by Wahidabi Sulaiman

Created on: September 28, 2009

A sales forecast is the backbone of every business. Even if you are starting out and have no historical data to help you in setting your sales forecast, it is still vital to have an estimated sales forecast. In order for businesses to expand and to find new clients or customer base, you will need a sales forecast to help you move in the right direction. Be it prospecting new business or just keeping track of your business, a good sales forecast can help you in making major decisions.

You need not be a certified professional sales forecaster or seasoned business personnel to come up with a sales forecast. Any one can do up a sales forecast if you are driven by passion to make your business work. You need the right mindset, the strong passion and the ability to do research on your area of concern.

Refer to historical data

I say this to those who have one available at hand. Historical data is an indication of how you business market has been emerging and would likely give you the indication of how the market will move in the future. Discretion is advised because the economical factors never remain the same and hence, your forecast should take the current and expected economical condition into consideration. For those who are starting out new, you could rely on the other business's forecast with similar products to get a gauge.

Break down your sales into units.

Units could be in the sense of each particular unit of goods sold or no. of hours spent or even the number of calls attended. Depending on the nature of business, you have to decide what one unit of sale is. Based on this should be your sales projection. It is vital to identify the correct unit of sale representation as your entire forecast would be based on this.

If you have more than one product unit to forecast, you will have to either count each item separately. If the product base is huge such as those in supermarkets, for forecasting purposes, you can group similar items as a unit and measure accordingly.

Remember that forecasts are supposed to be estimates and not exact. Therefore, you have to make the judgment call such that the forecast can be used to the advantage of your business goals.

Forecast for different time period

When doing your sales forecast you should bear in mind which time frame you are forecasting for. An effective sales forecast takes 2 different time frames into consideration.

One is short term and one is long term. Short term projection would refer to approximately 12 months of sales projection and this can be fairly estimated with the current economic factors. This data should be monitored closely to figure out if your projection missed out on any crucial elements. This can be done progressively as your business progress month by month.

Long term projection should extend to either 3 years of projection or 5 years of projection. When projecting sales for long term, different factors need to be considered and these would be different from the short term forecasting analysis used. You must ensure that any changes that are made to your short term projection should be reflected in your long term sales projection as well in order to be more accurate.

Revise

Sales forecasts are indication and a guide to help you set your business moving in the direction you intend it to be. Therefore, you will have to constantly revise and make necessary changes to it as required in order for you to make full use of it. Always remember that a sales forecast is as good as how you make it to be.

Learn more about this author, Wahidabi Sulaiman.
Click here to send this author comments or questions.