Michael Herman

Software Developer

Startup Tips for Forecasting Revenues and Growth

Ready to launch a new business idea, but want to know what you are getting into first? How can you do this if the business doesn’t officially exist yet?

It’s natural to look at a start-up venture with some trepidation. After all, it takes a significant amount of time and resources to get a business off the ground so that it becomes profitable. Understanding how to grow business and increase revenues is vital in the first year of a new business, especially in an uncertain economy. Whether you are a first time entrepreneur or a serial entrepreneur for many years, there are time-tested steps you’ll need to take to forge a successful business plan and predict your future earnings.

Before you conduct your start-up forecasting, understand these two things:

  • The figures you calculate must be based on factors you know going in. Therefore, things are subject to change.
  • You are not predicting future success, but rather weighing the possibility of risk vs. profits. Keep this in mind and don’t make any concrete promises to investors.

To get started with forecasting and planning for your startup, here are some basic steps. Remember, that you will use this as part of your overall business plan and for staging the launch of your new venture.

Step 1 – Total Available Market (TAM)

The total available market refers to the amount of the identified consumer or business market that will be receptive to your offering. You may be looking at a large sector of a specific industry, or a sub-set of a market that your niche product can satisfy an unmet need. Get a picture of who your target market is.

Step 2 – Served Available Market (SAM)

The served available market is made up of your targeted market of consumers or business owners who are already getting their needs met by your competitors. You must carefully look at this number and research what they are receiving and where there are unmet needs, if you want to get these prospects away from your competition.

Step 3 – Gaps in TAM vs. SAM

This step compares your TAM data with your SAM data, also sometimes referred to as a SWOT analysis. In this exercise, you will begin to identify the prospects who have unmet needs or are not currently using a comparable product or service that you can offer. For many startups, this represents the first customers attained.

Step 4 – Rate of Adoption

A startup business can expect that things may take time to ramp up before any real income is generated. On average, the rate of adoption by prospects can take as long as 12 to 18 months. Have a plan in place to keep the business afloat during this time. You could maintain a day job or bring investment partners on board.

Step 5 – Resources to Launch

You’ll need many resources in the first year of a startup. Factor in time, materials, staff, and office rental fees you will require to get going. Also, look at administrative costs and marketing resources you’ll require to launch.

Step 6 – First Year Sales Generated

Now that you have the first 5 steps completed of your forecasting plan, you’ll be ready to start reaching out to your prospects in a concentrated sales effort. Determine how you will sell to your targeted market, and how many you will contact in the first 12 months of being an entrepreneur.


Your success can only be measured by how well you plan and forecast your business to the world. With hard work and support from a growing community of startups, you’ll find a small business to be very rewarding in many ways.

For more info, please visit Starter Financial Model

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