Plan and forecast sales

Sales forecasts enable you to manage your business more effectively. Before you begin, there are a few questions that may help clarify your position:

• How many new customers do you gain each year?
• How many customers do you lose each year?
• What is the average level of sales you make to each customer?
• Are there particular months where you gain or lose more customers than usual?

Existing businesses

The starting point for your sales forecast is last year's sales.

Before you factor in a new product launch, or an economic trend, look at the level of sales for each customer last year. Do you know of any customers who are going to buy more - or less - from you next year?

In the case of customers who account for a significant value of sales, you may want to ask them if they plan to change their purchase level in the foreseeable future.

New businesses

New businesses have to make assumptions based on market research and realistic judgement.

You could begin by listing the number of customers you think is realistic to achieve in your first year.  Then try to assign a realistic sales figure against each of them.

Bear in mind that a few larger customers are likely to account for a greater share of sales than the rest - although this depends on your type of business. There must inevitably be some guesswork here, but at least you should reach a forecast that is broadly in the right area.

Consider sales volume as well as value

Depending on your type of business, you may want to specify the volume of sales in the forecast - for example, how many five-litre cans of paint you expect to sell. By knowing the volume as well as the value of sales, you can plan what resources you're likely to need in terms of:

• production
• storage
• transport
• staffing