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The Entrepreneur’s Knowledge and Experience

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The knowledge and experience an entrepreneur brings to the business will be helpful in forecasting sales, particularly if the entrepreneur has worked in the industry in which the business will be operating. Nevertheless, the entrepreneur’s experience is anecdotal and should always be confirmed by other sources.
The Industry
The importance of understanding how an industry works cannot be stressed enough. A solid understanding of typical margins, sales patterns, and purchase cycles will provide valuable benchmarks for the entrepreneur’s forecasts, although these numbers will need to be adjudged to reflect the new venture’s inexperience in the industry.
The Market/ Customer
Another critical source of information is the customer. Customers are far more likely than a competing business to provide useful information. Talking to customers and observing them in their “buying habitat” is an important way to gain insights into patterns and cycles of buying that can be applied to the entrepreneur’s forecast.
With three sources of information, – the entrepreneur’s own knowledge, the industry, and the market/customer – the entrepreneur’s estimates should be closer to reality. It is important to remember that forecasting is more art than science in new ventures, so the more information the entrepreneur has, the better.

Bernard Taiwo
I am Management strategist, Editor and Publisher.

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