Forecast and plan your sales
A sales forecast is an essential tool for managing a business of any size. It is a month-by-month forecast of the level of sales you expect to achieve. Most businesses draw up a sales forecast once a year and include it in their business plan.
A well-constructed sales plan, combined with accurate sales forecasting, can allow you to spend more time developing your business rather than responding to day-to-day developments in sales and marketing.
A basis for sales forecasts
Sales forecasts enable you to manage your business more effectively. Ask yourfelf the following before you begin:
• How many new customers do you gain each year?
• How many customers do you lose each year?
• What is the average level of sales you make to each customer?
• Are there particular months where you acquire or lose more customers than usual?
New businesses have to make assumptions based on good judgement and the findings from your market research.
Depending on your type of business, you may want to specify the volume of sales in the forecast. By knowing the volume, you can plan the necessary resources in areas such as production, storage and transport.
Every year is different so you need to list any changing circumstances that could significantly affect your sales. These factors - known as the sales forecast assumptions - form the basis of your forecast.
If possible, put a figure against the change - see examples below. Also, give the reasoning behind each figure, so that other people can comment on whether it's realistic.
Examples of assumptions:
• You will double your sales force from three people to six people, halfway through the year.
• You will spend 50 per cent less on advertising, which will reduce the number of enquiries from potential customers.
• The market you sell into will grow by 2 per cent....