DEVELOPMENT OF A SALES FORECASTING MODEL FOR SMALL BUSINESSES WITHIN A SERVICE INDUSTRY

Scope and Method of Study. The purpose was to develop a sales forecasting model for small businesses within a selected service industry, drycleaning and laundering. The primary objectives were to identify and quantify the marketing and other variables to be used in developing the sales forecasting model; to develop a sales forecasting model; and to assess the model(s) and formulate guidelines for small businesses in the selected service industry.;Findings and Conclusions. The 'best' model selected for the sample business included the independent variables of price, the number of outlets and dummy variables used to reflect seasonal variation in sales. The model performed efficiently with an R('2) of .9535 and a .0001 level of significance. The model predicted short term sales ranging within .48 to 9.58 of the actual sales figures.;Assessment of four models using fourteen test businesses indicated that three were efficient for small businesses. Guidelines were included for utilization of the sales forecasting models by similar service businesses.;Fourteen independent variables were identified and four models were developed using the sample business data for the years 1980, 1981 and 1982 to predict monthly sales for 1983. Multiple regression was selected as the sales forecasting method. Performance of the four models was assessed using fourteen similar businesses.