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Old 06-17-2008, 08:53 PM   #10 (permalink)
Coda1108
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The first part of the answer is what NOT to do. Don't generalize by saying something like... "Well if I contact X number of people about my business and Y% of them become customers, then I'll make This Much Money."

It really depends on what you're selling. However a guideline is to be honest with yourself about your customer base. Usually there are different categories of customers. For example, a friend of mine makes soy candles. He sells to organizations in bulk for fund-raising and gift purposes; He sells to re-sellers who base their purchases on their own business plans; and he sells directly to consumers.

This information is used to set some basics about each category. How many new customers in each category will be gained in the next month; 3 months; 6 months. At what percentage will there be repeat business (20% of consumers will make another purchase within 9 months; 35% of re-sellers will make another purchase in 6 months, etc.)

Finally, each category will be paying a different price for what they're buying. In the candle example, consumers will be paying more than re-sellers. You need to do a little market research and determine at what price you'll be selling it.

Next, you must predict your expenses, both for the product or service you're providing; then overhead costs.

I tried to put a lot of stuff into this one post. Hope it helps.
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