Many business leaders often struggle to create a sales forecast which provides an accurate portrayal of reality, however, accurate sales forecasts should be an achievable goal for any type of business. In addition, there can be more important core goals to a company such as growth and profit. Occasionally, a modest improvement to a sales forecast’s accuracy can help improve a gross profit margin.
Business owners should never be content with a sales forecasting strategy which under-delivers, knowing that there's potential for higher profits.
What is Sales Forecasting?
Sales forecasting is the process of estimating future sales to allow companies to make business decisions and predict both short-term and long-term performance. Sales forecasts are often based on past sales data, economic trends and industry comparisons.
Sales forecasting is much easier for well-established companies that are able to predict future sales due to having years of previous business data. Newer companies may have to base their information on market research to be able to forecast their business.
Forecasting also gives businesses an insight into how they should manage their cash flow, resources and their workforce. Accurate sales data is important to businesses that are looking to acquire investment capital.
Involve Key Stakeholders
Collaboration is a key element often missed in common forecasting processes that are employed by the majority of SMEs. A well-executed forecast analyses data from many functions of the company in order to make an informed statement about future projections.
When forecasting, your efforts will most likely include numerous voices and multiple areas of expertise in different industries. By doing so, you’ll have representatives who understand different sets of data at an experienced level and they will be able to contribute observations to analysis reports that a sales professional could potentially miss.
Use Past Experiences To Back Up Projections
When creating an accurate forecast report, maintaining a balance is a requirement. You will need to use both past results and new evidence to inform future decisions. Analysing past performance data in relation to the present is the foundation of an accurate sales forecast, but it is also important to use real-time data. Your forecast will most likely be outdated each time you have a review, so you should be prepared to adapt at a moment’s notice.
Create Forecasting Reports On A Regular And Specific Basis
By scheduling regular forecasting sessions, you can avoid information overload paralysis. Set time aside for the forecasting process and any related activities. Forecasting requires full-attention as it is possible to become too consuming when analysing how new data affects your projection. This can turn useful forecast reports into a confusion of numbers with no clear through-line.
It's simple and easy to make effective business decisions, motivate staff and maximise marketing and sales efforts with endless performance data. Set targets, make improvements and watch your business succeed with complete visibility and control of your strategy.