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5.7 Sales Projection Year 1

Market conditions and sales projections for the first year Green Lawn Landscaping is in business:

When projecting sales for the first year of business for Lights On Electrical, we decided to make sure that we take in three distinct market conditions for our business. The first is a slow market condition that is typically characterized by a sluggish economy. Second is a good market conditions that reflects a typical average market for the electrical contractor business and finally is the great market conditions that is reflective of a booming economy where business is coming in from everywhere and business owners like Frank and Peter and just trying to keep up with all the work that is pouring in.

Sales seasonality - how much will sales fluctuate during the year for Green Lawn Landscaping?

Green Lawn Landscaping is located in Allegheny County, Pennsylvania. As most folks know, the landscaping business in the North East is characterized by the very busy spring and summer months, followed by a relative quiet winter when contractors are making some money by offering snow removal services and keep the walkways and driveways free of snow and ice. With this in mind, we are estimating that both the first and last quarters of each year will be the traditionally slower periods of activity for Green Lawn Landscaping. However between April and September we estimate that the firm will bring in almost 67% of its total annual revenues.

Sales projections for the first year for Lights On Electrical:

Thus the firm is projecting that for the first year in a good market condition we will probably be able to get to $295,000 in sales with approximately 823 customer transactions each generating about $360 in revenues. In the event the market for electrical contracting services were to slow down, we are projecting that we will be able to process 617 sales transactions for the first year that will bring in a total of $221,250. Also in the event we have a boom in the local and larger economy and we wind up with a great market condition, we project that Lights On Electrical will be able to take in approximately $354,000 having served its customers with 987 transactions during our first year of operations.

Factoring in annual lawn maintenance contracts into the mix:

When making these projections, Frank and Peter have divided up all potential annual maintenance contract revenues into each of the four quarters. Clearly more work will be done during the summer months on a annual maintenance contract and therefore the more revenues will be generated accordingly. These sales projections should be used carefully when planning out cash flows projections since there can be many months when business is rather slow and very little cash is coming in.

Revenues from snow plowing:

Frank and Peter have included revenues from snow plowing in the total sales projections. While typically each snow plowing job pays differently depending on the size of the parking lot or driveway, when projecting sales we have added the total revenues anticipated for each quarter and divided that up by the total number of jobs irrespective of the fact that in the winter months all the revenues will be coming from snow plowing and during the rest of the year it sales will be generated by the traditional landscape functions of lawn maintenance.

Quick Links:

  1. Go to the Corresponding Template section for this industry.
  2. Go to the Corresponding Questionnaire section for this industry.

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