Calculating Cash Flow Projections

[RedStix]

Hi there. I'm hoping you can help. A friend of mine is thinking about starting a small online retail business. She has not yet ventured out but is in the process of putting together a business plan to see if its viable as its something she feels passionately about and she really wants it to work.

One part of the business plan she is having a lot of difficulty with is cash flow projections. She really has no way of knowing how much traffic she will get to her site and therefore how many products she is going to sell.

Another source of income would be affiliates and (maybe) google ads.

Anyone have any idea of how she could possibly project her cash flow on such a project?

Thanks in advance everyone
GED

 

[ButtermilkJa]

This is always going to be difficult to calculate. First you have to try to guess how many visitors the site will get and then how many will purchase. Also what type of product, as each will have a different profit margin. Not an easy thing to do. I suppose the best thing to do is for her to do is make an educated guess, or perhaps work out how many sales she needs to break even and base the business plan on those figures.

Bear in mind that Google ads would not be a reliable source of income. Any returns made would most likely be spent on her own Google ads.

 

[eoinhealy]

The only way you can really know is to do a test run. Make the website live. Get a Google Adwords account running. You dont have to spend a fortune just put a few euros into the adwords account and leave it run until the money runs out.

You can get a counter for you website that will record everthing that hapens on you site..... how many people viewed you site, where thos people are from, how long they stayed looking at you website, what pages of you site they viewd, and a whole lot more like what search engine brought them to you site. You can use the figures from the stats to work out your cash flow projection, and maybe sell a few things at the same time.

You can download these counters by doing a search in Google for website counters.

I only know all this because I had to do it myself, I set upa decking business a few months ago, and most of my work came from my web site which I used Googe Adwords.

Hope this helps and good luck in the new business venture.


Eoin
(The Landscaper)