Yesterday I shared a high level sales plan, one where we figured out that our business would generate $28.2 million in sales and $2.6 million in profit.
Is the plan something we can take to the bank?
Well, you have the "bottom's up" crowd that estimates a business plan based on individual segment performance in marketing campaigns. It's a lot of work, and it isn't any more accurate than doing the simple calculation I performed yesterday. I know this because I spent a decade building plans at Eddie Bauer & Nordstrom and have the scars to prove my point.
The plan, of course, is subject to a lot of variability.
For instance, over the past five years, annual rebuy rates have varied as follows for this brand:
- Mean = 36%.
- Standard Deviation = 0.016.
- 10% of the time, net sales will be under $26.5 million.
- 25% of the time, net sales will be under $27.4 million.
- 50% of the time, net sales will be +/- $28.5 million.
- 25% of the time, net sales will be above $29.6 million.
- 10% of the time, net sales will be above $30.6 million.