Sales forecasting - some difficult truths

1. Sales forecasting - some difficult truths The sales forecast is the most important part of your business plan, as it tells the story of your business�s growth and drives its profitability But - making your first sales forecast will probably seem the most difficult part of the entire business plan There is no one best �scientific� way to estimate sales for a new business There are many ways to approach a sales forecast Because the variables are many and complex, forecasting is ultimately a matter of judgement It is important to view the forecast from multiple perspectives You will need to repeatedly review the forecast as you improve your understanding of the market, develop your competitive advantage and refine your marketing plan The most important rule is to start early - first just �guesstimate�, then progressively review and refine the forecast

9. Six key principles of good forecasting

19. As a new business, you will not be on equal terms with established competitors - you will simply have to try much harder to gain a similar level of sales. However hard you try. You will be unlikely to reach their sales levels in the short term. There are two main reasons for this: accumulated buyer awareness, experience and reputation accumulated experience of operating in the market

25. � Forecasting is usually both easier and more accurate if the total sales figure is disaggregated or broken down into categories. � Examples of useful categories might be different product groups and / or markets � Disaggregation is essential where: market penetration rates are different across segments products are introduced at different times different segments have different growth rates - segments have different seasonality

48. Building your forecast - a suggested sequence of analysis Make a rough estimate of attainable steady-state sales Estimate the duration of the pre-sales period Think about the likely pattern of sales build-up (i.e. start-up scenario) Estimate the duration of the build-up period Use at least two forecasting techniques and triangulation to arrive at a new steady-state forecast Spreadsheet a first draft forecast for the first year, estimating the pattern of sales build-up Factor in seasonality Progressively refine the first-year forecast, with a special emphasis on the rate of sales growth Extend the forecast over future years, factoring in your growth strategy