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How to forecast sales - Making sales assumptions

4 minute read

Preparing a sales forecast is all about estimating future sales. This forecast forms a key part of any business plan and helps you to make informed decisions about your business. It won’t be 100% accurate unless you have a crystal ball, but it will provide a useful guide to help you budget and manage your business.  

  • If you are a new business, you will be relying on your market research to assist you in forecasting sales.
  • An established business will be able to use past performance to predict future sales.  

Sales Assumptions 

These will form the basis of your forecast and will usually include:

  • Seasonal Demands - Is your product or service sales likely to be affected by the seasons? Or are you a parent who will spend less time running your business during the school holidays? These are the type of questions that you will need to ask yourself when starting your forecast.  
  • Marketing Activity - It’s important to be aware of the relationship between your marketing activities and your sales. If you’ve planned your marketing, then it will be a fair assumption to make that you would see an increase in sales after a campaign or exhibition. Alternatively, if you need to cut your marketing spend during the year then you will expect this to have a negative impact on sales.  
  • Resources - If you plan to grow your team and employ someone or buy a new piece of machinery then you might make the assumption that sales will start to increase in the months that follow.  
  • Market Conditions – Uncertainty around economic issues such as Brexit may be something you believe will have an impact on your sales. A new competitor opening soon might also lead to you making conservative forecasts. The research you have carried out into your market will help you to address this aspect.  
  • Capacity – you will need to factor in your own/the business’s ability to be able to provide the products or services at the level at which you are forecasting. 

So What's Next?

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