In order to keep your business healthy and to identify the risks for the future, a sales forecast is absolutely necessary. What is a sales forecast? A sales forecast is an expression of expected sales revenue. It’s a projection of how much money your business will make within a certain time period.
A sales forecast answers the questions:
- How much income will your sales opportunities bring into the business?
- When is this revenue expected to hit (which specific month, quarter, or year)?
Why Are They Important?
It’s important to have a sales forecast to account for all of your resources as a business – the shipping of products, marketing costs, hiring new employees, etc. If your sales forecast is accurate, your business will perform as a well-oiled machine that meets the customer demand, and you may even get to invest the extra money if you exceed the expected revenue. If your forecast is inaccurate or off-course, your business could face challenges in product delivery, lack of profits, pricing, and more.
A sales forecast is a great framework to use when scaling your business and determining future success. Check out our blog, “What Does It Mean to Scale Your Business?” to learn more.
Who Creates Sales Forecasts?
Depending on your team, your sales forecast can be designed by your product leaders, your sales leaders, or your sales reps. Product leaders will be able to tell you which products will be available and when. Sales leaders will have the exact numbers that their teams can deliver, and the sales reps report their own numbers to the managers.
Who Uses Them?
All departments can typically use sales forecasts. For example, the finance department will use this framework to decide on annual or quarterly investments, product leaders will use it to plan for new products based on the demand, and the HR department will use the forecast to determine the hiring needs if the business is growing.
How To Design a Sales Forecast
To design a sales forecast, focus on three main objectives:
- Determine the monetary number and time period in which it will happen. You can do this using a Customer Relationship Management tool (CRM) that shows your sales pipeline, your top performers, and tracking of sales overlays. You’ll want to analyze your prospects and see how the sales opportunities are stacking up in your pipeline and reports.
- Review and revise. Make sure to schedule check-ins on a quarterly basis to see how your forecast lines up with current sales. You might see that you’ve achieved certain milestones, and those should get factored into future forecasts.
- Be open to breaking patterns. Look at different angles of the data, have your executives review the numbers, and ask questions about how your business can grow.
As you can see, a sales forecast is not a task you can complete as “one and done”. You must always be developing or reevaluating your forecast to better serve your customers and your business. If you would like more information on how to create a sales forecast, check out this detailed guide by Salesforce.
At Assemblage, planning for the future of your business is part of our services! Through a business strategy, we can help you identify the key steps to take so you can reach your business goals.
Contact us today, and tell us how we can be an asset to you!