Forecasting Sales

Every business needs to forecast sales and then use the information to budget effectively. You can prepare a forecast based on your market research. Once you are in business, then existing sales can give a good indication of what you expect in the following period. You need to define your customers as accurately as you can – better still, name them. Look at the total size of the market; look at what your competitors are doing; read market research reports; look at what potential customers are buying; and undertake primary research. All of this should help you to set a forecast. For most businesses, the forecast is also the target, so put a sales graph on the wall and mark your target on it to give an instant picture of how sales are doing.

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Preparing a sales forecast for a new business can be tricky, especially as you will not have previous sales figures to go by. There are, however, a number of tools available online that can guide you through the forecasting process including Practical Business Forecasting, by Dr Michael K Evans (www.blackwellpublishing.com/evans/content.htm#I). The first two chapters of this e-book are available free to download and examine the practical tools required for business forecasting.