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how to write sales forecast in business plan

  • Business strategy |
  • Sales forecasting: How to create a sale ...

Sales forecasting: How to create a sales forecast template (with examples)

Alicia Raeburn contributor headshot

A strong sales team is the key to success for most companies. They say a good salesperson can sell sand at the beach, but whether you’re selling products in the Caribbean or Antarctica, it all comes down to strategy. When you’re unsure if your current strategy is working, a sales forecast can help.

What is a sales forecast?

A sales forecast predicts future sales revenue using past business data. Your sales forecast can predict a number of different things, including the number of new sales for an existing product, the new customers you’ll gain, or the memberships you’ll sell in a given time period. These forecasts are then used during project planning to determine how much you should allocate towards new products and services. 

Why is sales forecasting important?

Sales forecasting helps you keep a finger on your business’s pulse. It sets the ground rules for a variety of business operations, including your sales strategy and project planning. Once you calculate your sales projections, you can use the results to assess your business health, predict cash flow, and adjust your plans accordingly.

[inline illustration] the importance of sales forecasting (infographic)

An effective sales forecasting plan:

Predicts demand: When you have an idea of how many units you may sell, you can get a head start on production.

Helps you make smart investments: If you have future goals of expanding your business with new locations or products, knowing when you’ll have the income to do so is important. 

Contributes to goal setting: Your sales forecast can help you set goals outside of investments as well, like outshining competitors or hiring new team members.

Guides spending: Your sales forecast may be the wake-up call you need to set a budget and use cost control to reduce expenses.

Improves the sales process: You can change your current sales process based on the sales projections you’re unhappy with.

Highlights financial problems: Your sales forecast template will open your eyes to problem areas you may not have noticed otherwise. 

Helps with resource management: Do you have the resources you need to fill orders if it’s an accurate sales forecast? Your sales forecast can guide how you allocate and manage resources to hit targets.

When you have an accurate prediction of your future sales, you can use your projections to adjust your current sales process.

Sales forecasting methods

Sales forecasting is an important part of strategic business planning because it enables sales managers and teams to predict future sales and make informed decisions. But why are there multiple sales forecasting methods? Simply put, businesses vary in size, industry, and market dynamics, so no single methodology suits all.

Choosing the right sales forecasting method is more of an art than a science. It involves:

Analyzing your business size and industry

Assessing the available data and tools

Understanding your sales cycle's complexity

A few telltale signs that you've picked the correct approach include:

Improved accuracy in sales target predictions

Enhanced understanding of market trends

Better alignment with your business goals

Opportunity stage forecasting

Opportunity stage forecasting is a dynamic approach ideal for businesses using CRM systems like Salesforce. It assesses the likelihood of sales closing based on the stages of the sales pipeline. This method is particularly beneficial for sales organizations with a clearly defined sales process.

For example, a software company might use this method to forecast sales by examining the number of prospects in each stage of their funnel, from initial contact to final negotiation.

Pipeline forecasting method

The pipeline forecasting method is similar to opportunity stage forecasting but focuses more on the volume and quality of leads at each pipeline stage. It's particularly useful for businesses that rely heavily on sales forecasting tools and dashboards for decision-making.

A real estate agency could use it by examining the number of properties listed, the stage of negotiations, and the number of closings forecasted in the pipeline.

Length of sales cycle forecasting

Small businesses often prefer the length of sales cycle forecasting. It's straightforward and involves analyzing the duration of past sales cycles to predict future ones. This method is effective for businesses with consistent sales cycle lengths.

A furniture manufacturer, for instance, might use this method by analyzing the average time taken from initial customer contact to closing a sale in the past year.

Intuitive forecasting

Intuitive forecasting relies on the expertise and intuition of sales managers and their teams. It's less about spreadsheets and more about market research and understanding customer behavior. This method is often used with other, more data-driven approaches.

A boutique fashion store, for example, might use this method, relying on the owner's deep understanding of fashion trends and customer preferences.

Historical forecasting

Historical forecasting uses past performance data to predict future sales. This method is advantageous for businesses with ample historical sales data. It's less effective for new markets or rapidly changing industries.

An established book retailer could use historical data from previous years, considering seasonal trends and past marketing campaigns, to forecast next quarter's sales.

Multivariable analysis forecasting

Multivariable analysis forecasting is a more sophisticated method that's ideal for larger sales organizations. It analyzes factors like market trends, economic conditions, and marketing efforts to provide a holistic view of potential sales outcomes.

An automotive company, for example, could analyze factors like economic conditions, competitor activity, and past sales data to forecast future car sales.

How to calculate sales forecast

Sales forecasts determine how much you expect to do in sales for a given time frame. For example, let’s say you expect to sell 100 units in Q1 of fiscal year 2024. To calculate sales forecasts, you’ll use past data to predict future trends. 

When you’re first creating a forecast, it’s important to establish benchmarks that determine how much you normally sell of any given product to how many people. Compare historical sales data against sales quotas—i.e., how much you sold vs. how much you expected to sell. This type of analysis can help you set a baseline for what you expect to achieve every week, month, quarter, and so on.

For many companies, this means establishing a formula. The exact inputs will vary based on your products or services, but generally, you can use the following:

Sales forecast = Number of products you expect to sell x The value of each product

For example, if you sell SaaS products, your sales forecast might look something like this: 

SaaS FY24 Sales forecast = Number of expected subscribers x Subscription price

Ultimately, the sales forecasting process is a guess—but it’s an educated one. You’ll use the information you already have to create a data-driven forecasting model. How accurate your forecast is depends on your sales team. The sales team uses facts such as their prospects, current market conditions, and their sales pipeline. But they will also use their experience in the field to decide on final numbers for what they think will sell. Because of this, sales leaders are more likely to have better forecasting accuracy than new members of the sales team.

Sales forecast vs. sales goal

Your sales forecast is based on historical data and current market conditions. While you always hope your sales goals are attainable—and you can use data to estimate what your team is capable of—your goals might not line up directly with your forecast. This can be for a number of reasons, including wanting to create stretch goals that push your sales team beyond what they’ve done in the past or big, pie-in-the-sky goals that boost investor confidence.

How to create a sales forecast

There are different sales forecasting methods, and some are simpler than others. With the steps below, you’ll have a basic understanding of how to create a sales forecast template that you can customize to the method of your choice. 

[inline illustration] 5 steps to make a sales forecast template (infographic)

1. Track your business data

Without details from your past sales, you won’t have anything to base your predictions on. If you don’t have past sales data, you can begin tracking sales now to create a sales forecast in the future. The data you’ll need to track includes:

Number of units sold per month

Revenue of each product by month

Number of units returned or canceled (so you can get an accurate sales calculation)

Other items you can track to make your predictions more accurate include:

Growth percentage

Number of sales representatives

Average sales cycle length

There are different ways to use these data points when forecasting sales. If you want to calculate your sales run rate, which is your projected revenue for the next year, use your revenue from the past month and multiply it by 12. Then, adjust this number based on other relevant data points, like seasonality.

