Do you know your business’s sales forecast? If you don’t, you may want to keep reading to learn more about why it’s so important to forecast your sales, and how you can come up with an accurate sales figure. Forecasting sales will help your business set measurable goals, which are vital to business growth. While the process can be quite difficult and complex, you’ll want to start with the basics if this is your first time attempting to forecast your sales.
Why you need a sales forecast
If you aren’t convinced that you should spend some time analyzing past sales and forecasting future sales, here are some of the top reasons that demonstrate why this process is so important:
Predict future revenue, and plan for increased business demands during busy periods
Promote higher performance standards for yourself and/or your sales team
Entrepreneurs and startups need a sales forecast to attract investors and secure loans
Setting measurable goals, and having a history of those goals, is one of the only ways to measure success is a concrete, numbers-based manner
How to forecast sales
Like many things in business, forecasting sales is an art combined with a bit of science. You’ll have to think creatively and objectively in order to predict sales, and some research will be required. Complete each of the steps below and you’ll be on your way to an accurate sales prediction.
Crunch the numbers
Hopefully your business has a CRM or other data-management solution to track all sales. It’s absolutely vital that sales representatives keep their sales data recent—without accurate data, it will be impossible to forecast your sales. There are a variety of software solutions available for this purpose. If you don’t already utilize one, it’s worth looking into.
Conduct regular reviews
According to the 2011 Inside Sales Performance Optimization Report, managers who conduct “regular pipeline reviews” are able to predict their sales far more accurately. If you utilize sales representatives, it’s imperative to check in with them regularly to assess whether their targets and estimates are realistic. Plus, if you’ve already reviewed the sales data, you’ll have a better idea of how accurate their numbers are.
Don’t confuse the pipeline with actual revenue
When a deal is in the sales pipeline nothing is guaranteed, but sales reps will often add those figures into their own forecasts. For example, if a rep has a pipeline with ten deals, how many are they expected to close? The percentage of deals closed will vary from rep to rep, which is why your CRM data is so important.
Use your sales forecast data to drive momentum
Once you have a ballpark figure for your sales revenue, don’t forget to make that number work hard for you. Sales forecasts can be used to hold employees accountable, and they’re great tools for motivating and creating momentum to drive the company forward. Use that data to establish and hit new targets, and remember to update your sales forecast as conditions change. After all, predicting sales is an evolving art.
Dawn is responsible for helping Envysion’s enterprise clients in the retail and restaurant spaces determine which Envysion products and services will best meet their needs. Prior to Envysion, Dawn was with MegaPath and was responsible for selling complex Wide Area Network (WAN) solutions into retail and restaurants. Additionally, Dawn has delivered significant results for other start-ups such as Connect South LLC, Intrepid Communications and Advanced Radio Telecom. Dawn earned her Bachelor’s degree in Public Relations at Western Kentucky University.