How to Forecast Revenues for a Company Launch

One of the first things a MBA major learns is the importance of a well-crafted business plan. A key component of that plan is forecasting revenues. This is essential if you're going to be looking for investors in advance of a company launch. Those investors will want to know how and when their money will be coming back to them. Here are the steps to follow to forecast revenues for a company launch:

Step 1: Determine Your Operating Costs

What will it cost to keep your business open? Factor in everything from rent, insurance, salaries, office supplies, marketing, manufacturing (if applicable) and miscellaneous expenses. Those will be your operating costs. You'll then have a profit margin on every item you sell. That accumulated margin needs to be deducted from those operating costs.

Step 2: Create a Customer Profile

Who are you selling to? By creating a customer profile you'll be able to anticipate shifting trends in your business. You'll also know where to target your marketing campaigns. The majority of laundry detergent is sold to the moms who do the shopping and the advertising reflects that. There is a business adage that goes, "20% of your customers account for 80% of your sales." That's why you really have to understand who you're selling to in order to make an accurate forecast. You'll be depending on those profiles to be accurate.

Step 3: Determine the Reach of Your Campaign

If you're opening a neighborhood storefront then you should know what to expect in terms of foot traffic or customers traveling to your store. However, with an online business your reach could truly be global. How will you know how far that reach can go in order to make an accurate prediction? This might come down to a matter of marketing penetration. For instance, if you're going to advertise on Facebook then you'll be able to know what type of click through rate to expect. You can build a forecast utilizing that information.

Step 4: Size Up the Competitive Landscape

Chances are that whatever business you're starting up, somebody has already beaten you to the punch. That's a good thing because you can learn a lot by studying your competition. If you can find out what type of sales they achieved you should be able to make comparable forecasts.

Step 5: Add it Up

Now that you have all of those numbers you're ready to make a forecast. The best approach is to provide conservative and logical forecasts backed by data. Being conservative means erring on the side of caution and embracing the "worst case scenario" when it comes to sales.   

Is An MBA Worth It For Entrepreneurs?

 

There is no denying that adding an MBA to your resume is an impressive accomplishment. It is definitely the kind of degree that can give you a leg up as you enter into the job market, but what if your goal is to be your own boss?

Do you need that MBA to become an entrepreneur? The records show a mixed result of successful entrepreneurs: some have an MBA and others don’t.

If you have both an idea for a business and catalogs for college you might want to consider the following factors before making your final decision.

The Risks

Investing in a startup business is going to take up a lot of your time and money. The same can be said for pursuing an MBA degree. On many levels it will be hard to accomplish both tasks simultaneously. With the MBA there will be extreme limitations on your time. To succeed with that degree you’ll want to give it your best effort without distraction. Are you ready to make a 2 to 4 year commitment of further studies?

If you do go down the path of the MBA, chances are you’ll forge a strong bond with many of your classmates. The pressure will be on to excel out in the real world as a majority of your fellow grads will be snagging those high paying corporate gigs. Would you be prepared to give those up to pursue your business startup? In other words, would your drive to becoming an entrepreneur wane over the ensuing years of your MBA studies? It’s perfectly natural but it’s a good argument for diving into your business first.

One thing you might not learn in an MBA program is probably the most important skillset you can develop, and that’s sales. It’s the ability to persuade investors or clients to come on board your startup. The only tried and true method of that is through trial and error. You’ve got to get out of the classroom to practice your pitch and find the cash.

The Rewards

On the other side of the coin, having an MBA can become a benefit, especially if you focus your degree program on the specific area of business you intend to pursue.

Depending on where you obtain your MBA, you could find yourself surrounded with future captains of industry. That’s an extremely valuable network that you can tap into. You’ll also be able to work out the details of your business plan in a kind of “laboratory” setting. Wouldn’t it be better to run several models of your business by a collective think tank of professors and business experts then going into the venture “blind”?

With the MBA you’ll also have a solid “fall back” position should your business plan come up short. It might be that added level of security could be your deciding factor.

The Challenges of Female MBA's

With few exceptions, the business world has never been a bed of roses for women. In a society that still views business primarily as a "man's world," women, despite their capabilities and qualifications, continue to fight an uphill battle for equality that is due them.

A recent study conducted by Catalyst, a non-profit organization for women in the workplace, compared 9,000 male and female MBAs entering the workforce over a ten year period. 46 percent of the males received entry-level positions while 60 percent of the women were hired at an entry level, despite the same level of professional experience for both gender groups. Likewise, the men earned $4,600 more at their first jobs.

One of the reasons given for the parities is not prejudice but practicality. Most companies hire employees with a long term plan in mind. It is anticipated that young women entering the workforce after college will have children within a certain period of time, thus disturbing the succession planning of the company. Thus, businesses prefer to invest more in men, anticipating longevity with the company. Women, themselves, admit that family commitments may disrupt their careers and, therefore, they tend not to lobby and pursue the top positions.

The point was driven home in another study conducted jointly by the Columbia Business School and the Women's Executive Circle of New York. The study went beyond entry levels and found that the disparities plague women throughout their careers. In examining women's roles at the 100 largest public corporations based in New York, less than 11 percent of the C-level positions were held by women.

Women are making strides in the business world but the progress is slow. Companies do want equality but this will only occur when the business world attunes itself to the needs of the cultural world, allowing the business world to benefit from the many qualified and experienced women available, while modifying to meet the needs of the women's lifestyles.

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Did Lack of MBA Ethics Cause the Recession?

It was inevitable that one outcome of the recession, aside from the devastation of the economic hurricane, would be deciding who or what truly was to blame. The truth is there is no one factor or person. However, as the smoke begins to clear, there is increasing blame being attributed to the financial leaders of our generation, specifically the mighty who have fallen.

We have all been witness to major financial scandals over the last couple of years. Many of these scandals have been perpetrated by key figures in the upper echelon financial world, individuals with impeccable credentials, or so we thought. To the dismay of both the public and academia, a good number of these individuals bore MBA's – seemingly their license to direct the financial community – from some top business schools.

While no pattern has emerged, a number of questions have arisen regarding MBA programs and the students therein. While there are no guarantees, an MBA from a top business school is a tremendous stepping stone to a lucrative career. The question is how desperate are students to obtain that coveted degree.

In a 2006 study released by the Academy of Management Learning and Education, an astonishing 56% of MBA students admitted cheating, far exceeding any other major discipline.

The focus of many major MBA programs is quite straightforward – your sole obligation is to make as much money as possible for your stockholders, within the parameters of the law. Unfortunately, a decided absence of ethical teachings has caused many graduates to ignore the legal obligations of earning money. The argument that students want to earn as much as possible in order to repay their expensive education doesn't hold much water. Were that the case, medical students would be dropping like flies in insurance scams.

Many business schools acknowledge that a lack of classes in business ethics may be part of a larger problem and some, indeed, have begun to change their curricula to reflect a necessary change. Others schools have tightened their application processes to help weed out potential "future problems." Overall, the fall of the giants has helped remind us that, in a democratic society, we are all equally accountable for our actions.

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