Developing a sales forecast is an essential part of any business. Understanding how well a business is going to do in a given period of time allows business owners to get a better idea of ​​which areas of the business need the most resources.

For example, if it is going to be an extremely busy period, owners may consider hiring more staff in production or during less busy periods, then they can invest their time in product development or marketing.

It may seem impossible for some business owners to attempt to develop a sales forecast, however without one it can be very difficult for managers and business owners to predict what resources will be needed and where. Here are some tips on how to develop a forecast for new and established businesses.

Use historical data and past sales figures

If you operate an established sales business, the best data you have access to to run a sales forecast is historical data. The sales figures for the last few years will give you a good indication of how the business will develop during a given quarter.

The historical data should give you an indication of how many new customers you are likely to acquire and how many they will leave. This, in turn, will influence the amount of sales and marketing activities you will do to win new business.

You should seek to break down historical data into customers and product lines, to understand which customers bought which products and how many of each were sold. By focusing on more profitable product lines, this will allow you to generate more income with the same amount of effort.

Sales forecast for new businesses

If you are starting a new business, forecasting sales can be a bit more difficult as you don’t have access to historical data. However, you can analyze the following to try and estimate the sales figures for a given period:

• Competitor sales data analysis (if available)

• Conduct market research

• Seasonal trends in the market in which it operates

All of this data will give you a good indication of the likely sales figures you can achieve in a quarter. It is important to make conservative estimates of business growth, as overestimating it could cost you more in the future.

Be consistent with the forecasting method you use

Finally, it is important that once you develop a method for forecasting sales that you be consistent in how you forecast in the future. If you change the method each time, you are likely to end up with unreliable data. Using a consistent model will help you cope with demand and allow you to take action when things go wrong.

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