This can improve the communication between both departments and facilitate continuous improvements.

It presents targets that all departments can base their respective action plans on to support the sales team and generate better results. Sales forecasts can be an effective measuring tool where you gauge the efficiency of your sales team or the organisation as a whole. A sales forecast is a performance assessment tool. While the forecast’s accuracy is undoubtedly important, the sales forecaster should also put as much value on their reports’ relevance, value, and decision usefulness to the company. It is worth mentioning, however, that some executives or experts have the wrong mindset towards sales forecasting.Īccording to the research, “ Sales Forecasting, Market Research and the Value of Information” conducted by Michael Barron and David Targett of London Business School, forecasting experts have the tendency to focus (exceedingly) on the accuracy of their sales forecast instead of its decision usefulness. When you have all of these pertinent details at hand, you can now make educated decisions, that have a higher chance of bringing in outstanding results. It even tells you what your sales performance was in the past, giving you better insights on what would happen in you perform certain actions (like the ones you did in the past). Not only do sales forecasts have sales records and estimates in it, but it also includes events and their possible dates (among other things). Sales forecasts are remarkable decision-making tools since it gives you a better perspective of all the elements in place that can affect your sales. A sales forecast is a decision-making tool. It allows you to anticipate changes and make the necessary adjustments prior to the changes occurring. In short, you can mitigate risks or business problems through sales forecasting. A sales forecast is a mitigating measure.īecause sales forecasts enable you to see potential problems before they actually occur, it gives you ample amount of time to prepare for the potential problems, making it easier for you to avoid them. Elements like these can maximise your sales since you won’t have to turn down a single customer/client due to your lack of inventory.Īs you can probably imagine, having your goods ready and available in the market at the right time (or when demand is estimated to be high) can spell the difference between you getting hundreds of thousands of sales, or you not getting anything at all. When using a sales forecast as a planning tool, you are not only able to prepare your resources, but you can also stay consistent with supplying your goods in the market. Sales forecasts allow business owners to plan out their much-needed requirements such as their raw materials, workforce, budget, and other logistics-related needs. These events will almost always affect your number of sales. There are certain changes within a period that happen in regularity or those that are already sure to happen (like the seasons and occasions, for example). It reduces uncertainty and leads you to increased responsiveness and improved services. The act of planning is always one of the best ways to ensure adaptability to your business’ ever-changing ecosystem.

Budget forecast definition