Tip: The best way to track historical data is to use customer relationship management (CRM) software. When you have a CRM strategy in place, you can easily pull data into your sales forecast template and make quick projections.

2. Set your metrics

Before you perform the calculations in your sales forecast template, you need to decide what you’re measuring. The basic questions you should ask are:

What is the product or service you’re selling and forecasting for? Answering this question helps you decide what exactly you’re evaluating. For example, you can investigate future trends for a long-standing product to decide whether it’s worth continuing, or you can predict future sales for a new product. 

How far in the future do you want to make projections? You can decide to make projections for as little as six months or as much as five years in the future. The complexity of your sales forecast is up to you.

How much will you sell each product for, and how do you measure your products? Set your product’s metrics, whether they be units, hours, memberships, or something else. That way, you can calculate revenue on a price-per-unit basis.

How long is your sales cycle? Your sales cycle—also called a sales funnel—is how long it takes for you to make the average sale from beginning to end. Sales cycles are often monthly, quarterly, or yearly. Depending on the product you’re selling, your sales cycle may be unique. Steps in the sales cycle typically include:

Lead generation

Lead qualification

Initial contact

Making an offer

Negotiation

Closing the deal

Tip: You can still project customer growth versus revenue even if your company is in its early phases. If you don’t have enough historical data to use for your sales forecast template, you can use data from a company similar to yours in the market. 

3. Choose a forecasting method

While there are many forecasting methods to choose from, we’ll concentrate on two straightforward approaches to provide a clear understanding of how sales forecasting can be implemented efficiently. The top-down method starts with the total size of the market and works down, while the bottom-up method starts with your business and expands out.

Top-down method: To use the top-down method, start with the total size of the market—or total addressable market (TAM). Then, estimate how much of the market you think your business can capture. For example, if you’re in a large, oversaturated market, you may only capture 3% of the TAM. If the total addressable market is $1 billion, your projected annual sales would be $30 million. 

Bottom-up method: With the bottom-up method, you’ll estimate the total units your company will sell in a sales cycle, then multiply that number by your average cost per unit. You can expand out by adding other variables, like the number of sales reps, department expenses, or website views. The bottom-up forecasting method uses company data to project more specific results. 

You’ll need to choose one method to fill in your sales forecast template, but you can also try both methods to compare results.

Tip: The best forecasting method for you may depend on what type of business you’re running. If your company experiences little fluctuation in revenue, then the top-down forecasting method should work well. The top-down model can also work for new businesses that have little business data to work with. Bottom-up forecasting may be better for seasonal businesses or startups looking to make future budget and staffing decisions.

4. Calculate your sales forecast

You’ve already learned a basic way to calculate revenue using the top-down method. Below, you’ll see another way to estimate your projected sales revenue on an annual scale.

Divide your sales revenue for the year so far by the number of months so far to calculate your average monthly sales rate.

Multiply your average monthly sales rate by the number of months left in the year to calculate your projected sales revenue for the rest of the year.

Add your total sales revenue so far to your projected sales revenue for the rest of the year to calculate your annual sales forecast.

A more generalized way to estimate your future sales revenue for the year is to multiply your total sales revenue from the previous year.

Example: Let’s say your company sells a software application for $300 per unit and you sold 500 units from January to March. Your sales revenue so far is $150,000 ($300 per unit x 500 units sold). You’re three months into the calendar year, so your average monthly sales rate is $50,000 ($150,000 / 3 months). That means your projected sales revenue for the rest of the year is $450,000 ($50,000 x 9 months).

5. Adjust for external factors

A sales forecast predicts future revenue by making assumptions about your growth rate based on past success. But your past success is only one component of your growth rate. There are external factors outside of your control that can affect sales growth—and you should consider them if you want to make accurate projections. 

Some external factors you can adjust your calculations around include:

Inflation rate: Inflation is how much prices increase over a specific time period, and it usually fluctuates based on a country’s overall economic state. You can take your annual sales forecast and factor in inflation rate to ensure you’re not projecting a higher or lower number of sales than the economy will permit.

The competition: Is your market becoming more competitive as time goes on? For example, are you selling software during a tech boom? If so, assess whether your market share will shrink because of rising competition in the coming year(s).

Market changes: The market can shift as people change their behavior. Your audience may spend an average of six hours per day on their phones in one year. In the next year, mental health awareness may cause phone usage to drop. These changes are hard to predict, so you must stay on top of market news.

Industry changes: Industry changes happen when new products and technologies come on the market and make other products obsolete. One instance of this is the invention of AI technology.

Legislation: Although not as common, changes in legislation can affect the way companies sell their products. For example, vaping was a multi-million dollar industry until laws banned the sale of vape products to people under the age of 21. 

Seasonality: Many industries experience seasonality based on how human behavior and human needs change with the seasons. For example, people spend more time inside during the winter, so they may be on their computers more. Retail stores may also experience a jump in sales around Christmas time.

Tip: You can create a comprehensive sales plan to set goals for team members. Aside from revenue targets and training milestones, consider assigning each of these external factors to your team members so they can keep track of essential information. That way, you’ll have your bases covered on anything that may affect future sales growth. 

Sales forecast template

Below you’ll see an example of a software company’s six-month sales forecast template for two products. Product one is a software application, and product two is a software accessory. 

In this sales forecast template, the company used past sales data to fill in each month. They projected their sales would increase by 10% each month because of a 5% increase in inflation and because they gained 5% more of the market. They kept their price per unit the same as the previous year.

Putting both products in the same chart can help the company see that their lower-cost product—the software accessory—brings in more revenue than their higher-cost product. The company can then use this insight to create more low-cost products in the future.

Sales forecast examples

Sales forecasting is not a one-size-fits-all process. It varies significantly across industries and business sizes. Understanding this through practical examples can help businesses identify the most suitable forecasting method for their unique needs.

[inline illustration] 6 month sales forecast (example)

Sales forecasting example 1: E-commerce

In the e-commerce sector, where trends can shift rapidly, intuitive forecasting is often useful for making quick, informed decisions.

Scenario: An e-commerce retailer specializing in fashion accessories is planning for the upcoming festive season.

Trend analysis phase: The team spends the first week analyzing customer feedback and current fashion trends on social media, using intuitive forecasting to predict which products will be popular.

Inventory planning phase: Based on these insights, the next three weeks are dedicated to selecting and ordering inventory, focusing on products predicted to be in high demand.

