Predicting sales for start-up retail business...

[rayjay01]

I'm trying to generate some figures for my cash-flow forecast for a business idea I have had.

I should probably point out that this is the first time I've put together a business plan / cash flow forecast - therefore I would appreciate any advice.

The idea I've had doesn't require huge amounts of capital and is a relatively small venture which I believe is perfect for me to use as a project to enhance on any business knowledge and hopefully help me in the future.

Without going into too much detail - I would be selling a number of convenience store based product lines.

I'm struggling to get my head around the prediction aspect of figures for a start-up business though.

From what I've read, most people use industry trends to pull data from. However, as my plan focuses on a local area only, I don't feel this kind of data would be accurate enough, due to the various differing factors each area can have on a number of things.

I'm also not sure how in depth I am supposed to go in regards to each product I plan to sell. For example, do I list each product and assign a prediction of a number of sales for each one? In which case, how on earth do I go about doing such a thing?

Say I use a bottle of coke as an example product and I predict I'm going to sell 10 bottles a day, how do I justify those figures?

I've tried to look for data that relates to similar businesses in my area, sadly to no avail.

Any advice would be greatly appreciated.

 

[Philip Hoyle]

Find the closest example you can find of your proposed business and do some stalking! If you're looking for a village location, then find a similar shop in a similar sized village. If you're looking for a town centre shop, find similar in a similar type of town, etc.

Sit outside for a few hours per day over several days to get an idea of footfall at different times of day and watch for trends on different days.

Once you have a rough idea of the number of customers, you can then go on to model what they buy, their average purchases, etc. To do that you need to go into a wide range of similar shops and lurk around watching the average customer's average shopping basket. Look at what's on the shelves, in the most prominent positions and with most shelf space - they're the highest sellers. By just spending five minutes in each shop, you can note whether the average customer is buying one item or 5, whether it's cigarettes, booze, milk or bread, crisps or soft drinks, etc.

Yes, time consuming, but it's highly valuable research. There is basically no readily accessible industry data for small shops, so stop looking as you'll not find it.

If you get into bed with a small chain, such as Spar, Londis, Booker, etc., they will have data that they may share with you, certainly of the buying history of shops that buy most of their stuff through that chain. I'm not sure how helpful they will be with sharing that data at the planning stages though as they may want a commitment from you before they'll release it.

 

[uksme]

Have you considered talking to some convenience store owners directly? Independent owner-operated convenience store managers will have a reasonably good idea, anecdotally, of how many products you are likely to sell in a given week or month.