SlideShare ist ein Scribd-Unternehmen logo
1 von 2
Downloaden Sie, um offline zu lesen
Active PrActice UPDATEs                                                                 NOveMBer 2011

                                                                                               plummerparsons




                                                                                               ap-sf-nov2011




Effective sales planning
The ability to predict realistic sales levels is essential for a business.
Not only does it enable you to identify and deal with any possible
cashflow issues, it also makes it easier to plan for growth, to exploit                                               Business UPDATE
openings in the market, and to manage operations and production.


A sales forecast provides a business with just        But don’t limit your analysis to the income              •    Calculating the effect of any planned
such a capability. It sets out the level of sales     generated by those sales. Take a look at                      changes to the business (if you are
that a business can reasonably – a key word,          the volume too. This will give you vital                      going to be putting up prices, for
here – expect to achieve.                             information about possible production                         example, you will need to examine
                                                      levels in the future, and about the costs that                the impact this will have on both sales
“The more detailed a forecast, the                    such operational matters as delivery, stock                   values and sales volumes)
more accurate and practical it will be.”              holding, and employment resources will                   •    Looking at the effect of staffing changes
                                                      involve.
Preparing the ground                                                                                                (will you be investing in more sales staff
                                                                                                               •    Assessing the impact of any changes
To create an accurate and working sales               Accounting for changes                                        to the products or services your
forecast, a business needs first to assemble          in circumstance                                               business offers (some new products
some basic information covering past sales.                                                                         may take time to achieve their potential
This information should include:                      It is unlikely that the months of the year ahead              sales levels; some products may be
                                                      will exactly replicate the year that has gone.                approaching the full limit of their sales
•    The numbers of customers gained and
                                                      A business, therefore, must make certain,                     reach; while sales of other, older
     lost in the last year
                                                      well-informed estimates, and assess any                       products may already be on the point
•    The (seasonal) periods (if any) when
                                                      possible changes to circumstances that will                   of falling).
     sales rise or dip
                                                      affect the volume and value of sales. Such
•    The value of sales made to each                  estimates, based on both past sales and                  What about seasonal trends? Factor in
     customer                                         on any realistic ambitions for growth your               surges and falls in demand. This will be
•    Specific product or service sales that are       business has, will create the framework for              critical when it comes to the delicate
     growing, flat-lining or declining                the sales forecast.                                      balance between income, paying supplier
                                                                                                               bills and stock holding (if a sales forecast
•    The impact of national economic
                                                      There are a number of areas where you                    isn’t accurate you could find yourself with
     circumstances
                                                      must take a balanced view of probable                    too much stock on your hands but without
•    Cyclical purchasing trends                       developments. These include:                             the customers to buy it).
•    One-off events (bad weather, for                 •    Judging market trends (is the overall
     example)                                                                                                  It is important to assign a definite value
                                                           market likely to grow or contract; is your
                                                                                                               to each of these assumptions if the sales
•    The impact of particular measures that                share of the market set to expand or
                                                                                                               forecast is to be meaningful.
     have been taken to push sales, such as                decline?)
     a marketing campaign.