Sales monitoring and adjustment: As the holiday season approaches, the team closely monitors early sales data, ready to adjust their inventory and marketing strategies based on real-time sales performance.

This approach allows the e-commerce retailer to stay agile , adapting quickly to market trends and customer preferences.

Sales forecasting example 2: Software development

For a software development company, especially one working with B2B clients, opportunity stage forecasting can help predict sales and manage the sales pipeline effectively.

Scenario: A software development company is launching a new project management tool.

Lead generation and qualification phase: In the initial month, the sales team focuses on generating leads, qualifying them, and categorizing potential clients based on their progress through the sales pipeline.

Proposal and negotiation phase: For the next two months, the team works on creating tailored proposals for high-potential leads and enters negotiation stages, using opportunity stage forecasting to predict the likelihood of deal closures.

Closure and review: In the final phase, the team aims to close deals, review the accuracy of their initial forecasts, and refine their approach based on the outcomes.

Opportunity stage forecasting enables the software company to efficiently manage its sales pipeline , focusing resources on the most promising leads and improving their chances of successful deal closures.

Pair your sales forecast with a strong sales process

A sales forecast is only one part of the larger sales picture. As your team members acquire leads and close deals, you can track them through the sales pipeline. A solid sales plan is the foundation of future success.  

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How to Create a Sales Forecast

Female entrepreneur standing at the front of her shop reviewing receipts to start organizing categories for a sales forecast.

11 min. read

Updated October 27, 2023

Download Now: Free Pitch Deck Template →

Business owners are often afraid to forecast sales. But, you shouldn’t be. Because you can successfully forecast your own business’s sales.

You don’t have to be an MBA or CPA. It’s not about some magic right answer that you don’t know. It’s not about training you don’t have. It doesn’t take spreadsheet modeling (much less econometric modeling) to estimate units and price per unit for future sales. You just have to know your own business. 

Forecasting isn’t about seeing into the future

Sales forecasting is much easier than you think and much more useful than you imagine.

I was a vice president of a market research firm for several years, doing expensive forecasts, and I saw many times that there’s nothing better than the educated guess of somebody who knows the business well. All those sophisticated techniques depend on data from the past — and the past, by itself, isn’t the best predictor of the future. You are.

It’s not about guessing the future correctly. We’re human; we don’t do that well. Instead, it’s about setting down assumptions, expectations, drivers, tracking, and management. It’s about doing your job, not having precognitive powers. 

  • Successful forecasting is driven by regular reviews

What really matters is that you review and revise your forecast regularly. Spending should be tied to sales, so the forecast helps you budget and manage. You measure the value of a sales forecast like you do anything in business, by its measurable business results.

That also means you should not back off from forecasting because you have a new product, or new business, without past data. Lay out the sales drivers and interdependencies, to connect the dots, so that as you review plan-versus-actual results every month, you can easily make course corrections.

If you think sales forecasting is hard, try running a business without a forecast. That’s much harder.

Your sales forecast is also the backbone of your business plan . People measure a business and its growth by sales, and your sales forecast sets the standard for  expenses , profits, and growth. The sales forecast is almost always going to be the first set of numbers you’ll track for plan versus actual use, even if you do no other numbers.

If nothing else, just forecast your sales, track plan-versus-actual results, and make corrections — that process alone, just the sales forecast and tracking is in itself already business planning. To get started on building your forecast follow these steps.

And if you run a subscription-based business, we have a guide dedicated to building a sales forecast for that business model.

  • Step 1: Set up your lines of sales

Most forecasts show several distinct lines of sales. Ideally, your sales lines match your accounting, but not necessarily in the same level of detail.   

For example, a restaurant ought not to forecast sales for each item on the menu. Instead, it forecasts breakfasts, lunches, dinners, and drinks, summarized. And a bookstore ought not to forecast sales by book, and not even by topic or author, but rather by lines of sales such as hardcover, softcover, magazines, and maybe categories (such as fiction, non-fiction, travel, etc.) if that works.

Always try to set your streams to match your accounting, so you can look at the difference between the forecast and actual sales later. This is excellent for real business planning. It makes the heart of the process, the regular review, and revision, much easier. The point is better management.

For instance, in a bicycle retail store business plan, the owner works with five lines of sales, as shown in the illustration here.  

how to write sales forecast in business plan

In this sample case, the revenue includes new bikes, repair, clothing, accessories, and a service contract. The bookkeeping for this retail store tracks sales in those same five categories.

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  • Step 2: Forecast line by line

There are many ways to forecast a line of sales.

The method for each row depends on the business model

Among the main methods are:.

  • Unit sales : My personal favorite. Sales = units times price. You set an average price and forecast the units. And of course, you can change projected pricing over time. This is my favorite for most businesses because it gives you two factors to act on with course corrections: unit sales, or price.
  • Service units : Even though services don’t sell physical units, most sell billable units, such as billable hours for lawyers and accountants, or trips for transportations services, engagements for consultants, and so forth.
  • Recurring charges : Subscriptions. For each month or year, it has to forecast new signups, existing monthly charges, and cancellations. Estimates depend on both new signups and cancellations, which is often called “churn.”
  • Revenue only : For those who prefer to forecast revenue by the stream as just the money, without the extra information of breaking it into units and prices.

Most sales forecast rows are simple math

For a business plan, I recommend you make your sales forecast a detailed look at the next 12 months and then broadly cover two years after that. Here’s how to approach each method of line-by-line forecasting.

Start with units if you can

For unit sales, start by forecasting units month by month, as shown here below for the new bike’s line of sales in the bicycle shop plan:

how to write sales forecast in business plan

I recommend looking at the visual as you forecast the units because most of us can see trends easier when we look at the line, as shown in the illustration, rather than just the numbers. You can also see the numbers in the forecast near the bottom. The first year, fiscal 2021 in this forecast, is the sum of those months.

Estimate price assumptions

With a simple revenue-only assumption, you do one row of units as shown in the above illustration, and you are done. The units are dollars, or whatever other currency you are using in your forecast. In this example, the new bicycle product will be sold for an average of $550.00. 

That’s a simplifying assumption, taking the average price, not the detailed price for each brand or line. Garrett, the shop owner, uses his past results to determine his actual average price for the most recent year. Then he rounds that estimate and adds his own judgment and educated guess on how that will change. 

how to write sales forecast in business plan

Multiply price times units

Multiplying units times the revenue per unit generates the sales forecast for this row. So for example the $18,150 shown for October of 2020 is the product of 33 units times $550 each. And the $21,450 shown for the next month is the product of 39 units times $550 each. 

Subscription models are more complicated

Lately, a lot of businesses offer their buyers subscriptions, such as monthly packages, traditional or online newspapers, software, and even streaming services. All of these give a business recurring revenues, which is a big advantage. 

