Sales forecasting refers to a process of approximating sales revenues based on prior years’ sales data and the examination of market surveys and trends. A sales forecast, also known as a sales budget, forms an integral part of a business plan as sales revenues affect almost every area of a company. Sales forecasting can be set to happen every month, three months, six months or twelve months. A sale budgeting process is so crucial that it helps businesses manage their stock and cash flow and prepare for future growth. With excellent sales forecasting, businesses can have great information to use in their cycles of decision making.
A sales budgeting procedure entails the following:
After finishing the above three steps, do the following:
A lot of things can affect your sales and these should form an important part of the forecasting process. These are:
Economic changes – When the economy is slowing down, the market for what you sell could decline as well. But when the economy is blossoming, you business is likely to grow.
Changes within your industry – Your sales budgets are likely to be affected by factors within your sector. These include intense competition, shrinkage of the market for your goods and services and legal restrictions.
What you sell – If launching a new product or service, your sales may increase. However, sales of your old products or services may decline due to better items entering the market. Your production cost may rise due to a high cost of raw materials and affect your sales projections.
Marketing effort – There is no business that grows without intense marketing to reach people. As you create your sales budget, consider how your advertising efforts and plans may affect your end result. Will creating a new web store, marketing on social media or boosting your email marketing increase your sales. Will your total sales surpass your total advertising cost?
It is extremely important to speculate and envisage how each of the above-mentioned factors could change your sales forecasting.
Experts are of the view that a sale budget for an existing business is easier to do that when one is dealing with a start up company. This is mainly because an old business has past records and a lot of economic and industry-based knowledge to rely on. Besides, an established company has made some loyal repeat customers per product it sells. This simplifies the task of speculating future sales. When dealing with a new business, however, a sales budgeting process can be extremely intricate. There are no past sales records, repeat customers or market surveys and data to depend on. So you have to do the hardest work of researching your target audience, business location and level of competition.
The easiest way to forecast with precision is to consult the best sales forecast software sold online. To learn more about this, consult anaplan.com demos today.…