Performing a sales forecast is necessary to ensure the well-being of your company. Managing a small or mid-sized company requires performing these calculations on the short, medium and long term.
A successful sales forecast is designed to stress test the sustainability of your company, as it regularly identifies all the required planning activities, materials, human capital and return on investment available to and by the company.
The goal of your forecast is to maximize customer profitability. It is necessary to look at three types of scenarios:
Optimistic: There is a positive growth compared to the previous year.
Pessimistic: Identifying a negative growth in sales.
Conservative or zero growth: Having same sales as last year.
By conducting a sales forecast your company will benefit by:
There are qualitative and quantitative forecasts.
Qualitative forecasts are based on indexes such as level of customer satisfaction or estimation. They help a company reshape its sales operations to improve efficiency and brand awareness which will then lead to increased volumes.
Quantitative ones are refers to a numerical forecast that predicts sales values that the company hopes to achieve in the next year.
There are a number of steps you can take to improve your sales forecast, such as updating the forecasts based on initial sales data, analysing the accuracy of your forecasts, identifying errors, providing a solution, testing the acceptance of new products before and after launch and using different methods of forecasting approaches, that will allow you understand different assumptions from using different techniques.
We recommend you to follow next steps to make a sales forecast 100% effective:
Ensure you analyse sales thorough by recent years so you can make an accurate estimate of future sales.
If there is someone in the company is the sales team who knows the market well and your customer needs. Use that expertise – they have seen it all before.
The market is governed by a number of trends that have to be observed, analysed and extrapolated in your business in order to make future calculations.
Identify trends that mark your best customers. From their tastes and historical needs you should be able to calculate the sales forecast for each category of different types of customers, and identify how to make all your customers get to that level.
If the life cycle of some products is closely linked to the devolution of the sector use that relationship to see that the sales forecast is going to serve you as a reference for your own forecast.
Ensure that when you introduce your new products to the market, your sales forecast identify the market share that you expect to achieve.
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