How to make realistic sales projections (for your small business)
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We'll explore this business lesson with the case study of 'Tobe the Bedsheet Baron'.
Introduction
Tobe is starting an Afro-centric Bedsheet Business, featuring culturally significant African designs.
His Strategy is to generate 80% of his Revenue from Direct to Consumer (D2C) sales and 20% from Wholesale customers.
His pricing to Consumers is N3,000 while to Wholesalers, it is N2,000.
Sales Strategies
Tobe identified the following as Direct to Consumer (D2C) sales strategies:
Personal Networks;
Social Media Ads;
Influencer Marketing;
Pop-Up Stores and;
Black Friday Sales Promo.
For Wholesale, Tobe would partner with Online and Physical Stores and bulk users to sell his bedsheets.
Personal Networks
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In one year, Tobe will pitch his products to at least 500 of his friends and family through phone calls, Whatsapp, and physical visits. He expects a conversion rate of 20%, i.e., at least 100 of them will buy (some because they love the products and others just to support him).
His budget for this strategy is Zero.
He expects to make revenue of N300,000 (N3,000 x 100).
Social Media Ads
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Tobe will run daily Ads on Facebook & Instagram to gain followers and convert them to customers. He expects a conversion rate of 0.4%, i.e., if his Ads reach 360,000 people, at least 1,440 of them will buy (360,000 x 0.4%).
His budget for this strategy is N2,400 ($5) daily i.e., N840,000 a year.
He expects to make revenue of N4,320,000 (N3,000 x 1,440).
Influencer Marketing
Photo Credit: Multichoice Nigeria
Tobe will pay one of the Ex-BBN Stars with over 2 million followers to market his bedsheets. He expects that his Ad will be seen by at least 100,000 of their followers. Based on their star power he expects a conversion rate of 2%, i.e. If his Ads reach 100,000 fans, at least 2,000 of them will buy (100,000 x 2%).
His budget for this strategy is N1,000,000.
He expects to make revenue of N6,000,000 (N3,000 x 2,000).
Pop-Up Stores
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Twice a month, Tobe will participate in trade fairs or partner with established businesses to set up pop-up stores in their premises. He expects that each event will have about 1,000 attendees and that at least 80 people would buy a product from him. Each event will cost him N50,000.
His budget for this is N1,200,000 (N50,000 x 24 events).
He expects to make revenue of N5,760,000 (N3,000 x 80 x 24).
Black Friday Sales Promo
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On Black Friday, Tobe will offer a 50% sale on all products. He will advertise on his E-Commerce website, social media platforms (paid promos) and print and distribute flyers. He expects to reach 300,000 people and achieve a conversion rate of 0.3%. i.e., 900 people will buy.
His budget for this promo is N300,000 (Ads & flyers).
He expects to make revenue of N1,350,000 on Black Friday alone (N1,500 x 900).
Wholesale Partners
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Tobe's business development for Wholesale will include:
1. Securing trading relationships with Stockists.
2. Writing proposals to bulk buyers like Hotels, etc.
He expects to secure at least 12 of such sales a year with minimum order quantity of 200 units.
His budget for this strategy is Zero.
He expects to make revenue of N4,800,000 (12 x N2,000 x 200).
Summary
At the end of the year, Tobe expects the following results.
Note: Tobe does not need to have N3,340,000 for marketing before he can execute his sales strategy, he can start with whatever he has and then reinvest the money as he makes sales. Also he can execute some of these strategies at the same time and with little amounts of money until he finds what works best for him.