For subscriptions, you normally estimate new subscriptions per month and canceled subscriptions per month, and leave a calculation for the actual subscriptions charged. That’s a more complicated method, which demands more details. 

For that, you can refer to detailed discussions on subscription forecasting in How to Forecast Sales for a Subscription Business .

  • But how do you know what numbers to put into your sales forecast?

The math may be simple, yes, but this is predicting the future, and humans don’t do that well. So, don’t try to guess the future accurately for months in advance.

Instead, aim for making clear assumptions and understanding what drives your sales, such as web traffic and conversions, in one example, or the direct sales pipeline and leads, in another. Review results every month, and revise your forecast. Your educated guesses become more accurate over time.

Experience in the field is a huge advantage

In a normal ongoing business, the business owner has ample experience with past sales. They may not know accounting or technical forecasting, but they know their business. They are aware of changes in the market, their own business’s promotions, and other factors that business owners should know. They are comfortable making educated guesses.

If you don’t personally have the experience, try to find information and make guesses based on the experience of an employee,  your mentor , or others you’ve spoken within your field.

Use past results as a guide

Use results from the recent past if your business has them. Start a forecast by putting last year’s numbers into next year’s forecast, and then focus on what might be different this year from next.

Do you have new opportunities that will make sales grow? New marketing activities, promotions? Then increase the forecast. New competition, and new problems? Nobody wants to forecast decreasing sales, but if that’s likely, you need to deal with it by cutting costs or changing your focus.

Look for drivers

To forecast sales for a new restaurant, first, draw a map of tables and chairs and then estimate how many meals per mealtime at capacity, and in the beginning. It’s not a random number; it’s a matter of how many people come in.

To forecast sales for a new mobile app, you might get data from the Apple and Android mobile app stores about average downloads for different apps. A good web search might also reveal some anecdotal evidence, blog posts, and news stories, about the ramp-up of existing apps that were successful.

Get those numbers and think about how your case might be different. Maybe you drive downloads with a website, so you can predict traffic from past experience and then assume a percentage of web visitors who will download the app.

  • Estimate direct costs

Direct costs are also called the cost of goods sold (COGS) and per-unit costs. Direct costs are important because they help calculate gross margin, which is used as a basis for comparison in financial benchmarks, and are an instant measure (sales less direct costs) of your underlying profitability.

For example, I know from benchmarks that an average sporting goods store makes a 34 percent gross margin. That means that they spend $66 on average to buy the goods they sell for $100.

Not all businesses have direct costs. Service businesses supposedly don’t have direct costs, so they have a gross margin of 100 percent. That may be true for some professionals like accountants and lawyers, but a lot of services do have direct costs. For example, taxis have gasoline and maintenance. So do airlines.

A normal sales forecast includes units, price per unit, sales, direct cost per unit, and direct costs. The math is simple, with the direct costs per unit related to total direct costs the same way price per unit relates to total sales.

Multiply the units projected for any time period by the unit direct costs, and that gives you total direct costs. And here too, assume this view is just a cut-out, it flows to the right. In this example, Garrett the shop owner projected the direct costs of new bikes based on the assumption of 49 percent of sales.

how to write sales forecast in business plan

Given the unit forecast estimate, the calculation of units times direct costs produces the forecast shown in the illustration below for direct costs for that product. So therefore the projected direct costs for new bikes in October is $8,894, which is 49% of the projected sales for that month, $18,150.

how to write sales forecast in business plan

  • Never forecast in a vacuum

Never think of your sales forecast in a vacuum. It flows from the strategic action plans with their assumptions,  milestones , and metrics. Your marketing milestones affect your sales. Your business offering milestones affect your sales.

When you change milestones—and you will, because all business plans change—you should change your sales forecast to match.

  • Timing matters

Your sales are supposed to refer to when the ownership changes hands (for products) or when the service is performed (for services). It isn’t a sale when it’s ordered, or promised, or even when it’s contracted.

With proper  accrual accounting , it is a sale even if it hasn’t been paid for. With so-called cash-based accounting, by the way, it isn’t a sale until it’s paid for. Accrual is better because it gives you a more accurate picture, unless you’re very small and do all your business, both buying and selling, with cash only.

I know that seems simple, but it’s surprising how many people decide to do something different. The penalty for doing things differently is that then you don’t match the standard, and the bankers, analysts, and investors can’t tell what you meant.

This goes for direct costs, too. The direct costs in your monthly  profit and loss statement  are supposed to be just the costs associated with that month’s sales. Please notice how, in the examples above, the direct costs for the sample bicycle store are linked to the actual unit sales.

  • Live with your assumptions

Sales forecasting is not about accurately guessing the future. It’s about laying out your assumptions so you can manage changes effectively as sales and direct costs come out different from what you expected. Use this to adjust your sales forecast and improve your business by making course corrections to deal with what is working and what isn’t.

I believe that even if you do nothing else, by the time you use a sales forecast and review plan versus actual results every month, you are already managing with a business plan . You can’t review actual results without looking at what happened, why, and what to do next.

Content Author: Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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  • Forecasting isn’t about seeing into the future

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How to Do a Sales Forecast for Your Business the Right Way

Posted june 8, 2021 by noah parsons.

how to write sales forecast in business plan

New entrepreneurs frequently ask me for advice about forecasting their sales . These entrepreneurs are always optimistic about the future of their new company. However, when it comes to the details, most aren’t sure how to predict future sales and how much money they’re going to make.

It’s an intimidating task, looking into the future. The good thing is, none of us are fortune tellers and none of us know any more about your new business than you do. (If you do happen to be able to see into the future, please just skip the whole startup thing and go play the stock market. It’ll be much easier and make you richer!)

So, my advice is always to just take a deep breath and relax. You’re as well equipped as everyone else to put together a credible, reasonably accurate forecast. Let’s dive right in and figure it out.

What is sales forecasting?

Sales forecasting is the process of estimating future sales with the goal of better informing your decisions. A forecast is typically based on any combination of past sales data, industry benchmarks, or economic trends. It’s a method designed to help you better manage your workforce, ash flow, and any other resources that may affect revenue and sales

It’s typically easier for established businesses to create more accurate sales forecasts based on previous sales data. Newer businesses, on the other hand, will have to rely on market research, competitive benchmarks, and other forms of interest to establish a baseline for sales numbers. 

Why is sales forecasting important?

Your sales forecast is the foundation of the financial story that you are creating for your business. Once you have your sales forecast complete, you’ll be able to easily create your profit and loss statement , c ash flow statement, and balance sheet.

Sales forecasts help you set goals

But beyond just setting the stage for a complete financial forecast, your sales forecast is really all about setting goals for your company . You’re looking to answer questions like:

  • What do you hope to achieve in the next month? Year? 5-years? 
  • How many customers do you hope to have next month and next year?
  • How much will each customer hopefully spend with your company?