18 Hyde Gardens                                                                                                               www.plummer-parsons.co.uk
Eastbourne East Sussex BN21 4PT
01323 431 200 eastbourne@plummer-parsons.co.uk
Effective sales planning
Creating a sales                                Specifying the types of product each
                                                customer may purchase will give a
                                                                                                indication of how well (or not) the business
                                                                                                is performing. It will also allow you to
forecast                                        business the opportunity to predict             make adjustments to operations and to
                                                possible supply issues and anticipate           formulate plans – a boost to marketing
Step one in drawing up a sales forecast
                                                both potential shortages and gluts, and to      spend, a switch to alternative sources of
is to estimate market demand. Market
                                                achieve a better balance between stock          custom, a change in pricing policy – for
demand for a product or a service is
                                                build-up and sales.                             correcting any downturn or for exploiting
the total volume that would be bought
                                                                                                any upturn.
by customers, in a defined market or            It is important to bear in mind that a sales
geographic area, and in a defined time          forecast is not a sales target – a figure       It is vital also to consult with your sales
period.                                         aimed at defining, or encouraging, the          staff as you draw up the forecast.
                                                sales effort over a given period – or a         Allocating them targets they know to be
Step two is to work out the share of
                                                sales budget – a figure used to cover           impractical will be counterproductive.
market demand that a business actually
                                                current purchasing, production and cash-        And for an objective viewpoint, why not
commands, be it on a national, regional
                                                flow decisions.                                 get the advice of your accountants once
or local scale. For example, if a local
                                                                                                the forecast is complete – this can offer a
bicycle firm believes that the overall          The secret is to focus on the sales you         very useful counter to any rosy-tinted (or
bicycling market in the town in which it        actually believe you will make rather           self-effacingly modest) assumptions on your
operates is £400,000 and its income is          than on an ambition for sales. Otherwise        part.
£80,000 per year, then it has £400,000          the forecast becomes a marketing plan,
divided by £80,000 or 20 per cent of            establishing goals instead of concentrating
the market.                                     on the specifics of sales based on
                                                particular circumstances. Remember that
Step three is to establish an expected level
                                                the purpose of the forecast is to help you
of business sales based on a marketing
                                                gauge sales on a month-by-month basis
plan. Will, for instance, that bicycling
business be developing its website; will it
                                                and to help you control cashflow.               summary
be focusing on one product line (off-road
bikes) at the expense of another (thin-
                                                Realism                                         Sales forecasting is crucial to a business.
                                                                                                It is both an aid to growth and an early
wheeled track cycles); will it be targeting     It is absolutely essential to make sure         warning sign that problems need to
increasing consumer awareness of ‘green’        that every figure is based on realistic         be addressed. The watchwords are
travel; will it be attempting to spread its     assessments and not on projected or             realism and a willingness to adapt to the
sales across a broader area of the year;        hoped-for increases in sales. While             information the forecast may be giving
will it be dropping its prices in order         optimism has its place, over-estimation of      you about the performance of your
to lessen the impact of dead stock; will        sales will end up burdening your business       business.
it be changing its stock management             with expectations that could harm, not
so that the shop is either extending or         enhance, its performance.
contracting its range; will it be questioning
its dependence on the sales of children’s       For this reason, all the figures should take
bikes?                                          into account what the business is capable
                                                of achieving in terms of productivity
The sales forecast                              and capacity. If you are not planning
                                                on taking on more staff, don’t assume
The more detailed a forecast, the more          that productivity will rise by a significant
accurate and practical it will be.              amount. If you are not going to invest in
                                                a new plant, don’t assume - whatever the
It can help, for example, to separate
                                                level of demand in the market - that output
products out by market, area or customer.
                                                is going to outstrip your firm’s ability to
It is also very useful to calculate the
                                                manufacture.
percentage chance of any given sale
actually occurring, as this will have an        Once the sales forecast is determined,
impact on its predicted value. Bear in          try to avoid the temptation to tinker with
                                                                                               If you would like our help in constructing
mind that the likelihood of making a sale       the figures too much (although some
                                                                                               the sort of sales forecast that will give your
to an existing customer is higher than          adjustments may need to be made if
                                                                                               business the best opportunities for success,
converting a new customer, so the chance        predictions appear to be off the mark).
                                                                                               please don’t hesitate to contact us.
of the sale happening in the former case is     Comparing actual sales figures with
correspondingly higher too.                     the forecast will give you an accurate

Weitere ähnliche Inhalte

Was ist angesagt? (20)

Sales budget & forecasting
Sales budget & forecastingSales budget & forecasting
Sales budget & forecasting
 
Sales forecasting
Sales forecastingSales forecasting
Sales forecasting
 
Types Of Quotas
Types Of QuotasTypes Of Quotas
Types Of Quotas
 
Retail Forecasting
Retail ForecastingRetail Forecasting
Retail Forecasting
 
Sales quota
Sales quotaSales quota
Sales quota
 
Sales presentation2
Sales presentation2Sales presentation2
Sales presentation2
 
Dynamic sales forecasting
Dynamic sales forecastingDynamic sales forecasting
Dynamic sales forecasting
 
