Video Production Business Tips – Why Your Sales Projections Should Come From Reflections

In the long years of being in a video production business, I realized that everyone wants projections from you. The only problem is that you don’t have a crystal ball and it would be foolish to pretend that you know what’s going to happen in 3 months, a year and especially 3 years. After several years of failed attempts at predicting what future sales would be for our video production business, my wife and I decided to reflect on previous years instead.

My talent is making the money whereas her talent is keeping the money. We make a great team! As it turned out, all the interested parties I listed above were much happier with our projections once we started basing them on averages of previous year’s sales. How do we do this?

It’s really quite simple to use this method for projecting future sales if you have been in the video production business at least 2 years. Write down what you sold in each month of year one and in each month of year two. Then, average the numbers for each month.

The sales average for each month is your projected sales number for the upcoming year. For instance, if you did $10,000 in November of 2008 and $8,000 in November of 2009, the average of those two numbers is $9,000. This is what you should project for sales to be in November 2010. This is a very conservative projection and your bankers and investors will appreciate that. Plus, this gives you a realistic view of what your business should and most likely will do in sales each month in the coming year.

To get a picture of what your entire year will look like, repeat the exercise above for each month. Your total sales for the year should equal the average of the previous two year’s sales. In theory, all you’ll have to do to meet these numbers is keep doing what you’ve always done. You can follow the same level of product and customer service; make the same or similar volume of repeat orders and new orders, and the assumption that there won’t be any major changes in the economy.

The question now is, “Are you happy with those numbers?” If so, great! You can continue to do what you love best and feel good about what the next year will bring. If not, you’ll need to look at how and where you can improve your video production business to increase your revenues. In this case, I’d suggest smaller, incremental changes each year instead of a complete overhaul. Complete overhauls take a lot of your time and will cost quite a bit of money.

Talk to your mentors about these numbers. I’m assuming you have several mentors you consult with on a regular basis. Ask for their help in analyzing your numbers and for ideas on how to improve them.

Finally, remember that the only number more important than how much you sell is the number that reflects how much you keep. You need to be very aggressive is guarding your expenses because even if your video production business only experiences single digit percentage growth each year, you’ll continue to get wealthier and wealthier.