The business world is continually evolving, making it vital for us to constantly assess and to forecast sales progress and hurdles. Forecasting allows business owners to compare the current state of their business to their overall budget. A sales forecast can be difficult to estimate, but taking into account market trends and economic conditions will help ensure that your business is on the right track.
Forecasts are usually performed monthly, depending on the needs of your business, and can consist of components such as start-up costs, sales, expenses, cost of goods and cashflow. Check out online sources for further information on each component and user-friendly templates to help guide you.
It is important to research industry trends, economic conditions, and to understand your customer’s buying habits. When completing a sales forecast as an existing business look over your sales history, otherwise if you are a start-up then have a look at market research for data on sales. Remember when doing your sales forecast to ask questions like:
- How many new customers have you gained versus lost?
- In what months did you lose the most customers?
- How do your sales vary from month to month, season to season?
- Are there any special events / times of the year that affect sales or costs more than others (such as Christmas, Easter, Mothers Day, Fathers Day or school holidays)?
- How many sales do you predict to achieve each month per customer group?
The more research you do and the more accurate your data, then the more exact your predictions from your sales forecast will be. Doing this is essential to understanding the direction your business is taking, to help avoid road blocks and realize the variance from your budget. Comparing your sales forecast to your sales budget will point out the path you need to take to make sure your business meets its budget goals.
If you need advice how to forecast for your business then you can contact Small Business Smart Business and book a session with a mentor.