Your sales forecast will help you answer all of these questions and potentially any others that involve the future of your business.

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Sales forecasts inform investors

Having a solid sales forecast also provides a picture of your performance and performance milestones for potential investors. Like you, they want to be sure you have established goals and a firm trajectory for your business laid out. The more detailed, organized, and up-to-date your forecast is, the better you explain the position of your business to third parties and even employees.

How to use your sales forecast for budgeting

Your sales forecast is also your guide to how much you should be spending. Assuming you want to run a profitable business , you’ll use your sales forecast to guide what you should be spending on marketing to acquire new customers and how much you should be spending on operations and administration. 

Now, you don’t always need to be profitable, especially if you are trying to expand aggressively. But, you’ll eventually need your expenses to be less than your sales in order to turn a profit.

How detailed should your forecast be?

When you’re forecasting your sales , the first thing you should do is figure out what you should create a forecast for. You don’t want want to be too generic and just forecast sales for your entire company. On the other hand, you don’t want to create a forecast for every individual product or service that you sell.

For example, if you’re starting a restaurant, you don’t want to create forecasts for each item on the menu. Instead, you should focus on broader categories like lunch, dinner, and drinks. If you’re starting a clothing shop, forecast the key categories of clothing that you sell, like outerwear, casual wear, and so on.

You’ll probably want between three to ten categories covering the types of sales that you do. More than ten is going to be a lot of work to forecast and fewer than three probably means that you haven’t divided things up quite enough.

You really can’t get this wrong. After all, it’s just forecasting and you can always come back and adjust your categories later. Just pick a few to get started and move on.

Which forecasting model is best? Top-down or bottom-up?

Before they have much historical sales data, lots of startups make this mistake—and it’s a big one. They forecast “from the top down.” What that means is that they figure out the total size of the market ( TAM, or total addressable market ) and then decide that they will capture a small percentage of that total market.

For example, in 2015, more than 1.4 billion smartphones were sold worldwide. It’s pretty tempting for a startup to say that they’re going to get 1 percent of that total market. After all, 1 percent is such a tiny little number, it’s got to be believable, right?

The problem is that this kind of guessing is not based on any kind of reality. Sure, it looks like it might be credible on the surface, but you have to dig deeper. What’s driving those sales? How are people finding out about this new smartphone company? Of the people that find out about the new company, how many are going to buy?

So, instead of forecasting “from the top-down,” do a “bottom-up” forecast. Just like the name suggests, bottom-up forecasting is more of an educated guess, starting at the bottom and working up to a forecast.

Start by thinking about how many potential customers you might be able to make contact with; this could be through advertising, sales calls, or other marketing methods. This is your SOM (your “share of the market”), the subset of your 1 percent of the market that you will realistically reach—particularly in the first few years of your business. This is your target market .

Of the people you can reach, how many do you think you’ll be able to bring in the door or get onto your website? And finally, of the people that come in the door, get on the phone, or visit your site, how many will buy?

Here’s an example:

  • 10,000 people see my company’s ad online
  • 1,000 people click from the ad to my website
  • 100 people end up making a purchase

Obviously, these are all nice round numbers, but it should give you an idea of how bottom-up forecasting works.

The last step of the bottom-up forecasting method is to think about the average amount that each of those 100 people in our example ends up spending. On average, do they spend $20? $100? It’s O.K. to guess here, and the best way to refine your guess is to go out and talk to your potential customers and interview them. You’ll be surprised how accurate a number you can get with a few simple interviews.

How to create a sales forecast

Keep in mind that your sales forecast is an estimate of the number of goods and services you believe you can sell over a period of time. This will also include the cost to produce and sell those goods and services, as well as the estimated profit you’ll come away with.

We’ll dive into specific methods, assumptions, and questions you’ll need to ask in order to build a viable sales forecast. But to start, here are the general steps you’ll need to take to create a sales forecast:

  • List out the goods and services you sell
  • Estimate how much of each you expect to sell
  • Define the unit price or dollar value of each good or service sold
  • Multiply the number sold by the price
  • Determine how much it will cost to produce and sell each good or service
  • Multiply this cost by the estimated sales volume
  • Subtract the total cost from the total sales

This is a super basic rundown of what is included in your sales forecast to give you an idea of what to expect. For example, you may find the need to aggregate similar items into unified categories, if you sell a large variety of items. And if at all possible, try to keep your forecasted items grouped similarly to how they appear on your accounting statements to make updates easier.

Check out this video for a quick overview of how to forecast sales:

YouTube video

Now let’s dive into some specific elements of your forecast you’ll need to define ahead of time.

Should you forecast in units or dollars?

Let’s start by talking about “unit” sales.

A “unit” is simply a stand-in for whatever it is that you are selling. A single lunch at a restaurant would be a unit. An hour of consulting work is also a unit. The word “unit” is just a generic way to talk about whatever it is that you are selling.

Now that’s out of the way, let’s talk about why you should forecast by units.

Units help you think about the number of products, hours, meals, and so on, that you are selling. It’s easier to think about sales this way rather than to think just in dollars (or yen, or pounds, or rand, etc.).

With a dollar-based forecast, you are only thinking about the total amount of money that you’ll make in a given month, rather than the details of the number of units that you are selling and the average price you are selling each unit for.

To forecast by units, you predict how many units you’re going to sell each month—using the bottom-up method of course. Then, you figure out what the average price is going to be for each unit. Multiply those two numbers together and you have the total sales you plan on making each month.

For example, if you plan on selling 1,000 units at $20 each, you’ll make $20,000.

how to write sales forecast in business plan

When you forecast by units, you have a couple of different variables to play with: What if I’m able to sell more units? What if I raise or lower my prices?

Also, there’s another benefit: At the end of a month of sales, I can look back at my forecast and see how I did compared to the forecast in greater detail. Did I meet my goals because I sold more units? Or did I sell for a higher price than I thought I would? This level of detail helps you guide your business and grow it moving forward.

Sales forecast assumptions

One thing to remember is that your sales forecast is built on assumptions. You’re not predicting the future, but aggregating information to help define your future outlook. These assumptions are always changing, meaning that you’ll need to have a pulse on the following:  

Market conditions

Having a general understanding of the macro effects on your business can help you better predict overall growth. A growing or shrinking market can either provide a low or high ceiling for potential sales increases. So, you need to understand how your business can react to any changes.

What does the broader market look like? Is the economy slowing or growing? Is the industry you operate in seeing an influx of competition? Maybe there’s a labor or material shortage? Are there new customers you now have access to?

Products and services

You may find yourself making regular changes to your products and services. This can be sales factors that impact the customer, or production factors that impact the overall cost. 

