How to calculate meaningful sales forecast for your business? The simple guide to the sales budget analysis of sales data to forecast…
Many business owners are often concerned about the sales forecasts, regarded as oracles or uncertain results of complex calculations are impossible to deal with.
In fact, the sales forecasting techniques are much simpler and more useful than it seems.
This is not guesswork nor to predict the future with absolute certainty. We are human beings and this outside our possibilities.
What we can do instead is…?
- Establish meaningful targets;
- Formulate hypotheses;
- Monitor the performance of our business;
- Monitor the market;
- Optimize the management.
Moreover by comparing the store to take full advantage of the cost of sales forecasts (also called sales forecast) to manage and to better plan your budget.
You can start developing your sales forecasts starting from some concrete and measurable data, it will also help review them regularly and then recalibrate if necessary based on the results. For example, by comparing the sales data of the past years.
Of course, in the case of a new product or a new project, there cannot be an analysis of historic sales data on which to build. In such cases, you should rely on the sales driver and the various interdependency, reviewing the results every month and correcting each time shooting.
You think that the implementation of the sales forecast is difficult. Try to lead a task without making predictions, and you’ll realize how even more difficult!
The sales forecasts also form the backbone of your business plan. The status and growth of a company is measured based on sales, and your sales forecast determines the standard for expenses, profits and investment. The moment you are able to predict the expenses, compare current results with what you had planned, and make the necessary corrections, you’re already (re) designing your business plan.
Your business does not include any single item. No problem: time, expertise, projects and any type of service can be a unit of measurement.
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Sales forecast: What numbers to use for the forecast of sales?
Calculation tables as you can see are very simple and clear, but the forecast may require more effort.
To start with, you need to have a clear view of the factors that can push sales: analyzes web traffic and conversions, monitors pipelines direct sales and potential clients, verify any seasonal cyclicality etc. … Compare the different results each month and adjusting your forecast accordingly. Your assumptions will from time to time more reliable.
The experience in the specific area helps.
The experience in a certain field is undoubtedly a great advantage, as it allows you to base this on the progress of industry sales, anticipating positive and negative trends, and recognize in advance potential opportunities or risks. Although no specific accounting knowledge or forecasting techniques, knowing how it works in your business, as it moves the competition, such as the varying market demands, what works at a promotional level, and so on, you can already make a solid case.
If you lack such a wealth of experience, look around. Tries to get the information that you need observing your sector of the market, attending seminars and meetings industry, following your pattern, for example, an entrepreneur or a company for you is a landmark, and studying its history and his experiences.
The analysis of past sales data allows you to better see the future
If your business already has a historic, using the previous results as guidelines. Enter the figures of last year in your prediction for next year, and focused on what should change from year to the next.
You have presented opportunities to increase sales. You have discovered new possibilities for marketing or advertising. Great, you can further expand your prediction.
If you have identified possible obstacles to your business (new competitors, market saturation, more competitive products …), then you put them in anticipation to cut some costs and expenses or to resize some of your goals.
Identifies the sales drivers
The sales driver will be invaluable to your predictions, as long as you know how to identify them correctly.
You have to bring to market a new app. Search the App-store apps similar to yours, and see how many downloads they got. Make a search on the web to see how and how much the visibility of certain apps that have had reviews on blogs and industry sites may have increased the popularity. Use this data and apply them to your specific case.
If you sell a product and, for example, in your site you’ve always made available to the information material for download, verify the relationship between downloading and sales of the product and consequently assumed potential growth of sales made by a new marketing activities.
The important thing is not to think of sales forecasts as something isolated, but always keep them related to your business plan and accordingly to your marketing plan. If over time your business plan should be modified or changes, you must also necessarily change your sales forecasts.
The moment controls sales forecast and revise each month in the light of the results, you are already managing your business plan. You cannot analyze the results regardless of what happened, why it happened, and you have no idea how to act accordingly.
Remember that making a forecast of sales is not to predict the future but to test your assumptions and to manage any changes when the status of your sales does not meet your expectations. Applying the necessary corrections during construction, you can calibrate your prediction and strengthen your business by making choices as more aware.