All those sophisticated techniques depend on data from the past. We know that from the start. What you want is to understand the sales drivers and interdependencies, to connect the dots, so that as you review plan vs.
Fact-based assumptions, historical data analysis and an analysis of the potential impact economic, regulatory and market changes can have on a small-business are essential forecasting components.
Because sales forecasts significantly affect both operational and financial decisions, every small-business owner should know how to develop sales forecasts extending out for up to three to five years.
Overly optimistic predictions or wishful thinking, especially common with a new small-business owner making his first long-term sales forecast, can be a critical mistake.
In addition, forecasts should never contradict fact-based forecasting assumptions. Data Requirements Start by gathering the data necessary for creating accurate long-term sales forecasts. For an existing small-business, this starts with sales data for each product or service line going back a minimum of three years.
In addition to historical data, gather consumer market data, economic forecasts and information relating, for example, to pending additions or modifications to regulatory legislation that could potentially impact sales.
This is one of the most important aspects of long-term forecasting, because it establishes a base for sales predictions. In making assumptions, consider, for example, whether sales are seasonal or whether they remain fairly constant, whether sales data reflects sales growth or decline trending, and possible reasons for sales trends.
An assumption relating to sales barriers might determine that because the business will be relocating to a more desirable location within the next 24 months, sales will increase by 30 percent once the move is complete.
Creating the Forecast Start by setting long-term sales objectives describing what the business intends to focus on in the next three to five years and what it intends to change.
Identify the steps involved in achieving each objective and then begin breaking the steps into short- and mid-term goals.
For example, a long-term forecast objective such as increasing the sale of a product line by 35 percent that also considers a relocation assumption might set an increase of 10 percent over the next 24 months and the remaining 25 percent once the business moves.
It can also be helpful to create contingency forecasts using what-if, or best- and worst-case scenarios. A what-if scenario could be used, for example, to modify the forecast if the business moves in the next 12 rather than 24 months or delays the move for an additional year.Jul 02, · I believe that even if you do nothing else, by the time you use a sales forecast and review plan versus actual results every month, you are already managing with a business plan.
You can’t review actual results without looking at what happened, why, and what to do next. Do you have questions on how to forecast sales for your business?/5(64).
Learn the importance of sales forecasting and how to better manage your sales pipeline and business goals with free, downloadable templates for Excel and Word.
Find sales email templates, a sales funnel, an action plan, and more.
Jul 02, · For unit sales, billable hours and revenue only lines of sales, start by forecasting units month by month for the first year, as shown here below for the thermos-for-subscribers line of sales in the Soup There It Is plan/5(64).
Sample Sales Forecast for a Restaurant. By Tim Berry.
5 Comments. Magda is developing a lean plan for a café she wants to open in an office park. She wants a small locale, just six tables of four. She wants to serve coffee and lunches. Although her capacity looks like about $20, of sales per month, she knows it will take a while to. Business forecasting requires time, research and thought.
Some business owners might be tempted to skip this step and instead use the time to sell or produce the product or service. Your sales forecast in a business plan should show sales by month for the next 12 months--at least--and then by year for the following two to five years.
Three years, total, is generally enough.