At this stage of preparing your marketing plan, you need to put on your accounting and project management hats. (Perhaps neither hat fits you very well, but try to bear them for a day or two.)

You need these hats to:

• Estimate future sales, in units and dollars, for each product in your plan.
• Justify these estimates and, if they’re hard to justify, create worst-case versions.
• Draw a time-line showing when your program incurs costs and performs program activities. (Doing so helps with the preceding section, and also gets you prepared for the unpleasant task of designing a monthly marketing budget.)
• Write a monthly marketing budget that lists all the estimated costs of your programs for each month of the coming year and breaks down sales by product or territory and by month.

If you’re part of a start-up or small business, I highly recommend doing all your projections on a cash basis. In other words, put the payment for your year’s supply of brochures in the month in which the printer wants the money, instead of allocating that cost across 12 months. Also, factor in the wait time for collecting your sales revenues. If collections take 30 days, show money coming in during December from November’s sales, and don’t count any December sales for this year’s plan. A cash basis may upset accountants, who like to do things on an accrual basis — see Accounting For Dummies, 4th Edition, by John A. Tracy (Wiley) if you don’t know what that means — but cash-based accounting keeps small businesses alive. You want to have a positive cash balance (or at least break even) on the bottom line during every month of your plan.

If your cash-based projection shows a loss some months, fiddle with the plan to eliminate that loss (or arrange to borrow money to cover the gap).

Sometimes a careful cash-flow analysis of a plan leads to changes in underlying strategy. One business-to-business marketer I worked with adopted the goal of getting more customers to pay with credit cards rather than invoices as the primary marketing objective. The company’s business customers cooperated, and average collection time shortened from 45 days to less than 10, greatly improving the business’s cash flow as well as its spending power and profitability.

Several helpful techniques are available for projecting sales, such as buildup forecasts, indicator forecasts, multiple-scenario forecasts, and time-period forecasts. Choose the most appropriate technique for your business based on the reviews in the following sections. If you’re feeling nervous, just use the technique that gives you the most conservative projection. Here’s a common way to play it safe: Use several of the following techniques and average their results.