Quarterly News

Forecasting (sales and) success

Making predictions for future growth should not be limited to those starting up in business. While substantiating the case for finance may be the initial reason for preparing a sales forecast, annually updating your original plans can reap many rewards.

Establishing a sales and marketing plan is the key to setting a sales forecast. Your knowledge of the marketplace or outcomes of market research will help to identify the opportunities for your products and services. Focusing on a 12 to 18 month period, detailed documents can prove unnecessary; often a simple list of realistic key objectives can suffice. Always remember the obvious: customers have to want to buy your products, you wanting to sell them is never enough! The process of recording the sales plan forces you to evaluate the impact of future events on projected sales. Gathering input from the whole team may lead to initiatives and ideas for product development, pricing strategies, or marketing campaigns to your most profitable customers or for your most profitable products. Many businesses use a SWOT (strengths, weaknesses, opportunities and threats) analysis approach to kick-start their thinking.

The next stage is to add numbers to the assumptions in your plan. Calculating monthly sales volumes and values should not prove difficult once a vision for sales has been recorded. Whether a simple spreadsheet or a specialist forecasting package is required will depend on the size and complexity of your business and product mix. Building in 'what if' scenarios is not difficult to do with today's spreadsheets and can provide a clear picture of how different results will be dependent on actions taken. The sales forecast can provide the backbone for a full financial forecast or a cash flow statement where these are required.

Regular monitoring of actual performance in comparison to the forecast enables trends and sales shortfalls to be proactively addressed. Many businesses review their monthly performance and formally revise their sales forecast on a quarterly basis. By the final quarter, your initial predictions can look questionable, so regular reviewing and revising is always recommended.

Don't miss out on the opportunity to use the sales forecast to set targets to incentivise your team. Establishing creative reward schemes can make all the difference between failing, achieving or exceeding your forecast. This can also assist with performance reviews for your team.

The familiar expression “you cannot manage what you don’t measure” is certainly true where sales are concerned. Forecasting can play a key part in measuring your success and helping you to drive the performance of your business. Can you visualise your sales pipeline for the next 12 months? If your plans are not as clear as you would like them to be, we can help so please get in touch.

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