Importance of Sales Forecasting
In order for a certain company to achieve a high level of success, there is a need to make use of tools and strategies.
One of these is sales forecasting, which is considered very essential. If you would like to know more about this, read the succeeding paragraphs.
What is a Sales Forecast?
Sales forecasting is considered as a company’s self-assessment tool that utilizes current and past sales statistics in order to predict the future of the company’s performance. Bear in mind that in order to know how healthy your company is, you need to keep on taking its pulse. The main purpose of a sales forecast is to report, to graph and to analyze your business’ pulse. Apart from that, it is also considered as an important cornerstone of the company’s budget. Therefore, sales forecasting is indeed indispensable for the direction and future of your company.
The Benefits of Sales Forecasting
Now that you already know what sales forecasting is and why it is used, you need to discover its several benefits. They are as follows: capability in determining the return on investment or ROI, determining the business’ value above the value of its present assets, identifying the trend or pattern of sales, planning for capacity and production, gauging the customers’ knowledge and the items they order, knowing the right time to purchase and having enhanced cash flow.
If these benefits are combined, they will result to increased efficiency, decreased cost, increased customer retention and increased revenue as well. Now, in order for you to experience the great benefits of sales forecasting in your business, you must not treat it as a separated exercise. Instead, it should be strictly integrated into all the aspects of your organization.
Sales Forecasting is Also Important for First-time Business Owners
If you think that sales forecasting is just applicable for established businesses, you are wrong. The truth is that it is also very important even for a business that has just started. Businesses need to have start-up capital or loans in purchasing everything important in order to successfully get off the ground such as inventory, equipment, office space, marketing and employee salaries. Always remember that you cannot just walk into a bank having enthusiasm and bright ideas. You should have the guts to show them the numbers that can prove that your business is feasible. In short, a business plan is required.
The sales forecast will be the core part of the business plan. Considering the fact that you don’t have any sales numbers to work with, you have to conduct research with regard to the related businesses operating in the same market having the same customer base. At first, you have to make concessions for the hardship of beginning from scratch. Then, you have to convince the bank that the business you own has new ideas that will outsell the competition. These ideas must be expressed as numbers such as profits, sales forecasts and losses that the bank can understand.