Are you making any changes or updates to current offerings? Are you launching a new product or service that compliments or disrupts your existing sales? Are you adjusting prices or sales channels? Are you able to decrease the cost of production? Or are expenses rising due to material, labor, or other production costs?

Seasonality

Depending on what you’re selling, you may find dips or increases in sales at specific times during the year. This seasonality may have to do with the weather, holidays, product/feature releases, or a number of other predictable factors. 

If you have been operating for a while, you can likely look at your accounting data to identify any trends. If you’re a new business look to your competitors to see how they act during specific times of the year to help you identify these trends earlier on.

Marketing efforts

How much you spend on marketing, and even your messaging may have an impact on your overall sales. Make sure that you connect any performance changes to marketing efforts that may affect your performance.

Are you launching a new marketing campaign? Are you spending more or less on advertising? Are you adjusting your targeting for digital ads? Are you branching out or removing specific marketing channels from your overall strategy?

Regulatory changes

You may find that specific laws or regulations directly impact your industry. It’s difficult to anticipate what legislation will provide a negative or positive impact, and just how often this type of regulatory change may occur. The best thing you can do is keep your ear to the ground, and be ready to adjust expenses or sales when any changes appear to make traction.

How far forward should you forecast?

I recommend that you forecast monthly for 12 months into the future and then just develop an annual sales forecast for another three to five years.

The further your forecast into the future, the less you’re going to know and the less benefit it’s going to have for you. After all, the world is going to change, your business is going to change, and you’ll be updating your forecast to reflect those changes.

12 months from now is far enough into the future to guess. You’ll have to update your forecasts regularly with actual performance to help keep them accurate. 

And don’t forget, all forecasts are wrong—and that’s O.K. Your forecast is just your best guess at what’s going to happen. As you learn more about your business and your customers, you can change and adjust your forecast. It’s not set in stone.

Why using visuals will make forecasting easier

My final word of advice is to make sure that you graph your monthly sales with a chart.

how to write sales forecast in business plan

A chart will make it easy to see how your sales might dip during a slow period of the year and then grow again during your peak season. A chart will also highlight potentially unreasonable guesses at your sales growth. If for example, you show a big jump in sales from one month to the next, you should be able to back this up with a strategy that’s going to deliver those sales.

Adjust your forecasts based on actual results

Your sales forecast isn’t done when you start sharing it with lenders and investors. Instead, smart businesses use their sales forecast to measure their progress and ensure that they’re on the right track. Their sales forecast becomes a live forecast . An up-to-date management tool that helps them run their business better.

The easiest way to convert your sales forecast into a management tool is to have a monthly financial review meeting where you look at your business’s finances. You shouldn’t just look at your accounting system, though. You should compare the numbers from your accounting software to your forecast and see if you’re on track. 

Are you exceeding your goals? Or maybe you’re falling a little bit short. Either way, knowing if you’re meeting your goals or not will help you determine if you need to make some shifts in strategy. This way, your business numbers drive your strategy.

Forecasting is easier with LivePlan

Tools like LivePlan can help with this. LivePlan uses a smart dashboard to automatically compare your forecast to your numbers from your accounting system—no cutting and pasting or complicated spreadsheets required. And with LivePlan’s LiveForecast feature , you can update the forecasts within your Profit and Loss Statement, with the push of a button. 

This allows you to spend less time updating and more time analyzing performance to make better decisions. In fact, the LiveForecast feature allows you to expand the details of your performance and identify the variance in performance within your statements. You’ll know your current cash position and the impact on projected year-end totals at a glance. It provides you with enough information to then explore the dashboard with questions and potential steps in mind.

Sales forecasting isn’t as difficult as you think

Just remember that sales forecasting doesn’t have to be hard. Anyone can do it and you, as an entrepreneur, are the most qualified to do it for your business. You know your customers, and you know your market, so you can forecast your sales.

Editor’s note: This article was originally published in March 2016, and was updated for 2021.

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Noah Parsons

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How to Create a Sales Forecast (Examples & Templates)

how to write sales forecast in business plan

Every business needs management tools to maximize performance and keep everything running smoothly. A sales forecast is a critical tool that businesses use to measure their progress and check everything is going to plan. Here’s a closer look at why sales forecasts are important and how to create them. We have some great templates for you, too.

What Is a Sales Forecast – And Which Factors Impact It?

Sales forecasts are data-backed predictions about the sales volume a business will experience over a specific period.

A sales forecast is very important because it provides the foundation for almost all other planning activities. Businesses will rely on accurate sales forecasting to better understand how they should plan financially and execute their game plan .

This means that sales forecasts have the potential to make or break a business.

As with anything in life, though, nothing is certain. Sales forecasts can be affected by a range of factors. This means that businesses have to prepare for any and all eventualities.

Here’s a look at some of the factors that can affect sales forecasting:

A lack of sales history

Sales forecasts are often built using historical data. Businesses analyze previous results to extrapolate and create predictions. If a business starts and lacks a good body of historical sales data, it will struggle to create an accurate sales forecast.

The type of business

Each industry has its series of unique challenges and quirks. Those factors are sometimes unpredictable and could affect a business’s revenues. The ad tech industry, for instance, is often rocked by new data privacy regulations.

Outside factors

Some businesses find that everything is moving according to plan before blindsiding by an unpredictable event they cannot control. Consumer earnings may plummet, for instance, and cause people to restrict their spending.

Inside factors

Some businesses are forced to change their pricing or payment structures. This new dynamic can often have unpredictable effects and cause a business to veer off course from what its sales forecast predicted.

Why Should You Establish Sales Forecasts?

Sales forecasting is essential for every business. Here are some of the key reasons.

Perform accurate financial planning

Sales forecasts help the CFO and financial team understand how much cash is going to be coming into a business. This gives businesses a better understanding of how they can use that capital and makes it possible to calculate what profit they can expect over a given period .

Plan sales activities

A sales forecast can help executives with sales planning. Those executives will understand how many salespeople to employ, for instance, and which quotas and targets to attribute to each of those salespeople. This means that an accurate sales forecast can help salespeople to understand and hit their objectives.

Coordinate marketing

A sales forecast will have a big impact on marketing. For instance, the sales forecast might show that sales are waning, and a bigger investment needs to be placed within marketing. It might also show that a particular product or service fails to deliver appropriate amounts of value.

Control inventory

A sales forecast gives businesses a good understanding of how much inventory they will need to purchase and retain. This is an important factor; it helps businesses balance overstocking and running out of materials. This is also true for SaaS businesses needing customer support and success.