Sales forecasting
Sales forecastingSales forecasting
Sales forecasting
 
SALES FORECASTING METHOD
SALES FORECASTING METHODSALES FORECASTING METHOD
SALES FORECASTING METHOD
 
Sales forecasting
Sales forecastingSales forecasting
Sales forecasting
 
Data analysis methods
Data analysis methodsData analysis methods
Data analysis methods
 
Pharma sales territory management
Pharma sales territory managementPharma sales territory management
Pharma sales territory management
 
Breakthrough To Fast Growth
Breakthrough To Fast GrowthBreakthrough To Fast Growth
Breakthrough To Fast Growth
 
Sales Forecasting Techniques
Sales Forecasting TechniquesSales Forecasting Techniques
Sales Forecasting Techniques
 
Spring 2012 group 2 marketing productivity
Spring 2012 group 2 marketing productivitySpring 2012 group 2 marketing productivity
Spring 2012 group 2 marketing productivity
 
Demand planning and inventories strategy
Demand planning and inventories strategyDemand planning and inventories strategy
Demand planning and inventories strategy
 
desining a sales territory (Sales management)
desining a sales territory (Sales management) desining a sales territory (Sales management)
desining a sales territory (Sales management)
 
The Company and The Market
The Company and The MarketThe Company and The Market
The Company and The Market
 
Sdm ppt
Sdm pptSdm ppt
Sdm ppt
 
Sales forecasting
Sales forecastingSales forecasting
Sales forecasting
 

Ähnlich wie Plummer Parsons Chartered Accountants Effective Sales Planning November 2011

Jk Marketing Opportunity I Vid
Jk Marketing Opportunity I VidJk Marketing Opportunity I Vid
Jk Marketing Opportunity I Vidjohn.klyza
 
Sales Forecasting Pipeline Or Pipe Dream
Sales Forecasting Pipeline Or Pipe DreamSales Forecasting Pipeline Or Pipe Dream
Sales Forecasting Pipeline Or Pipe DreamEvanLMorris
 
Heed Presentation
Heed PresentationHeed Presentation
Heed PresentationMazen Farah
 
Heed presentation
Heed presentationHeed presentation
Heed presentationMazen Farah
 
Marketing in a Recession Playbook
Marketing in a Recession PlaybookMarketing in a Recession Playbook
Marketing in a Recession PlaybookDana Vanden Heuvel
 
How a Global Manufacturer Successfully Enhanced its Pricing Structure in Four...
How a Global Manufacturer Successfully Enhanced its Pricing Structure in Four...How a Global Manufacturer Successfully Enhanced its Pricing Structure in Four...
How a Global Manufacturer Successfully Enhanced its Pricing Structure in Four...Cognizant
 
Sales And Operations Planning The Key To Continuous Demand Satisfaction
Sales And Operations Planning The Key To Continuous Demand SatisfactionSales And Operations Planning The Key To Continuous Demand Satisfaction
Sales And Operations Planning The Key To Continuous Demand SatisfactionArnold Mark Wells
 
Marketing Agility: A Brand Point Management Perspective
Marketing Agility: A Brand Point Management PerspectiveMarketing Agility: A Brand Point Management Perspective
Marketing Agility: A Brand Point Management PerspectiveSchawk, Inc.
 
