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2020 Revenue Forecast Calculator: What's Ahead For Your Business?

Last January, I was looking forward to a new year and a new decade. Businesses were booming, industries were expanding… there were so many possibilities. Of course, what we ended up with was a global pandemic, wildfires, impeachment, sensational blind dating shows, the cancelation and revival of sports, the failure of Quibi, the rise (and fall?) of TikTok in the United States, and so much more

It’s been a devastating year for businesses, plain and simple. Hundreds of thousands of businesses have shut down permanently. With brick-and-mortar stores closed, businesses that remained afloat saw customers shift to online shopping. This presents new opportunities—and new problems. Wholesale accounts have experienced significant supply chain disruption, forcing changes in buying behavior. The impact of the pandemic has not been felt equally across industries. Most importantly, consumers’ needs have changed, which means businesses must change with them.

Since March, 55% of businesses that closed on Yelp have closed for good

"Some 26,119 shopping and retail businesses are also still closed, of which roughly half (or 12,454) are permanent — which is up 29% from what Yelp reported last month."

With all this turbulence, revenue forecasting matters more than ever. To bring much-needed clarity to an uncertain future, I created this simple tool for Part and Sum’s clients. Start by specifying your level of optimism or pessimism. Next, input your ecommerce revenues from the past six quarters. The calculator will determine the YoY change over the past two quarters, factor in your outlook, and predict your Q3 and Q4 ecomm revenues using a weighted average of your YoY revenue change.

If applicable, repeat the calculations with retail and wholesale revenues. It’s important to know what percentage of total revenue is coming through each sales channel (ecommerce, retail, and wholesale), and how that compares to your breakout for 2019. Has total revenue increased or decreased YoY? Which sales channels are seeing growth or contraction? Does the contraction in certain channels outweigh the growth in other channels? 

What’s Your Outlook?

A recent Deloitte report provides general outlooks for different industries. Use this list as a starting point, but remember, you know your business best.

Very Optimistic: Pharmacies, Groceries, Discount stores

Optimistic: Tech and telecom, Digital entertainment

Pessimistic: Consumer wholesale, Financial institutions and services

Very Pessimistic: Travel, hospitality, and wellness, Apparel and luxury goods, Oil, gas, chemicals, and special materials, Live entertainment

Give it a try!

Drop in your gross revenue from the last 6 quarters, then play with sentiment to see different predictions for 2020.

Sometimes Adapting Requires Sweatpants

Once you have a clear understanding of how your business is changing, you can decide how to adapt. Keep in mind that no two businesses are exactly alike. Some businesses have navigated this crisis better than others for a variety of reasons, including updated messaging, updated prices, and updated product offerings.

As an example: Using our calculator, we discovered that one Part and Sum client, a luxury clothing company, will offset declines in retail and wholesale revenues with ecommerce growth at the end of 2020. Overall, the client is likely to come close to breaking even YoY. This seems counterintuitive, given their industry, but this client had decided to launch a line of sweaters and sweatpants just as stores were beginning to close down. With a relevant product and revamped messaging about life at home, they were able to maintain a high volume of sales through their online store in the first half of the year. Now, the company’s leadership can plan for the future with a better understanding of how their revenue is shifting.

Get Insights, Then Get To Work

You can take the same approach. After running your numbers, experiment with different outlooks and scenarios in the calculator. Then, use the results to facilitate conversations about what is and is not working for your business during this period. If your predictions are positive, consider the factors that might be contributing to that outcome. Are certain products performing better than others? If so, what is it about those products that makes them successful in this strange time? What does that tell you about the rest of your products?

If the outlook isn’t so rosy, there’s still time to implement strategies that will make a difference in the bottom line. Get in touch if you’d like some help with that—we’re excited to learn more about your unique business challenges and work together to solve them.