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Key Factors To Consider When Forecasting Sales

Forecasting Sales

Analytical business tools are one of the main elements that ensure the efficient operation of the enterprise. They are especially relevant in the context of the coronavirus pandemic and the instability of the global economy. These tools include sales forecasting.

The importance of sales forecasting

Sales forecasting is the determination of the possible number of purchases by representatives of the target audience for a specified period. This analytical tool allows you to control the enterprise’s budget, calculate future profits, and develop brand promotion tactics.

What is sales forecast importance? With the help of an analytical tool, you can set goals. You will not be guided by your desires or guesses. At best, this approach will disappoint you, and at worst, it will lead to dangerous losses. The sales forecast is based on an assessment of the enterprise’s past performance and its actual potential.

With the help of a well-written sales forecast, you can:

  • allocate resources taking into account demand, season, and possible drawdowns;
  • plan future purchases;
  • prevent excess or shortage of goods in the warehouse;
  • optimize costs.

Key factors you need to consider

When forecasting sales, you need to take into account the previous enterprise’s results, the state of the sales funnel, and market trends. The accuracy of the result depends on the reliability of the initial information and the correctness of the formulation of conclusions.

How to estimate sales? There are two types of forecasting methods: subjective and objective. Let’s take a closer look at each of them.

Subjective sales forecasting methods include:

  1. Customer expectations. The key purpose of this tool is to get to know the target audience of the brand and its preferences better. But do not forget that interest in a product does not always end with its purchase.
  2. Opinion of sellers. Specialists working with clients are well-versed in the peculiarities of the seasons and sales volumes. They can help with sales forecasting, but considering their experience alone is not enough.
  3. Assumptions of top managers. Senior employees are generally aware of actual sales figures and patterns of their fluctuations. The opinion of top managers is more objective, but it also cannot guarantee absolute accuracy.
  4. Evaluation by professional analysts. Staff and invited experts conduct profile research and formulate a sales forecast based on it. However, even this method cannot be called accurate since the conclusion depends on the competence of a specialist.

More reliable are objective methods of sales forecasting  — market testing, analysis of time series, and annual charts. These methods are suited for businesses that have been operating for a long time and planning to introduce new or improved products.

External factors that influence a sales forecast

You can make every effort to develop the enterprise and increase profits. But do not forget about the existence of external factors affecting sales forecasting. These include:

  • Current legislature. Laws may be related directly to your industry or the market as a whole. It is impossible to resist official innovations, which means that you will have to adapt.
  • State of the economy in the country and the world. The more unstable the situation, the more effort you will have to make to maintain the required level of sales.

Competition and demand in your industry. The emergence of competitors with a more favorable pricing policy and changes in customer preferences affect sales.

Internal factors that influence a sales forecast

The volume of sales can change due to not only external but also internal reasons. Major factors in sales forecasting include business policy, turnover rate, marketing strategy, quality, and the cost of your products. If you want to join the leading industry representatives, look at all the listed components.


A sales forecast is not a prediction but a professional business tool. It will be helpful for enterprises of all industries.

This process involves specialists of all levels, from salespeople to top managers. To obtain the desired result, all team members need to evaluate each sales stage, record all the data, and choose the best forecasting methods.

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