What Is Sales Forecasting?
Sales forecasting is estimating what a company's future sales are likely to be based on sales records as well as market research. Information used for sales forecasting must be well organized and may include information on the competition and statistics that affect the businesses' customer base. Companies conduct sales forecasting in hopes of identifying patterns so that revenue and cash flow can be maximized.
Before the forecasting process begins, marketing, sales, or other managers should determine how far ahead the forecast should be done. Short-term forecasting is a maximum of three months and is often effective for analyzing budgets and markets. Intermediate sales forecasting is between a period of three months and two years and may be used for schedules, inventory and production. Long term forecasting is for a minimum of two years and is good for dealing with growth into new markets or new products. Sales forecasts should be conducted regularly and all forecasting results need to be measured so that future methods can be adjusted if necessary.
Basically, sales forecasting is analyzing all parts of a business from total inventory to the strengths and weaknesses of salespeople. Managers must think about changes in customer sales or other changes that could affect forecasting figures. They must be competitive when assessing the competition and how they can surpass the competition to better meet the needs of the target market.
Forecasting analysis involves the use of computer software. Sales forecasting software includes different sales management categories and it also keeps track of different departments. Sales forecasting software may have a dashboard format in which charts and statistics are easily accessible on one page. Dashboard software is preferred by many managers as rather than having to look through lengthy reports to find information, everything is charted and graphed and set out much like the dashboard of a car with its information readable at a glance of its gauges.
Businesses can customize dashboard and other sales forecasting software to suit their specific needs. For example, sales goals can often be placed on the same page as the chart feature that tracks their progress. Orders and proposals submitted to clients can be tallied and organized. Quarterly revenue flows may be displayed with forecasted future revenue for instant progress status. The performance of sales staff can also be tracked using forecasting software.
Written by Sheri Cyprus
