Sales Forecasting Methods

Sales forecasting methods are used in every company. Even if the company does not sell products, they still need to determine a predicted demand for their services or income. While sales forecasting can be complex, many methods can be implemented with ease. The main issue that a company is faced with is ensuring the data used for sales forecasting is accurate.

What is Sales Forecasting?

Sales forecasting is a method of predicting the future well being or performance of a business based upon history. A business owner can use sales forecasting to prepare for future issues such as when trends change, sales increase, or even when a recession may hit. These are all events that can threaten the survival of a business. Sales forecasting consists of many methods to indicate the future long and short term success for a business. However, the basis of forecasting is reviewing the sales numbers for each product or service on a monthly basis.

Maintain Records of Sales

The most essential part of sales forecasting is maintaining a consistent record of sales for each item or service that is rendered in a business. This can be done using a manual system of pen and paper. Another alternative would be to maintain these records on some type of spreadsheet. A business owner can complete a yearly sales forecast by taking the previous year’s sales and multiplying this number by the rate of inflation. Then, add this number to the previous year’s annual sales. This will give a forecast of the next year’s sales. However, there are easier methods of forecasting.

Use Accounting Programs

Another great method for sales forecasting is using an accounting program such as QuickBooks Premier or Quicken Small Business. These systems only require that business owners enter accurate data for sales and financial transactions into the programs. Then, the accounting system can automatically generate sales forecasts for the coming year on a month-by-month basis. This is by far one of the easiest and most accurate ways to complete sales forecasting for a business quickly, and there is no need to do complex calculations because the system does it for the business owner.

Using Web Based Tools

Web based forecasting tools are also becoming increasingly popular. There is a website called Salesforce that provides businesses with in depth sales forecasting. This system not only takes into account the financial numbers and sales, but also tracks shipment times and the satisfaction of customers. The system can help a business see where issues are occurring that prevent sales or cause them to lapse. The price for using this type of sales forecasting tool ranges based on the size of the business from $5 to $250 per month.

Implementing sales forecasting into a business is one of the most important things entrepreneurs can do for their business. Sales forecasting is an effective way for businesses to ensure spending and expansion is in line with sales figures. Using computer based or web based programs can provide an even deeper analysis of sales and give business owners an action plan that will allow a boost in sales.