ENTREP| Forecasting the Revenues of the Business Flashcards
is a result when sales exceed the cost to produce goods or render the services.
Revenue
is recognized when earned, whether paid in cash or charged to the account of the customer.
Revenue
Other terms related to revenue includes (2)
Sales and Service Income
is used especially when the
nature of business is merchandising or retail
Sales
is used to record revenues earned by rendering services
Service Income
These factors should serve as basis in forecasting revenues of the business (4)
1.The economic condition of the country
2.The competing businesses or competitors
3.Changes happening in the
community
4.The internal aspect of the
business
When the economy grows, its growth is experienced by the consumers. Consumers are more likely to buy products and services. The entrepreneur must be able to identify the overall health of the economy in order to make informed estimates. A
healthy economy makes good business.
The economic condition
of the country
Observe how your competitors are doing business. Since you share the same market with them, information about the number of products sold daily or the number of items they are carrying will give you the idea as to how much your competitors are selling. This will give you a benchmark on how much products you need to stock your business in order to cope up with the customer demand. This will also give you a better estimate as to how much market share is available for you to exploit.
The competing
businesses or
competitors
Changes’ happening in the environment such as customer demographic, lifestyle and buying behavior gives the entrepreneur a better perspective about the market. The entrepreneur should always be keen in adapting to these changes in order to sustain the business. For example, teens
usually follow popular celebrities especially in their fashion trend. Being able to anticipate these changes allows the entrepreneur to maximize sales potential.
Changes happening in the community
Another factor that affects forecasting revenues in the business itself. Plant capacity often plays a very important role in forecasting. For example, a “Puto” maker can only make 250 pieces of puto every day; therefore he/she can only sell as much as 250 pieces of puto every day. The number of products manufactured and made depends on the capacity of the plant, availability of raw materials and labour and also the number of salespersons determines the
amount of revenues earned by an entrepreneur.
The internal aspect
of the business
refers to the amount added to the cost to come up with the selling price
Mark up
Mark Up Price Formula
(Cost x Desired mark up percentage)
Selling Price Formula
(Cost + Mark Up Selling Price)
Projected Monthly Revenue Formula
Projected daily revenue x 30 days
Projected Yearly Revenue Formula
Projected daily revenue x 365 days
