6 Simple Steps to Forecasting Sales Revenue at Your Fitness Business
When it comes to budgeting at your fitness business, one of the most challenging areas can be forecasting your revenue for the upcoming year. While it would be wonderful to magically predict the future, it simply isn’t possible. However, there are ways to make the sales forecasting process flow more smoothly.
1. Do your research
Forecasts are essentially an estimate of future business trends and outcomes based on historical data. The financial reports for your business are key to compiling this data. Review your past sales to ascertain what you sold on a monthly basis. Your fitness software should have multiple reports, including sales by category, that will help compile this information for you quickly.
As you put this information together, always look for seasonality. This will help you manage your cash flow and identify the slower times during your year so you can prepare for it.
Your industry is another important area to research. Mindbody continually provides information on trends within the fitness and wellness industries.
It is also essential to review what is happening in the economy—both nationally and locally. If there is a buzz about a recession, this will often change the way people spend their disposable income. Though fitness and wellness are probably the areas you should focus on more during a recession, often this is the area where people choose to cut their spending first.
Locally, you should always be on the watch for new businesses opening and current businesses closing. Both of these scenarios can provide opportunities and threats to your business and your estimation of income.
2. Include the right people
As you begin the process of forecasting your revenue, consider including others in the process. Those in your company who help with the sales process can provide invaluable input when it comes to looking ahead at your sales numbers. Not only will they know your client and their spending habits, but they can also help support and meet your sales goals if they are included in the process of establishing those sales goals.
3. Be realistic
Your revenue outlook at your fitness business should clearly define what you believe you can do when it comes to sales. Far too often, sales projections are overestimated. While ambition is excellent when it comes to growing your fitness business, your revenue forecast should be somewhat conservative.
4. Break it down into pieces
Look at the various revenue streams within your business separately. Do not combine membership purchases with retail or yoga teacher training with yoga classes. By separating the different sources of revenue, it will help to make the process less overwhelming and more manageable. Plus, each revenue stream will most likely have its own direct costs. By separating it out at this level, it will help make budgeting for the expense side easier.
5. Begin with your biggest moneymaker
Always look at your biggest moneymaker first whether that is memberships, classes or a certain type of workshop. That revenue is your main source of income and may be covering most of your expenses. Once you estimate how those sales will perform you will also have a better idea of any “trickle-down” effect those sales may have to other areas in your business. For example, if the number of memberships increases, your personal training appointments may increase as well.
6. Start from where you are now
Always begin from where you are now and factor in for any net changes in clients, classes, studio offerings, etc. While it’s exciting to factor in growth from gains in clients, it’s also important to consider losses in clients as well.
Forecasting revenue is an essential part of developing any sort of budget or business plan. These projections empower the business owner to make intelligent, well planned financial decisions to take the company in the desired direction.