Managing modern trade
Managing modern tradeManaging modern trade
Managing modern tradefahdmatloob
 
Budgetary procedures
Budgetary proceduresBudgetary procedures
Budgetary proceduresrajthewicked
 
Sales Pipeline Acceleration Achieving Enhanced Business Performance
Sales Pipeline Acceleration Achieving Enhanced Business PerformanceSales Pipeline Acceleration Achieving Enhanced Business Performance
Sales Pipeline Acceleration Achieving Enhanced Business PerformanceRandy Pilkenton
 
Price Management For Non Food Retailers
Price Management For Non Food RetailersPrice Management For Non Food Retailers
Price Management For Non Food RetailersArielAubry
 
Six essentials for sales force success
Six essentials for sales force successSix essentials for sales force success
Six essentials for sales force successForum Corporation
 
Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09Xactly Corp
 
Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09Wayne De Jager
 
Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09Wayne De Jager
 
Balanced Scorecard Intro To Basic Concepts
Balanced Scorecard   Intro To Basic ConceptsBalanced Scorecard   Intro To Basic Concepts
Balanced Scorecard Intro To Basic Conceptsngaungsan
 
Balanced Scorecard Intro To Basic Concepts
Balanced Scorecard   Intro To Basic ConceptsBalanced Scorecard   Intro To Basic Concepts
Balanced Scorecard Intro To Basic Conceptsngaungsan
 

Ähnlich wie Plummer Parsons Chartered Accountants Effective Sales Planning November 2011 (20)

Jk Marketing Opportunity I Vid
Jk Marketing Opportunity I VidJk Marketing Opportunity I Vid
Jk Marketing Opportunity I Vid
 
Sales Forecasting Pipeline Or Pipe Dream
Sales Forecasting Pipeline Or Pipe DreamSales Forecasting Pipeline Or Pipe Dream
Sales Forecasting Pipeline Or Pipe Dream
 
Heed Presentation
Heed PresentationHeed Presentation
Heed Presentation
 
Heed presentation
Heed presentationHeed presentation
Heed presentation
 
Marketing in a Recession Playbook
Marketing in a Recession PlaybookMarketing in a Recession Playbook
Marketing in a Recession Playbook
 
How a Global Manufacturer Successfully Enhanced its Pricing Structure in Four...
How a Global Manufacturer Successfully Enhanced its Pricing Structure in Four...How a Global Manufacturer Successfully Enhanced its Pricing Structure in Four...
How a Global Manufacturer Successfully Enhanced its Pricing Structure in Four...
 
Forecast Toppers
Forecast ToppersForecast Toppers
Forecast Toppers
 
Sales And Operations Planning The Key To Continuous Demand Satisfaction
Sales And Operations Planning The Key To Continuous Demand SatisfactionSales And Operations Planning The Key To Continuous Demand Satisfaction
Sales And Operations Planning The Key To Continuous Demand Satisfaction
 
Marketing Agility: A Brand Point Management Perspective
Marketing Agility: A Brand Point Management PerspectiveMarketing Agility: A Brand Point Management Perspective
Marketing Agility: A Brand Point Management Perspective
 
How to do Forecasting
How to do ForecastingHow to do Forecasting
How to do Forecasting
 
Managing modern trade
Managing modern tradeManaging modern trade
Managing modern trade
 
Budgetary procedures
Budgetary proceduresBudgetary procedures
Budgetary procedures
 
Sales Pipeline Acceleration Achieving Enhanced Business Performance
Sales Pipeline Acceleration Achieving Enhanced Business PerformanceSales Pipeline Acceleration Achieving Enhanced Business Performance
Sales Pipeline Acceleration Achieving Enhanced Business Performance
 
Price Management For Non Food Retailers
Price Management For Non Food RetailersPrice Management For Non Food Retailers
Price Management For Non Food Retailers
 
Six essentials for sales force success
Six essentials for sales force successSix essentials for sales force success
Six essentials for sales force success
 
Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09
 
Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09
 
Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09Xactly Dreamforce Presentation 11 16 09
Xactly Dreamforce Presentation 11 16 09
 
Balanced Scorecard Intro To Basic Concepts
Balanced Scorecard   Intro To Basic ConceptsBalanced Scorecard   Intro To Basic Concepts
Balanced Scorecard Intro To Basic Concepts
 
Balanced Scorecard Intro To Basic Concepts
Balanced Scorecard   Intro To Basic ConceptsBalanced Scorecard   Intro To Basic Concepts
Balanced Scorecard Intro To Basic Concepts
 

