Home   Landscape Contractor   Free Lanscape Contractor Business Strategy Questionnaire   5.9 Sales Projection Year 3 Questionnaire

5.9 Sales Projection Year 3 Questionnaire

Why does a small business like Green Lawn Landscaping, Inc. need to forecast its sales for its third year of 2018?

The projections of sales is one of the key components of a business plan. The reason that a small business like Green Lawn Landscaping, Inc. need to project its sales, is that the sales projection become the basis for all financial planning and projections for the business in the business plan. This section of business planning gives a business owner like Frank Murphy the ability to convey his sense of what the growth of the business will be like to the reader of the business plan, who may be a banker or potential partner.

Since it is the revenues that drive the entire income and expense statement, the assumptions that a small business owner like Frank Murphy makes about the sales numbers are very important. If you get these numbers wrong, all your forecasts and expectations of profitability will be inaccurate. A clear balance has to be maintained at all time between not being too conservative and too aggressive. If we choose to forecast the first years sales in an overly aggressive manner, it could easily backfire in many ways:

  1. We may have to wind up eating a large piece of humble pie when the actual sales numbers for the third year of 2018 come in much below our aggressive forecasts.
  2. Lenders may decide to change the terms of the loans or even cancel entire lines of credit if the actual sales forecasts for the third year of 2018 come in below expectations.
  3. Partners may decide to use legal remedies if they think that the sales estimates for the third year of 2018 that have been used in our business plan by Frank Murphy were misleading.

Should the sales forecast for the third year of 2018 be any different that those for 2016 or 2017?

That would depend on the changing dynamics for a business like Green Lawn Landscaping, Inc.. Thus if Frank Murphy anticipates a change in business conditions that will substantially affect the sales for either 2016, 2017, or 2018, the sales forecasts will have to adjusted accordingly. If not, then the sales forecasts should take in the same inputs in 2016 and 2017 as they did in 2018.

What are the inputs that go into projecting the sales forecast for the third year of 2018?

There are two direct inputs that make up the sales projection for the third year of 2018. The first is price per unit of product or service and the second is the sales volume in units of product or service. There are many items that can be taken into consideration for the projection of price per unit, but the most important has to do with positioning. Thus if a small business like Green Lawn Landscaping, Inc. has chosen to position itself on the top end of the market, its owner, Frank Murphy will price out the product or service accordingly.

The second aspect of a sales projection is of course the number of units of product or service sold. This number is arrived once the price per unit is set and the seasonality of the sales projection for the third year of 2018 has also been established.

What is sales seasonality and how does it affect the sales projection for the third year of 2018 in a business plan for Green Lawn Landscaping, Inc.?

Seasonality of sales for the third year of 2018 refers to the how the sales for the year will be affected by seasonal changes in the buying patterns of a target market like Allegheny, Pennsylvania. If we feel that there is no seasonality then we can assume that the sales for the entire third year of 2018 will be evenly distributed and there wont be any changes in the pattern of revenues. On the other hand if an industry like Landscape Contractor does experience seasonal flucations in sales where for example things are slower in the winter than during the rest of the year, then this seasonal variability must be factored into the sales projection for the third year of 2018.

What is a slow market, good market and great market for a small business like Green Lawn Landscaping, Inc..

Anytime sales projections for the third year of 2018 for a small business like Green Lawn Landscaping, Inc. are being projected, it is very important to recognize that there are three distinct sales environments that the business will possibly face in its third year of business in 2018:

  1. Good Market - this market conditions is the definition of a steady and normal market where business conditions have not changed and the economic conditions for a local target market like Allegheny, Pennsylvania are normal.
  2. Slow Market - a slow market conditions is characterizied by a decease in the over level of economic activity in a target market of Allegheny, Pennsylvania. In a slow market environment, there is typically a slow down in the sales of all businesses and therefore an propotional slow down in the sales projection for Green Lawn Landscaping, Inc. is also anticipated.
  3. Great Market - a great market is a market where there is very strong optimism and the level of overall economic activity is very high and there is a tremendous demand for the goods and services from an industry like Landscape Contractor.

It is important to recognize that different market conditions require that the sales projection be adjusted accordingly and having these scenarios play out in the sales projections shows that the planning and strategy of a small business owner like Frank Murphy has taken into account many scenarios and not just the one with the best possible outcome.

Quick Links:

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

Small Business Owner Resource Center


Articles on the Small Business Financing Sources, the Small Business Loan Basics, small business loans Checklist and SBA Loans are incredible sources of knowledge for the small business owner.



Credit Report and Credit Score Analysis, how to Read a Personal Credit Report and all about Business Credit cover the intricacies of credit and are required reading for everybody.



The Foundation Grant Directory is a free listing of sources for grants by state. Why not look if there is some free money out there for your business. Hey - you never know!



The Business Loan Application covers every item you will need in your loan package and tells you how to get approved for business loans.



Fire your loan broker and use our Free Business Loans Bank / Lender Directory to find every bank in the country lending to small businesses.



If you are looking to start a business - look no further.  Check out the Free Incorporation Guide discussion and the State Incorporation Resource Directory.

Rate this page
Your feedback is important to us | Please rate this page
1 2 3 4 5