Determining the economic feasibility of your new business is an important task for anyone thinking about starting a small business. Estimating future sales can be approached from several perspectives.  Some business owners distribute surveys to their potential customers. The survey asks customers to state how much of the product they would purchase and how much they would be willing to pay. The information gathered through this method is tallied and used to estimate future sales. However, these surveys can be flawed, especially when friends and acquaintances are surveyed; they are more likely to respond positively, which inflates the potential sales figure. If using this method, remember to be very conservative.  Another great source of information is your industry trade association. The Encyclopedia of Associations, available in many college and university libraries, is an excellent resource for identifying the names and contact information for trade associations and much more. For example, if you wanted to start a bed and breakfast operation, you could contact the American Bed and Breakfast Association for information on occupancy rates and other factors impacting the industry that may be helpful in estimating sales revenue. You could also contact your state office of tourism. Getting acquainted with your trade association can be very useful in locating critical information about future trends or opportunities in your industry. Another common method of estimating sales is by estimating the number of customers in your target market and assigning an annual expenditure to those you expect to attract. Of course, this method requires you to have good data on the characteristics shared by your most likely customers and their annual expenditure. In addition, you will need to consider potential and existing competition and adjust your sales estimates accordingly. One successful approach used by many potential business owners is to identify a similar business located in an area with characteristics similar to the location in which you plan to open the business. Existing business owners are an excellent source of reliable information, and they are often willing to discuss a wide range of issues related to their business if the new business is not perceived as direct competition. Information available from existing business owners often includes potential sales, expenses, suppliers, customer profiles, unexpected challenges, and emerging opportunities. For further information, see other publications on conducting market research.

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