Mehr von nevillebeckhurst

Real Time Information - November 2012
Real Time Information - November 2012Real Time Information - November 2012
Real Time Information - November 2012nevillebeckhurst
 
Minimising Your Personal Tax Liability - November 2012
Minimising Your Personal Tax Liability - November 2012Minimising Your Personal Tax Liability - November 2012
Minimising Your Personal Tax Liability - November 2012nevillebeckhurst
 
The Insider - November 2012
The Insider - November 2012The Insider - November 2012
The Insider - November 2012nevillebeckhurst
 
Red Tape Regulation - October 2012
Red Tape Regulation - October 2012Red Tape Regulation - October 2012
Red Tape Regulation - October 2012nevillebeckhurst
 
The Insider - October 2012
The Insider - October 2012The Insider - October 2012
The Insider - October 2012nevillebeckhurst
 
The Insider - September 2012
The Insider - September 2012The Insider - September 2012
The Insider - September 2012nevillebeckhurst
 
Active Business Series - Estate Planning - September 2012
Active Business Series - Estate Planning - September 2012Active Business Series - Estate Planning - September 2012
Active Business Series - Estate Planning - September 2012nevillebeckhurst
 
Active Business Series - Tax and your Business - September 2012
Active Business Series - Tax and your Business - September 2012Active Business Series - Tax and your Business - September 2012
Active Business Series - Tax and your Business - September 2012nevillebeckhurst
 
Business Tax Planning August 2012 - Factsheet 13
Business Tax Planning August 2012 - Factsheet 13Business Tax Planning August 2012 - Factsheet 13
Business Tax Planning August 2012 - Factsheet 13nevillebeckhurst
 
Active Business Series - Exiting Your Business Aug 2012
Active Business Series - Exiting Your Business Aug 2012Active Business Series - Exiting Your Business Aug 2012
Active Business Series - Exiting Your Business Aug 2012nevillebeckhurst
 
Saving With A Tax Advantage - May 2012 - Active Business Series
Saving With A Tax Advantage - May 2012 - Active Business SeriesSaving With A Tax Advantage - May 2012 - Active Business Series
Saving With A Tax Advantage - May 2012 - Active Business Seriesnevillebeckhurst
 
Active Business Series - Red Tape Regulation April 2012
Active Business Series - Red Tape Regulation April 2012Active Business Series - Red Tape Regulation April 2012
Active Business Series - Red Tape Regulation April 2012nevillebeckhurst
 
Active Business Series - HR Spring Quarterly Update
Active Business Series - HR Spring Quarterly UpdateActive Business Series - HR Spring Quarterly Update
Active Business Series - HR Spring Quarterly Updatenevillebeckhurst
 
The Budget Report March 2012
The Budget Report March 2012The Budget Report March 2012
The Budget Report March 2012nevillebeckhurst
 

Mehr von nevillebeckhurst (20)

Real Time Information - November 2012
Real Time Information - November 2012Real Time Information - November 2012
Real Time Information - November 2012
 
Minimising Your Personal Tax Liability - November 2012
Minimising Your Personal Tax Liability - November 2012Minimising Your Personal Tax Liability - November 2012
Minimising Your Personal Tax Liability - November 2012
 
The Insider - November 2012
The Insider - November 2012The Insider - November 2012
The Insider - November 2012
 
Red Tape Regulation - October 2012
Red Tape Regulation - October 2012Red Tape Regulation - October 2012
Red Tape Regulation - October 2012
 
HR Update - Autumn 2012
HR Update - Autumn 2012HR Update - Autumn 2012
HR Update - Autumn 2012
 
The Insider - October 2012
The Insider - October 2012The Insider - October 2012
The Insider - October 2012
 
The Insider - September 2012
The Insider - September 2012The Insider - September 2012
The Insider - September 2012
 
Active Business Series - Estate Planning - September 2012
Active Business Series - Estate Planning - September 2012Active Business Series - Estate Planning - September 2012
Active Business Series - Estate Planning - September 2012
 
Active Business Series - Tax and your Business - September 2012
Active Business Series - Tax and your Business - September 2012Active Business Series - Tax and your Business - September 2012
Active Business Series - Tax and your Business - September 2012
 
