Financial statements

How do you figure out the sales a public company did?

Alison Lewis CEO/Creative Director

January 22nd, 2015

We have potential customers. They sell particular items and we want to be a component manufacturer in these items. 

For our business plan, we need to figure out the number of units we can sell in the world. To do this, we need to know how many items our potential customers sell a year. 

Here is an example with something familiar: Company X sells 1M button down shirts.  We sell buttons. How many buttons can we sell a year to company X? 

The challenge I am having is how do I figure out how many of item X a company sold last year? I know their annual gross income per geographical location, but not per item type. I also know the average cost per item. I need to fill in the blanks.

Are there any FREE resources for this sort of thing? Any hints or tricks that will help me out? 

Rob G

January 23rd, 2015

Their (your prospects') own sales people should know this info.  contact a sales manager or VP and tell them what you need and why.  They know what sales is like and will typically sympathize with your situation.  I have found sales people to be quite helpful when i am trying to sell into their company as long as they are confident that you are not a competitor.    

Juan Posada Technology executive, startup advisor and entrepreneur. Also a garage tinkerer and maker movement supporter.

January 23rd, 2015

Another suggestion, if company X has indirect distribution and you have other industry contacts (I'm assuming you do) - ask someone who sells their product? Or maybe ask another company who may be in their supply chain but with which you would not compete?


Neil Weintraut Co-Founder at Rendevu

January 23rd, 2015

Alison,

In a prior life so-to-speak, I was a public securities analyst for 9 years. The information that you think that you need is indeed rarely available in direct form, but reasonable proxies can be derived from the information that typically is available. 

There are special circumstances such as regulated industries or small-volume industries where the unit volumes must be explicitly disclosed.

The most likely source of "direct" numbers (i.e. unit volumes) would be reports by industry analyst (i.e. the type that sells their services and data to companies, such as say, the Gartner group). To be clear, they would have done the "hard-work" for you, but the numbers that they have are most likely derived. 

With that said, getting unit-volume numbers is pretty much what you would expect. An analytical drill of breaking down gross revenues (and COGS) into the components, making reasonable assumptions for unit cost, and dividing. There are some secondary tricks that can be used, such as triangulating differential data between periods (e.g. quarter to quarter), or simply tearing into press releases where often such numbers are citied or "between the lines", or promotional information from competitors (e.g. where they say that they're #2 at such and such a volume, wherein obviously that implies that the gross volume is at least twice that, and so on).

Having said that, the calibre / significance of these derived numbers are typically more than sufficient for business purposes that I envision that you need. For example, I expect and would hope that being off by a factor of 2, doesn't make or break your business or business case (if it does, then there's bigger problems). This includes planning inventory and facilities. Similarly, a key part of any new business is market-growth - unit volume that literally doesn't exist now, but is actually spurred by the startup itself. Even winging-it is often sufficient... there's x-billion of people that would buy this shirt at this price level; 10% penetration is this volume and we expect that our product will expand the market from x-billion to y-billion. I'm responding abstractly because that's all I've got to work with from you question. My point being that unless there's some business issue that's very decisive on knowing the hard gross unit-volumes, and as one who has suffered extracting and using such details, I expect that some simple anecdotally inferred numbers would be sufficient.

Regards

Michael Brill Technology startup exec focused on AI-driven products

January 23rd, 2015

If you're engaged with a handful then I agree with Tim... Ask them. There's probably a non-revenue proxy that they'd be willing to provide... "I'm looking at what we can do on pricing, about how many buttons do u buy today?" People like talking about themselves and what they do so sometimes asking is the best way!

Rob G

January 27th, 2015

Public companies are required to file 10-ks and annual reports, but they are not required and frequently do not publish data about what products they sell and how many.  

Donald Katz Counsel and Advisor for Closely Held Businesses

January 24th, 2015

If it's a public company, look at their 10-K filing / Annual Report, which could/should give data to back into the number if not plainly stated therein. 

Donald Katz Counsel and Advisor for Closely Held Businesses

January 28th, 2015

Annual reports are for investors.  They pretty much always discuss the products the company sells, how much at what margin etc.  One with adequate finance/accounting skills can usually extrapolate what they need from those reports using the appropriate analysis.  At the very least, you should be able to prove out the third party data you obtained and analyzed.  If it is not within an acceptable margin of error, one (or both) may not be accurate data sources or appropriate methods. 

You might also consider calling the investor relation department.  They too might be eager to help an investor / potential investor interested in the company's markets and market share.  If it's public, they must share with everyone, not just a lucky few investors.  Good luck. 



Neil Weintraut Co-Founder at Rendevu

January 23rd, 2015

Alison,
My sense is that there's some subtleties of your particular need or situation that don't come out in this type of forum, that would either point to a specific angle of approach unique to your situation, or reframe how to move the business forward entirely. You're welcome to contact me directly.

Michael Brill Technology startup exec focused on AI-driven products

January 23rd, 2015

Definitely a question you want to ask in person/phone vs. email.

Alison Lewis CEO/Creative Director

January 23rd, 2015

Thanks Michael! I did ask. They have not responded as of yet. Thank you...