A Retail Store Business Plan - Projecting Revenue

There are two main methods to project revenue for your retail store when creating

money projections for your business plan: a prime-down approach and a bottom-up approach. It's suggested to use each strategies to form certain that your projections are reasonable to readers.

High-Down Approach

A prime-down approach would be to begin with a median sales per square feet benchmark for your sort of retail establishment. This can be outlined as total net sales divided by the sq. feet of selling space. While wanting for an business average, check if there are geographic differences that will affect your store. You can assume that, upon launch, you'll be below the trade average, however be in a position to climb closer to it or on top of it over time.

You'll be able to rummage around for this average sales per sq. foot with trade associations and publications and in business publications at a library. To get examples, you'll apply some calculations to the numbers in annual reports of the big public companies in your industry. You'll even ask house owners of comparable businesses in alternative states who aren't in direct competition with you.

However, if you discover, for instance, that Target has sales of $fifty per square foot per year, $fifty may be difficult for your store to achieve. Target operates with extreme economies of scale, encompasses a recognizable complete, and has been around for several years. Unless you've got reason to believe the particular opportunity for your store can cause a abundant greater volume of sales, do not assume you'll be able to do higher than industry giants on sales per square foot.

Bottom-Up Approach

To project revenues from the bottom-up, have a look at your specific state of affairs, beginning with the location you expect to be operating at. Estimate the purchasers who will enter your doors on a given day (adding people who are passing by with those reached through your supposed promoting strategies), multiply by the percentage you expect to form a buying deal, and multiply by the common purchase price. Certainly, a lot of subjective thinking goes into each of these numbers, but, if they are based mostly in some rational method, the top result ought to be a revenue projection specific to your store.

Compare the number achieved through this methodology to the prime-down approach. You may choose to tinker with the numbers in your bottom-up estimate so as to come closer to the prime-down, especially if your estimate exceeds the prime-down estimate. In any event, be prepared to clarify your strategies and sources to funders who might need to understand how you thought through these projections.

by: Ethel Holmes

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