When you are in a business, you need to keep the record of your sales and other investments. You have to keep records of your bills and your taxes as well so that you can keep the money expenditures of your business under your nose. In this way, no situation might occur that you have not anticipated. This could also be done by a simple practice called Sales Forecasting.
This term is something that everybody knows yet nobody pays attention too. Well now, it is time that you do because Sales Forecasting is important in your business especially if you have small business.
What Is Sales Forecasting?
Sales Forecasting is the act of predicting your future sales by keeping your previous sales in mind. Other than that, you can analyze per annum growth, your expenditures, future expenses,and compare them with your opponents.Sales Forecasting is important for small business holders because they need to keep their expenditures in check constantly. As most of them have not much savings, these forecasts help them to realize their position in accordance to the markets.
Why Sales Forecasting Is So Important?
Sales Forecasting is important because this allows you to analyze the structure of cost and price. This would mean that you willknow perfectly well, where your profits are coming from and where you are short on funds. By keeping these points in mind you can increase your profits and earn more money. You get an objective view of the future and you can get hold of it easily this way.
A simple math is needed to help you in this quest. You do not need an accountant to do that, although you can take help of software to help you in Sales Forecasting.
If you are thinking Sales Forecasting for your business then here are a few tips that will help you in your quest!
You have to keep the record of your past sales accurately. It might be a difficult task but the better record you have the better forecast you will make. To do Sales forecasting you have to collect the most accurate data you can get your hands. Make records of sales every six months or so, this will give you accuracy as well as save time.
You do not have to make sales record for every month at of the year. This way you will you will do Sales forecasting better and more precise. However, you want to have the best sales forecast then try to collect the data of more than five to seven years. This way you will get the best possible forecast for your sales.
This way you will understand all the factors that are contributing towards the success and he loss of your business. You would make a direct list of these things for record keeping sack and for Sales Forecasting. Make sure that you keep both the external and internal factors in mind while making the detailed list. The external factors could be the activities of your opponents, their product sales, the economic conditions of the market in general and seasonal demands.
In addition, your customers are part of your external factors and the income and the employment of your competition is alsoan external factor. When we come to internal factors then your labor force, their condition, your inventory and your credit policy are a part of it. See the changes in your price, your manufacturing process and your products as well. See the number of products that you have made every year. See the factors that are affecting your sales and you will make your internal factor list complete.
Then the next thing you have to do in Sales Forecasting is that you should select your services and products. These could be all your products or services or they could be very specific ones. To have an accurate forecast make sure that the forecast for your product is done individually and for the services it is in a group. Sales Forecasting done this way will be more precise. The next thing that you should do is thinking of the time span for your forecast. Do not go too far in the future but do not remain in the near future.
Make sure that the time you have chosen gives you accurate result. Make sure that the frequency of your forecast is good. Think about good margins for errors. These errors should be held possible for your profits, expenses and cost. This will make sure that you get realism in your forecast and it does not become too much fanaticized.
Try to be analytical when looking at your sales report,account records, post-sale activities and financial statements. This will tell you about the sales activities and their cost up to the sale time and after the sale.
After you have collected all your data, you decide upon the method for your Sales Forecasting. You may choose from quantitative forecasting or qualitative forecasting. The quantitative formula is mathematical and it is quite difficult to understand, let alone use it.The qualitative Sales Forecasting is very simple all you would have to do is take all the mentioned above things together and you make an estimate forecast depending upon all these factors.
Of course it a rough guess and you have a little know how of your business future.
If you have a small company then a quantitative forecast is much better for you because you do not have many funds. But if you have a large company then a qualitative approach would be much better. This is because you have more funds and financial departments you would be probably making millions of products a year. But no matter whatever approach you take you will be getting a rough idea of your future sales and you should make your future strategies according to the results. Sales Forecasting will definitely help you in this regard.