Writing Business Plans/Growth Rates

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Question
Hello-

Thanks in advance for reading.

I am in the midst of writing the financials of a business plan for a retail product I plan on getting to the market over the summer.

I am in the Sales Forecast section of my Biz Plan software and they are asking me to guesstimate what my growth rate will be.
I have chosen 7% (for a number of reasons based on market research) but I am confused at to what this number really is.

Essentially they have it showing 7 percent growth, month over month. Meaning, I put the number in the “Growth rate” box provided and when I hit apply, it shows the growth in sales from month to month and it appears to be a 7% increase, every month. For clarity, I started with saying I would sell 5,000 units in month one and it automatically said I would said sell 5350 in month 2, 5725 in month 3 and so on.

Is this correct and a realistic assumption? I thought 7% growth means if we sold 5,000 in year one, wed sell 5350 in year 2? How does this growth rate that they are referring to differ from “year over year” growth?

Any help/advice on the above is greatly appreciated.

Answer
AVI.
THE   FORECAST   IS  GENERALLY  --ANNUAL  ONE.
SAY,  7%  ON  5000=350  [ 2014  TO 2015 ]
-------------5000  TO  5350.
WE  MAKE  MONTHLY  FORECAST  TAKING  FACTORS  LIKE  --season/ purchase trend etc.
SAY, BASED  ON  5000 ANNUAL,
YOUR AVERAGE  MONTHLY = 420
THIS WILL  FLUCTUATE  DUE
FACTORS  LIKE  --season/ purchase trend etc.
JAN---350
FEB---390
MAR---430
APR---450
MAY---480
JUNE---440
JULY---430
AUG---430
SEPT—440
OCT---450
NOV---400
DEC---330
THEN  YOU  MUST  WATCH  EVERY  MONTH
THE  GROWTH  RATE.

Writing Business Plans

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Leo Lingham

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