AV Business & Marketing
A sales forecast based on industry experience is
typically sufficient to determine whether your targeted trade area can
sustain a profitable-number.
However, a more rigorous forecast will reinforce your
data. It can also reduce the uncertainty of others
involved in your project -- financial partners, spouse,
employees, friends. The following method provides qualified
Web search total U.S. sales of independent AV dealers.
My search began with the CTA*. I used
their 2016 $1.9 billion factory
sales projection of home audio
I increased the number by a 33%*
gross profit margin to create a retail number.
($1.9 billion) x (1.5) = $
2.85 billion U.S. AV retail.
*CTA- Consumer Technology Association
* My search is limited to home
audio/video components to provide a conservative
In that regard --
given the big box dominates the TV category I avoided TV
* 33% GP supports a conservative value.
2. Web search
total U.S. retail sales.
2016 U.S. Census report = $ 415
U.S. Census source: Melissa.com >
3. Web search your
prospective trade area's total retail sales.
For example -- 2016 U.S.
Census SacramentoMetro total = $ 4.2 billion
U.S. Census source: Melissa.com > Use Lookups.
your trade area's market share of U.S. retail sales as a
Divide your market's total retail
sales by total U.S. retail sales.
For example -- SacramentoMetro: 4.2
billion ÷ 415 billion = 0.01 or 1%
5. Compute your
trade area's total projected independent AV retail
Multiply total U.S. AV
sales by your market share.
For example -- SacramentoMetro (1%)
x ($2.85 billion) = $ 28.5 million
Assume the big box owns 50% of
Therefore, the projected
SacMetro AV independent AV dealer sales = $14.25
Subtract the sales of
independent competitors from the result of #5.
- Make a best guesstimate per
- Or divide #5 by the
number of significant competitors.
- If you are a one or two
person custom dealer -- divide #5 by a factor of 75*.
*Dividing by 75 is not
supported by any economic study. It's my best
Use this result as your sales forecast