Sales Forecast: 5 reasons you need to write one today

' Let's have a look at your sales forecast ' is one question that seems to have my business coaching clients squirming in their seats, and researching this blog, seems to confirm that small business owners don't write sales forecasts; whether it's fear of numbers, not knowing where to start or simply not seeing the value for their business. Even if you avoid all the other numbers for your business this is one set you definitely need.

Here are 5 reasons why you should forecast the sales for your business today.

1. In my blog about goal setting we established the need to set goals for motivation and to drive higher performance. It is important to break down long term goals into shorter, sub goals. Well, the sales forecast sets that out for you in black & white. Starting with a £120,000 year end of goal is daunting, yet breaking that down to £10,000 per month and then by product sales enables to you see how realistic your goal really is.

2. A sales forecast is central to your regular business review. At the end of each month you can compare actual vs forecast.
Which product/service sales were up?
What was down?
Most importantly what can we learn from this – what impact did your marketing activities? What about the weather/seasonal /local/ national events? and how will this information affect your planned activity for next month?

Setting a standing date in your diary - i.e first Friday of the month - will ensure this review happens regularly.

3. Decision making – From which marketing activities to pursue or repeat, to price increases and taking on staff. Having real time information allows you to look ahead and make decisions to allow for growth or to quickly identify areas of concern.

4. Longer term planning – At the end of the first year, you can use the actual sales figures as the starting point for next years forecast. If you understand the impact of external forces on sales, you will be able to provision for those in your new forecast making it more accurate each time. If you want to grow turnover by 10%, 30% or 100% next year what does that mean in reality for sales, pricing and resources? you can model a range of scenarios in your forecast spreadsheet.

5.Feeling in control – one of the key concerns of business owners is not knowing what is going on in the business. A monthly review of your sales forecast gives you real information, peace of mind and regular opportunities to celebrate.

Basically a sales forecast is your educated guess of sales (revenue, customer numbers) over a given period. Typical forecasts, are for a year showing sales by month.

Excel is a great tool to create a simple plan and the example shown below separates out the key elements

• Separating sales into individual product/service volumes enables provides detailed information on what your business actually sells. Which products you sell most of, the impact of marketing promotions on product volumes, seasonal variations by product and longer-term trends – which product sales are growing/declining.

• Including product/service pricing – enables you to model the impact of price increases/promotional discounts

• Forecasting sales by month (or weekly if appropriate) allows you to predict busy/quiet months and plan – when is a better time to take holidays or when may you need additional resources.

The actual layout of your sales forecast will be specific to your type and complexity of business. A quick google search brings up a range of templates you can use, but make sure you tailor it to suit your business needs.

Most importantly make a note of any assumptions that you make - i.e if sales are doubled in July due to a one off event which won't be repeated, capture that for information for next years planning.

If you are an established business, you can base your sales forecast on last year’s sales, taking into account any known changes. If you’re starting out then your forecast will be an educated guess based on your market knowledge, working back from your turnover goal or based on % of your total capacity. However artificial this may feel, get it down on paper and at the end of the first month you will have some real numbers to review.

Whatever your personal feelings about money, the bottom line is, as a business owner you have to know your numbers.*

Once you know the numbers you have the power to decide what to do about them in order to achieve your goals.

So, if you don’t currently have a sales forecast for your business, get started today – don’t worry about it being perfect, no one can predict the future – but each time you review your guesses become more educated and I guarantee you will feel more in control.

Your sales forecast is a vital part of your business plan, if you would like to someone to work with you to get this in place for your business please contact Janet Doran (email janet@thepositivepen.co.uk or call on 07505 120051)

(* I have deliberately not included costs and profit calculations into this article - to avoid number overload let's make this the first step)

Janet Doran , works as a Strategic Business Coach across North Yorkshire, UK. enabling small business owners to win in competitive markets.

Find out more at www.thepositivepen.co.uk or call 07505 120051 and Follow her on twitter https://twitter.com/thepositivepen

One of the key benefits business owners get from working with a business coach is that ‘protected’ time to work on the business instead of it in. If you are thinking about working with a business coach in 2019 please give me a call.