240 ENTREPRENEURSHIP
monitor success. If an affiliate program is not working, they can replace it with
something else.^39- Blogs are Web logs and blogging is a national passion. Can bloggers make money
at it? Jason Calcacanis founded Weblogs, Inc., a network of blog sites that was pur-
chased by AOL in 2005. He suggests that the primary way to make money is to
“curate” blogs by grouping them and then marketing the group. An entrepreneur
can, of course, go solo, but the economics are not attractive. Giving ad space to a
company like Google AdSense can generate $3-10 per 1000 views. A blogger who
generates a heroic 500,000 pages a month can make between $1,500 and $5,000
per month and might want to keep the day job. B2B is more lucrative because rev-
enue per 1000 page views is higher, but massive volume is still the only way to make
money.^40 - TV advertisers have always purchased time on shows based on when they are aired
and who the audience is, and now Web sites are following suit. Ads can be bought
and sold according to the time they will appear on the site. Prices vary depending
on peak viewing hours and viewer demographics. If the entrepreneur sells globally,
rates may be lower when the domestic market is sleeping and the international tar-
get is awake.^41
SALES FORECASTING
Sales forecasting is the intersection of marketing research and marketing effort. It is the
first step in determining whether a new venture will be profitable. The sales forecast is
the logical last stage of the marketing plan, and analysis is the first stage of financial
analysis.
Two broad techniques are used to forecast sales: data-based methods and judgmental
methods. Examples of data-based methods are correlation analysis, multiple regression,
time-series analysis, and the use of econometric models. Examples of judgmental meth-
ods are: sales force estimates, executive consensus, historical analogies, and “intention-
to-buy” surveys. Most of these methods are appropriate for large firms in well-estab-
lished markets. The best predictor of next year’s sales is almost always last year’s sales,
but just knowing this does not help the new venture.Market Potential/Sales Requirements (MP/SR)
This method^42 combines elements of both judgmental and data-based techniques and
provides important insights into the financial consequences of the forecast.
This approach uses two different perspectives for the venture—likely sales and needed
sales. The market-potential technique is a “top-down” method that looks at the big
picture. The sales-requirements technique is a “bottom-up” exercise that starts with
the firm’s costs and expenses and then determines the sales needed for profitability.
These techniques can be conducted simultaneously. Figure 6.4 diagrams the two tech-
niques.
In the figure, market potential appears on the left side. This is the total number of
people, demand transactions, or dollar volume in the product/service category. Trade