2. Objective
Draw up
sales forecast and budget
for year âŚâŚ.
3. Sales Forecast defined
⢠The Sales Forecast is the expected level of company sales
based on a chosen marketing plan and an assumed marketing
environment
⢠A sales forecast is a prediction based on past sales
performance and an analysis of expected market conditions
⢠It's a self-assessment tool that uses past and current sales
statistics to intelligently predict future performance.
⢠Sales forecasting involves predicting the amount people will
purchase, given the product features and the conditions of
the sale
4. Benefits of sales forecasting
⢠Enhanced cash flow
⢠Knowing when and how much to buy
⢠In-depth knowledge of customers and the products they order
⢠The ability to plan for production and capacity
⢠The ability to identify the pattern or trend of sales
⢠Determine the value of a business above the value of its
current assets
⢠Ability to determine the expected return on investment
⢠See how well you are stacked against industry average
6. Factors that affect sales forecasting
⢠Market Potential/Size
⢠Market Share
⢠Sales contracts that won't be renewed
⢠New sales contracts that are on the horizon
⢠Industry analysts' predictions for growth or shrinking in your
market segment
⢠Economic analysts' predictions for the increased or decreased
buying power of consumers in your market
⢠Political changes that could affect government contracts
⢠Direct and indirect competition
⢠Consumer earnings
8. Forecasting Methods
1. For predictable /stable monthly Sales
â Sales Forecast=Past Sales+%age of inflation
2. For cyclical Monthly Sales
â Suppose, for instance, that a short-term forecast is being made for the
month of December. For some past years now sales in December have
totalled 15% of annual sales. During the same period, August sales
have averaged 10 percent of annual sales.
â Sales during the previous August wN10,000,000ere N10,000,000.
â N10,000,000 / .10 = N100,000,000(estimated annual sales)
â Projected sales for December will be 15% of N100,000,000(or
N15,000,000).
â Sales for other months can be forecast in the same way.
9. Forecasting Methods contâd
3. Annual Sales Forecast
â Last Yearsâ Sales (N100,000,000)
â Guaranteed contracts (N5,000,000)
â Projected Growth for next year (10%)
â Sales forecast= 5,000,000+ 100,000,000+10%X 100,000,000=115,000,000
12. Data Needed
⢠Economic Environment of Business
â PEST
⢠Products and Services
⢠Business Model
â OTC & MRC
⢠Market Segments
â Industries Served
⢠Last 3 years revenue
â By Product
â By Segment
â By Industry
13. Data Needed
⢠Next year growth drivers
â By Product
â By Segment
â By Industry
⢠Sales Opportunity funnel
â By Product
â By Segment
â By Industry
⢠Risk Analysis
â By Product
â By Segment
â By Industry/Clients