Sales Forecasting is one of the most important aspects of your business. It will help you set goals, allocate resources, avoid shortfalls, and make smart decisions for the future of your company. It will help you get a clear look at the financial health of your business and help you decide how to move ahead into future growth.
What Does It Mean?
To be put simply, forecasting is how you estimate your future sales. Using data and market trends, you’ll be able to plan for future growth, making smart business decisions along the way!
Why Forecasting Is Imperative For Your Sales Growth
Sales Forecasting will allow you to set clear goals and expectations for your business. Your ambitions will be based on data, not on numbers pulled from thin air. You’ll be able to look at your past success and build from that foundation.
A sales forecast can help you with staffing and other anticipated needs. When you know what’s coming, you’ll be able to have the staff on hand that you need, as well as the inventory to meed the additional volume. You’ll be able to allocate resources and prepare for market changes.
A sales forecast is an excellent motivational tool. It will put in black and white what is achievable for you as your business continues to grow. You’ll be able to scorecard and track your progress as you work to achieve your business goals!
Forecasting 2019 Sales
When using forecasting sales, you’ll want to break everything out by month and segment. What happens within your business in January may be different than what happens in July, and breaking things out by month will help you plan accordingly.
Take a look at your 2018 sales to set a basis to start from. Look at each month, noting what worked for you and what didn’t. What marketing methods were you using during periods of top-line sales growth?
Next, you’ll want to look at your profitability by segment or product. Your segments can include demographics, purchasing habits, or customer behaviors.
You’ll also need to take a look at your sales mix which breaks down how much a specific product is profiting in relation to your total sales. If your profits are declining, you’ll be able to shift focus from selling products with lower profits, and instead focus on the things create more bottom-line profits.
Growing Your Business
Forecasting is used to grow your business. Once you know what you’ve accomplished in the past, you’ll be better at setting the pace for the future! Here are 4 steps you’ll want to use to get you to where you want to be.
- The first step is to determine what you want to achieve. This can either be a percentage or dollar amount. The goal is to determine how much more you plan to achieve in sales as opposed to the previous year.
- Next, you’ll want to break this out by month. What numbers do you have to hit each month in order to achieve your goals?
- Once you’ve looked at your monthly goals, you’ll want to look at it by segment. Segments are channels of business (stores vs eCommerce) or can even be categories or departments within your business.
- Now it’s time to build your plan!
Creating actionable plans to achieve your sales goals is the only way you’ll get there. Using your sales forecast, you’ll be able to plan marketing, with campaigns and events taking place at the best possible times. You’ll be able to prepare inventory, staffing, and your time, assuring you always have the resources you need available when you need them. You’ll be able to plan your sales channel and product pricing!
To learn more about forecasting the sales for your business, get in touch with the team at Ellen Grace today!