation you discover that reinvention for you means selling the business, going out of business, or some other track that steers you away from being a business owner, listen to that as well and devise a similar plan for recreating your life.