SALES FORECAST FOR A STARTUP
Estimating sales under high levels of uncertainty
This general model admits for multi-dimensional variability on launching dates, volumes and staged growth rates for any type of company, but especially designed for high-tech start-ups where there are high levels of uncertainty.
A certain startup venture on hi-tech electronics is planning to launch five products during the following four years exploiting a newly developed and patented technology.
Assume that the company has already gone through its major research and development (R&D) phase when incomes from inputs are negative and where the prospects of failure are high.
The company has gathered estimates with respect to the first ascent phase for its product line. The ascent phase is defined as the phase when out-of-pocket costs have been recovered and the technology begins to gather strength by going beyond some point.
Additionally, the company has estimated some numbers for its maturity phase when gain is high and stable, the region, going into saturation. We will not estimate sales forecasts going unto the decline (or decay phase), after a certain point of reducing fortunes and utility of the technology.
Also, at first, a strong assumption is made with respect to competition. No potential competition effect will be added to the model. Even though this may be a naïve approach at this point, we will discard any competition effects in order to simplify the explanation of this forecasting methodology.