Avoid fluctuations in price

An accurate sales forecast helps businesses maintain consistent product and service pricing. A poor sales forecast might mean a business is forced to adjust its pricing unpredictably. This tactic is often the result of panic; without the proper strategy, it jeopardizes a business’s profitability.

how to write sales forecast in business plan

How to Forecast Sales – The Best Sales Forecasting Methods

Businesses around the world use a range of sales forecasting techniques. Here’s a closer look at some key methods you could use.

Opportunity Stage Forecasting

What is it?

This sales forecasting technique calculates the likelihood of deals closing throughout a pipeline.

Most businesses use a sales pipeline divided into a series of sections. The likelihood of converting a prospect increases the deeper the prospect moves into the sales process. To get the most from this technique, the team must dig into the current performance of the sales team.

After that analysis, the probabilities might look something like this:

  • Sales Accepted lead : 10% probability of closing
  • Sales Qualified Lead : 25% probability of closing
  • Proposal sent : 40% probability of closing
  • Negotiating : 60% probability of closing
  • Contract sent : 90% probability of closing

Using these probabilities, you can extrapolate an opportunity stage sales forecast. You’ll want to take the deal’s potential value and multiply that by the win likelihood.

Who should use it

This is a great sales forecasting method if you have access to historical data, lots of leads in your pipeline, and you need a quick estimate. It’s important to understand that this isn’t the most accurate option, given that many random factors affect those probabilities.

Length of Sales Cycle Forecasting

This sales forecasting method finds the average length of your sales cycle. This helps you predict when your deals will likely close and reveal opportunities for your sales team to expedite the sales cycle.

This method is simple. You can find the length of your average sales cycle using the following basic formula:

Total # of days to close deals / # of closed deals

Let’s imagine, for instance, that you find the following:

  • Deal 1: 28 days
  • Deal 2: 15 days
  • Deal 3: 50 days
  • Deal 4: 38 days

We closed four deals, and it took 131 days to close them all together. This means that the average length of our sales cycle is 33 days.

Equipped with that information, we can look at our pipeline and estimate how likely we are to close deals based on how old they are. The closer a deal moves toward the average sales cycle length, the more likely it will be closed.

This is a great sales forecasting method for sales managers who want to learn more about the deals spread across their pipeline. For instance, they can use this method to differentiate between different types of groups.

Sales managers might find that the average sales cycle length is much shorter for web leads, for example, when compared to email leads.

Historical Forecasting

Historical forecasting is a very quick and simple sales forecasting technique. The process involves looking back at your previous performance within a certain timeframe and assuming that your future performance will be superior or at least equal.

This is a useful reference because it helps you to get to grips with seasonality and the outside factors that affect your sales. You might find, for instance, that the holidays are a particularly slow time for your business, and looking at historical data can help you to prepare.

With that said, historical forecasting has its issues. It assumes that buyer demand will be constant, which is no longer a given. This could mean you overestimate your sales statistics and use an accurate sales forecast.

This forecasting method is ideal for a business that needs a quick and easy way to project how much it will sell over a given period. That said, historical data should be used as a benchmark instead of the foundation of a sales forecast.

Lead Pipeline Forecasting

This time-consuming sales forecasting method involves reviewing each lead within your pipeline and determining how likely the deal will be closed. That likelihood is determined by exploring factors like the value of the opportunity, the performance of your salespeople, seasonality, and more.

This is a time-consuming method, and it often makes sense for businesses with fewer high-value leads – it wouldn’t necessarily be efficient or make much sense for a SaaS business, for instance.

The big benefit of this method is its accuracy. If you have reliable and rigid data to base your analysis on, you will find that this method can give you a deeper insight into each lead.

This method makes sense for those businesses that have a lower number of leads. Inside salespeople, for instance, will want to get a clearer picture of every lead within their pipeline. This method isn’t appropriate for SaaS businesses that operate according to volume.

Test Market Analysis Forecasting

Businesses often launch exciting new products and services. But it can be difficult to get accurate sales forecasts without historical data . Test Market Analysis forecasting is the process of developing a product or service and introducing it to a test market to forecast sales and get an approximation of future sales.

This limited rollout allows businesses to track the performance of the new offering and monitor things like consumer awareness, repeat purchase patterns, and more. This is a data-gathering exercise, and it feeds businesses with the information they need to create accurate sales forecasts.

This approach is perfect for those businesses that need to perform real-world experiments to gather useful information. A new business can use sales forecasting to use its sales data to predict where future sales can come from. This can limit the cost since it’s an effective way of having a busy sales pipeline. The limited rollout of the product is also useful from a product perspective, given that adjustments can be made according to feedback.

A big issue with this form of forecasting is that one test market may not be like the others. Your data might not reflect the wider reality, so you must make prudent choices that provide you with accurate information.

Multivariable Analysis

As the name suggests, this method calls upon analyzing a range of variables to get the clearest picture possible. This means that if the method is performed well, it can often provide the most accurate forecast.

If you use this technique, you will want to bring together factors like the average length of your sales cycle, the performance of your salespeople, historical forecasting, and more.

The success of this method hinges upon two key factors within your business: 

  • the accuracy of your salespeople and their reporting
  • the quality of the forecasting tools that you use.

Both of these factors must be in place to make sure this forecasting method has the best chance of success.

Multivariable forecasting is most appropriate for larger and well-organized businesses, as it uses the data and tools necessary to blend various forecasting methods into one. This could be it if you need the most accurate forecast method possible.

Intuitive Forecasting

Your salespeople are on the front; their experience is very valuable. They often have a good idea of how likely they are to close a particular deal and can use educated guesses to assess the situation.

Experienced salespeople can take emotion out of the equation and rely on their experience and knowledge to make accurate predictions. Some businesses decide to incorporate those gut instincts into the way that they forecast a particular sale.

Some businesses, for instance, will add a score to the conversion probability of their various prospects according to the gut feeling of their salespeople.

This intuitive forecasting method is particularly useful for businesses that lack historical data. Without the quantifiable data to provide the basis for your sales forecasting, you might have to turn to more qualitative assessments from your salespeople.

The downside of this sales forecasting method is clear, though. These assessments are highly subjective, and you might find that your salespeople are often more optimistic in their projections. This means those projections should be taken with a pinch of salt, but they are better than nothing.

Sales Forecast Examples

We know the theory, but how about the practice? In these awesome examples, let’s take a closer look at what those sales forecast methods look like.

Standard Business Plan Financials

Live Plan

This example from Tim Berry (chairman and founder of Palo Alto Software) looks at what a startup sales forecast might look like .

Tim sets the scene and describes Magda’s situation – she wants to open a small café in an office park.

He goes on to show how Magda would establish a base case, estimate her monthly capacity, and what type of sales she could expect. To wrap up, she goes through her month-by-month estimates for her first year and estimates her direct cost.

This is a great exercise and unmissable reading for new entrepreneurs dreaming up a new venture.

