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Profit and Sales Projections

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Excel in Your Spreadsheet

You’ll need a spreadsheet program.  Excel is the best without doubt (in my humble opinion). Then, you create your spreadsheet from the first item on the list for GAAP projections, the Income Statement. You’ve found plenty of examples of those I’m sure, so I’ll not take the time to detail it for you.

In my opinion, the most important factor in the credibility of anyone’s numbers is the projection of the volume of sales. This is independent of other important numbers you must quantify, like costs, for the moment.

Self-Service Secret: Location

Since your idea is self-service, here are a few things to consider. Whether you're talking gumball machines or car washes, self-service businesses rely strongly on location. From that location, you need a way to determine traffic. If you're talking gumball machines, then foot traffic. If you’re talking car washes, then vehicular traffic.

Traffic Research

How do you find traffic data? In the case of vehicular traffic, check with the local Department of Transportation. In the case of foot traffic... well, that’s a different story. You'll have do some footwork of your own to get the numbers you need.

The only foolproof way is to physically monitor the traffic and then extrapolate your data. In other words, say you want a gumball machine on the corner of Hollywood and Vine. You monitor the foot traffic for two hours every day for a week. You can then extrapolate from that the foot traffic 24 hours a day, 7 days a week, if you monitor various times of the day on different weekdays. In the case of Hollywood and Vine, for instance, Saturday at midnight is the highest traffic time. You get the point.

Let’s look at a mini-universe to help discern the how to's. Back to gumballs. Since I’ve already propelled us to Hollywood and Vine, let’s say that you're going to put your gumball machine right next to the newspaper rack in front of the drug store. From your research, you've extrapolated total foot traffic in a week's period of 100,000 people (this is just a round number guess).

Next, you need a factor and that's how many of that 100,000 chew gum. The National Masticators Association could help with that or the Dental Association. You find they report 35% of public chews gum of all kinds on a regular basis. You factor that in: 35% of 100,000 = 35,000.

Next, you need another factor, and that's how many of the 35,000 will go out of their way to insert a coin and get your product? continued

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