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Tuesday, January 29, 2008

7 common problems found with Business Plan Sales Forecasts

On many occasions the sales projections included in a Business Plan are not achieved. Whilst the numbers are understood to be forecasts of future performance, from time to time they are found to differ significantly from the actual results.

What gives rise to dramatic variances between forecast and actual business plan sales forecasts?

7 common reasons why differences arise are:
1. A too optimistic view that sales growth rates achieved by competitors or previously by the business can continue into the future.
2. The marketplace for new products or services has not been researched to ensure prospective customers exist.
3. The distribution channels not established resulting in product not reaching customers.
4. The launch of new products or services not effectively planned resulting in delays before product is available and sales materialize.
5. The reaction of competitors to more competition not factored into the business plan forecasts. Competitors may reduce prices or launch a higher specification product to combat the threat of losing market position.
6. Staff are not trained in or qualified to effectively deliver a new product to market.
7. The business suffers from a lack of investment or working capital, resulting in delays before the anticipated sales forecasts are achieved.

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