Sales forecasting is one of the pillars of a company's financial stability. By predicting how much you will sell in the coming months and what your profit margin will be, you can plan a better allocation of time and money.
However, few organizations know how to forecast sales from start to finish with the accuracy needed to make strategic decisions. To give you an idea, a Gartner study revealed that 55% of sales leaders are not confident that their projections are accurate.
If you want to have more control over the future of your business while developing a competitive advantage , you've come to the right place. In this guide, you'll learn:
What is sales forecast?
What is the purpose of the sales forecast?
What are the methods and applications of sales forecasting?
How to make a sales forecast?
Shall we begin?
What is sales forecast?
Sales forecasting is an estimate of how many deals you can close in a given time period. Also known as sales forecasting , its purpose is to calculate the probability of converting an opportunity into a customer and identify the expected closing date. That way, you can plan investments and operational changes that depend on these results.
Here's an example of a sales forecast: Imagine that your analysis revealed that in the next three months you will complete 750 transactions, generating approximately $60,000 for your company. With that figure in mind, you begin planning the long-awaited office remodel, the purchase of more modern tools for your team, and, who knows, a pay raise for your employees.
If the predictions are correct, great! Your business is growing sustainably and you're ready to scale to the next level. If the predictions are wrong, you've got a big problem on your hands. You spent money you didn't have or you used money that could have kept your business safe, counting on getting more from sales.
Do you realize the importance of precision in this calculation?
You may be interested in reading: Sales budget: 8 models to organize finances .
What is the purpose of the sales forecast?
Sales forecasting is used to efficiently allocate resources and manage the company's cash flow. It is also useful for identifying consumer trends, managing risks and avoiding financial crises.
According to a recent study , 66% of small businesses face financial challenges. The data also indicates that for 43% of organizations, the most significant challenge is paying operating expenses. With an accurate sales forecast, you are able to efficiently allocate resources to the areas of your business that need them most, at the right time.
2. Manage cash flow
According to US research , 82% of businesses that went bankrupt cited cash flow problems as a factor in their failure. Knowing how much you earn, how much you spend, and how indonesia number phone much is left to invest in your business is crucial to planning for your future. In this regard, sales forecasting can help you predict how much money will be available in a short period of time, such as in the next month or quarter.
3. Identify consumer trends
Did you know that 78% of Mexicans think that the COVID-19 pandemic will permanently change their lives? More than preventive measures against the disease, such as constantly washing hands or maintaining the recommended physical distance, the study reveals that values are also being redefined .
But you wouldn't know any of this if someone hadn't done this research. The same is true for sales forecasting: a change in spending patterns can reveal consumer trends that you need to prepare for.
Want to stay up to date with market news? Download Zendesk's free 2022 CX Trends Report.