Business Tax Planning August 2012 - Factsheet 13
Business Tax Planning August 2012 - Factsheet 13Business Tax Planning August 2012 - Factsheet 13
Business Tax Planning August 2012 - Factsheet 13
 
The Insider - August 2012
The Insider - August 2012The Insider - August 2012
The Insider - August 2012
 
Active Business Series - Exiting Your Business Aug 2012
Active Business Series - Exiting Your Business Aug 2012Active Business Series - Exiting Your Business Aug 2012
Active Business Series - Exiting Your Business Aug 2012
 
The Insider - June 2012
The Insider - June 2012The Insider - June 2012
The Insider - June 2012
 
The Insider May 2012
The Insider May 2012The Insider May 2012
The Insider May 2012
 
Saving With A Tax Advantage - May 2012 - Active Business Series
Saving With A Tax Advantage - May 2012 - Active Business SeriesSaving With A Tax Advantage - May 2012 - Active Business Series
Saving With A Tax Advantage - May 2012 - Active Business Series
 
Active Business Series - Red Tape Regulation April 2012
Active Business Series - Red Tape Regulation April 2012Active Business Series - Red Tape Regulation April 2012
Active Business Series - Red Tape Regulation April 2012
 
Active Business Series - HR Spring Quarterly Update
Active Business Series - HR Spring Quarterly UpdateActive Business Series - HR Spring Quarterly Update
Active Business Series - HR Spring Quarterly Update
 
The Insider April 2012
The Insider April 2012The Insider April 2012
The Insider April 2012
 
The Budget Report March 2012
The Budget Report March 2012The Budget Report March 2012
The Budget Report March 2012
 
The Insider March 2012
The Insider March 2012The Insider March 2012
The Insider March 2012
 

