Unformatted text preview: important assumptions in enough detail, and that you explain
the background sufﬁciently. Try to anticipate the questions your readers will ask. Include whatever
information you think will be relevant, that your readers will need. How Many Years?
I believe a business plan should normally project sales by month for the next 12 months, and annual
sales for the following three years. This doesn’t mean businesses shouldn’t plan for a longer term than
just three years. It does mean, however, that the detail of monthly forecasts doesn’t pay off beyond a
year, except in special cases. It also means that the detail in the yearly forecasts probably doesn’t make
sense beyond three years.
It does mean, of course, that you still plan your business for ﬁve, 10, and even 15-year timeframes; just
don’t do it within the detailed context of business plan ﬁnancials. Summary
A sales forecast is hard for many people because they are unsure of how to forecast. Don’t worry; if
you know your business, you can give an educated guess of future sales. Remember, one thing harder
than forecasting is running a business without a forecast. CHAPTER 12: YOUR TARGET MARKET FORECAST The market segmentation concept is crucial to market assessment and market strategy. Divide the market into
workable market segments — age, income, product type, geography, buying patterns, customer needs, or other
classiﬁcations. Deﬁne your terms, and deﬁne your market. And of course, markets change. Don’t assume you
know your market because you’ve been in business a few years. Take a step back for a fresh look. Market Segmentation is Critical
Segmentation can make a huge difference in understanding your market. For example, when a local
computer store deﬁnes its customer segments as “high-end home ofﬁce” and “high-technology small
business,” its segmentation says a lot about its customers. The segmentation helps the company plan
its focus on the different types of potential customers. MARKET ANALYSIS PIE CHART The pie char...
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