Forecasting Sales Forecasting Sales It is important for business owners to be able to project their potential sales. Below you will find two sales forecasting methods: Market Percent and Average Sales. After reviewing these two worked out problems complete the Cool Time Pools Assignment at the bottom.

Market Percentage Method

CREEKVIEW RV PARK

64 rentable spaces

15 existing competitors (Yellow Pages)

sales price $12/night

fixed costs = $62,000/year

Blue Ridge Parkway Monthly Use Report for 2004 shows 136,000 campground visitations in the HaywoodCounty area.

Monthly distribution of total yearly visits:

Jan.0% Apr.0% July 25% Oct. 15%

Feb.0% May 5% Aug. 20% Nov. 5%

Mar.0% Jun. 15% Sept. 15% Dec. 0%

Creekview RV Park Solution:

136,000 campground visitations/year at Blue Ridge Parkway facilities in HaywoodCounty, 15 existing competitors plus Creekview = 16

Equal market share = 136,000 visitors/16 RV Parks = 8,500 visitors/year and 8,500 visitors avg per park/136,000 total visitors to all parks = 6% of market

For start up, assume 4% of market in the first year (6% market share x 70% amount of market share reasonably captured in first year = 4%, Businesses do not normally gain complete share of the market in the first year, which in this case was 6%).)

Creekview will receive 136,000 visitors x 0.04 market share = 5440 total visits

Monthly sales forecast equation:

136,000 x 4% x % of total visits for the month x $12/night(rate)

Monthly sales forecast:

Jan. $0 Apr. $0 July $16,320 Oct. $9,792

Feb. $0 May $3,264 Aug. $13,056 Nov. $3,264

Mar. $0 Jun. $9,792 Sept. $9,792 Dec. $0

Average Sales Method

MUNCHKINLANDCHILDCARECENTER

startup costs $607,772

maximum capacity 180 children

60% of competitors have waiting lists for 0 - 4 year olds

Group	Market %	Weekly Fee
Infants-2yrs	15%	$70
2yrs-3yrs	20%	$60
3yrs-5yrs	50%	$55
After School	15%	$40
	100%

MunchkinlandChildCareCenter Solution:

Calculate average revenue per child:

Group Market$	Market %	Weekly Fee	Weighted Average
Infants-2yrs	15%	$70	.15x$70=$10.50
2yrs-3yrs	20%	$60	.20x$60=$12.00
3yrs-5yrs	50%	$55	.50x$55=$27.50
After School	15%	$40	.15x$40=$6.00
	100%		$56.00=10.50+12+27.50+6 Avg. revenue/child/week

Monthly sales forecast:

Assume 4.3 weeks/month

Assume 50% occupancy months 1, 2, 3

Assume 80% occupancy months 4 -12

Sales forecast equation: $56.00 x 4.3 weeks x 180 children x % occupancy)

1 $21,672 4 $34,675 7 $34,675 10 $34,675

2 $21,672 5 $34,675 8 $34,675 11 $34,675

3 $21,672 6 $34,675 9 $34,675 12 $34,675

Cool Time Pools Assignment (market percentage method):

100,000 visitations/year at area facilities in EdgecombeCounty, 4 existing competitors

For start up, assume you will use 70% of the % market share you calculated for the first year

Price: $5.00 per visit

Monthly distribution of total yearly visits:

Jan.0% Apr.0% July 40% Oct. 0%

Feb.0% May 5% Aug. 25% Nov. 0%

Mar.0% Jun. 25% Sept. 5% Dec. 0%

Instructions: Use the Market percentage method to determine sales for the first year. Post your answers by clicking on the "Edit my submission" button below.