Plummer Parsons Chartered Accountants Effective Sales Planning November 2011

  • 1. Active PrActice UPDATEs NOveMBer 2011 plummerparsons ap-sf-nov2011 Effective sales planning The ability to predict realistic sales levels is essential for a business. Not only does it enable you to identify and deal with any possible cashflow issues, it also makes it easier to plan for growth, to exploit Business UPDATE openings in the market, and to manage operations and production. A sales forecast provides a business with just But don’t limit your analysis to the income • Calculating the effect of any planned such a capability. It sets out the level of sales generated by those sales. Take a look at changes to the business (if you are that a business can reasonably – a key word, the volume too. This will give you vital going to be putting up prices, for here – expect to achieve. information about possible production example, you will need to examine levels in the future, and about the costs that the impact this will have on both sales “The more detailed a forecast, the such operational matters as delivery, stock values and sales volumes) more accurate and practical it will be.” holding, and employment resources will • Looking at the effect of staffing changes involve. Preparing the ground (will you be investing in more sales staff • Assessing the impact of any changes To create an accurate and working sales Accounting for changes to the products or services your forecast, a business needs first to assemble in circumstance business offers (some new products some basic information covering past sales. may take time to achieve their potential This information should include: It is unlikely that the months of the year ahead sales levels; some products may be will exactly replicate the year that has gone. approaching the full limit of their sales • The numbers of customers gained and A business, therefore, must make certain, reach; while sales of other, older lost in the last year well-informed estimates, and assess any products may already be on the point • The (seasonal) periods (if any) when possible changes to circumstances that will of falling). sales rise or dip affect the volume and value of sales. Such • The value of sales made to each estimates, based on both past sales and What about seasonal trends? Factor in customer on any realistic ambitions for growth your surges and falls in demand. This will be • Specific product or service sales that are business has, will create the framework for critical when it comes to the delicate growing, flat-lining or declining the sales forecast. balance between income, paying supplier bills and stock holding (if a sales forecast • The impact of national economic There are a number of areas where you isn’t accurate you could find yourself with circumstances must take a balanced view of probable too much stock on your hands but without • Cyclical purchasing trends developments. These include: the customers to buy it). • One-off events (bad weather, for • Judging market trends (is the overall example) It is important to assign a definite value market likely to grow or contract; is your to each of these assumptions if the sales • The impact of particular measures that share of the market set to expand or forecast is to be meaningful. have been taken to push sales, such as decline?) a marketing campaign. 18 Hyde Gardens www.plummer-parsons.co.uk Eastbourne East Sussex BN21 4PT 01323 431 200 eastbourne@plummer-parsons.co.uk
  • 2. Effective sales planning Creating a sales Specifying the types of product each customer may purchase will give a indication of how well (or not) the business is performing. It will also allow you to forecast business the opportunity to predict make adjustments to operations and to possible supply issues and anticipate formulate plans – a boost to marketing Step one in drawing up a sales forecast both potential shortages and gluts, and to spend, a switch to alternative sources of is to estimate market demand. Market achieve a better balance between stock custom, a change in pricing policy – for demand for a product or a service is build-up and sales. correcting any downturn or for exploiting the total volume that would be bought any upturn. by customers, in a defined market or It is important to bear in mind that a sales geographic area, and in a defined time forecast is not a sales target – a figure It is vital also to consult with your sales period. aimed at defining, or encouraging, the staff as you draw up the forecast. sales effort over a given period – or a Allocating them targets they know to be Step two is to work out the share of sales budget – a figure used to cover impractical will be counterproductive. market demand that a business actually current purchasing, production and cash- And for an objective viewpoint, why not commands, be it on a national, regional flow decisions. get the advice of your accountants once or local scale. For example, if a local the forecast is complete – this can offer a bicycle firm believes that the overall The secret is to focus on the sales you very useful counter to any rosy-tinted (or bicycling market in the town in which it actually believe you will make rather self-effacingly modest) assumptions on your operates is £400,000 and its income is than on an ambition for sales. Otherwise part. £80,000 per year, then it has £400,000 the forecast becomes a marketing plan, divided by £80,000 or 20 per cent of establishing goals instead of concentrating the market. on the specifics of sales based on particular circumstances. Remember that Step three is to establish an expected level the purpose of the forecast is to help you of business sales based on a marketing gauge sales on a month-by-month basis plan. Will, for instance, that bicycling business be developing its website; will it and to help you control cashflow. summary be focusing on one product line (off-road bikes) at the expense of another (thin- Realism Sales forecasting is crucial to a business. It is both an aid to growth and an early wheeled track cycles); will it be targeting It is absolutely essential to make sure warning sign that problems need to increasing consumer awareness of ‘green’ that every figure is based on realistic be addressed. The watchwords are travel; will it be attempting to spread its assessments and not on projected or realism and a willingness to adapt to the sales across a broader area of the year; hoped-for increases in sales. While information the forecast may be giving will it be dropping its prices in order optimism has its place, over-estimation of you about the performance of your to lessen the impact of dead stock; will sales will end up burdening your business business. it be changing its stock management with expectations that could harm, not so that the shop is either extending or enhance, its performance. contracting its range; will it be questioning its dependence on the sales of children’s For this reason, all the figures should take bikes? into account what the business is capable of achieving in terms of productivity The sales forecast and capacity. If you are not planning on taking on more staff, don’t assume The more detailed a forecast, the more that productivity will rise by a significant accurate and practical it will be. amount. If you are not going to invest in a new plant, don’t assume - whatever the It can help, for example, to separate level of demand in the market - that output products out by market, area or customer. is going to outstrip your firm’s ability to It is also very useful to calculate the manufacture. percentage chance of any given sale actually occurring, as this will have an Once the sales forecast is determined, impact on its predicted value. Bear in try to avoid the temptation to tinker with If you would like our help in constructing mind that the likelihood of making a sale the figures too much (although some the sort of sales forecast that will give your to an existing customer is higher than adjustments may need to be made if business the best opportunities for success, converting a new customer, so the chance predictions appear to be off the mark). please don’t hesitate to contact us. of the sale happening in the former case is Comparing actual sales figures with correspondingly higher too. the forecast will give you an accurate