Sales Forecast Guide by Toptal Research

Sales Forecast

This simple sales forecasting guide from Toptal Research also includes a simple example that forms the basis of the guide. These simple visuals and data will give you a good idea of how you can put your sales forecasting efforts together and what it will look like.

This example also shows that you can attractively forecast sales and inform the sales teams. Sales forecasting doesn’t have to be boring columns of data, but you can bring your sales forecast to life with colorful visuals.

Detailed Sales Forecast by Microsoft

Detailed Sales Forecast by Microsoft

This detailed sales forecast template from Microsoft makes it simple for you to estimate your monthly sales projections.

The formula comes with pre-built formulas and worksheet features that result in an attractive and clear template. The template also relies on a weighted sales forecasting method based on the probability of closing each opportunity.

Even if you do not use this exact template, it’s a great file to use. It can give you a great idea of the information you need to include and how it might come together in a spreadsheet format.

Sales Forecast Templates

Looking for your own sales forecast templates to get a running start? Here’s a look at some of the most practical and useful templates.

Sales Forecast Template for Excel by Vertex42

Sales Forecast Template for Excel by Vertex42

This free sales forecast template helps you keep a handle on key information like unit sales, growth rate, profit margins, and gross profit.

The template is already set up to help you compare and analyze a range of products and services on a monthly basis. The chart also includes a range of sample charts that can be used to effectively and accurately communicate the contents of your sales forecast.

The same worksheet can be used to create monthly and yearly forecasts. You can play with the template to find your desired view and information. 

Sales Forecast Template by Freshworks

Sales Forecast Template by Freshworks

This simple forecasting template helps you to put together an effective sales forecast. This finished product can then be used to grow your revenues and hit your quotas.

This template is particularly effective for small businesses and startups that need to project sales and prioritize deals at the early stages of their business. Freshworks also explains that the template can help businesses achieve a higher rate of on-time delivery and accurate hiring projections.

The free sales forecast template is very intuitive to use. Again, it’s great to flick through the spreadsheet to understand what you need in a sales forecast and how it can be put together.

Free Sales Forecast Template by Fit Small Business

Free Sales Forecast Template by Fit Small Business

This sales forecast template is perfect if your CRM doesn’t currently offer built-in sales forecasting. This template can help you create a forecast from scratch that is adjusted to your own particular needs much quicker.

The template is available in various formats, including PDF, Excel, and Google Sheets. This is great news if you create your small business on your own terms and have limited software access .

Again, this template is clear and simple to use. All of the fields are explained within the spreadsheet – you don’t have to worry about going elsewhere to find definitions.

Sales Forecasting Tools

Looking for sales forecasting tools to take your activities to the next level? Here’s a look at some of the standout options.

Pipedrive

Pipedrive is a sales CRM that is designed for salespeople by salespeople. It is a robust CRM that includes all of the features a sales team needs to achieve sales success and grow their business.

The tool also includes a forecasting tool. This tool acts as a personal sales manager that helps salespeople to choose the right deals and activities at the right time. This helps salespeople to become better closers.

By all accounts, this function is very useful for salespeople and managers alike. The forecasting tool can also be customized to match the specific needs of salespeople.

Smart Demand Planner

Smart Demand Planner

Smart Demand Planner is a consensus demand planning and statistical forecasting solution that understands how accurate critical forecasts are to a business.

The tool was built on the premise that forecasts are often inaccurate and can cause various issues. Moreover, the traditional sales forecast often resides within a complex spreadsheet that is difficult to use, share, and scale.

The tool aims to fix those issues by aligning strategic business forecasting at all levels of your hierarchy. Smart Demand Planner offers a statistically sound objective foundation for your sales activities.

amoCRM

amoCRM is an easy and smart sales solution that focuses on the world of messenger-based sales. The platform understands the popularity and potential of messenger apps, so it offers a whole new way of using the channel to create valuable relationships.

The tool also includes visual, real-time reports that give salespeople and managers powerful insights. These analytics can be used to set targets and also forecast future sales. What’s more, they can measure performance and identify target areas.

The visual look and feel of the platform make this a very intuitive option. It can drive value through accurate forecasting in businesses where messenger-based selling is critical.

As we have seen, forecasts are critical to the success of your business. They can be cost-effective for a new business, keep sales teams and reps informed, and more. However, every business also needs the leads to make those forecasts a reality. Learn more about UpLead today and how our platform can help you to find, connect, and engage with qualified prospects.

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The Last Guide to Sales Forecasting You’ll Ever Need: How-To Guides and Examples

By Kate Eby | January 26, 2020 (updated August 26, 2021)

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Sales forecasts are a critical part of your business planning. In this comprehensive guide, you’ll learn how to do them correctly, including explanations of different forecasting methods, step-by-step tutorials, and advice from experienced finance and sales leaders.

Included on this page, you'll find details on more than 20 sales forecasting techniques , information regarding how to forecast sales for new businesses and products , a step-by-step guide on how to forecast sales , and a free sales forecast template .

What Is Sales Forecasting?

When you produce a sales forecast , you are predicting what your sales or revenue will be in the future. An accurate sales forecast helps your firm make better decisions and is arguably the most important piece of your business plan. 

A sales forecast contrasts with a sales goal . The former is the realistic representation of what you believe will occur, while the latter is what you want to occur. Forecasts are never perfectly accurate, but you should be as objective as possible when creating a sales forecast. Goals, on the other hand, can be based on optimistic or motivational targets.

Because the sales forecast is critical to business planning, many different stakeholders in a company (beyond sales managers and representatives) rely on these estimates, including human resources planners, finance directors, and C-level executives. 

In this article, you’ll learn about different sales forecasting methods with varying levels of sophistication. The most basic method is called naive forecasting , which uses the prior period’s actual sales for the new period’s forecast and does not apply any adjustments for growth or inflation. Naive forecasts are used as comparative figures for more robust methods.

What Is Sales Planning?

A sales plan describes the goals, strategies, target customers, and likely hurdles for your sales effort. The sales plan defines your sales strategy and the method of execution you will use to achieve the numbers in your sales forecast.

Overview of Sales Forecasting Steps

Your sales forecasting model can ultimately become very sophisticated, but to grasp the basics, you should first gain a high-level understanding of what is involved. There are three primary steps to getting started:

  • Decide which forecasting method or technique you will use. Also, determine the time period for your forecast. Later in this guide, we will review different methods of forecasting sales, including how to know which is best for your business.  
  • Gather the data to plug into your forecast model. The data points will vary by method, but will almost always include your actual past sales and current growth rate.
  • Pick a tool to support your forecasting effort. For learning purposes, you can start with pencil and paper, but soon after, you’ll want to take advantage of digital solutions. Common tools include spreadsheets, accounting software, and customer relationship management (CRM) or sales management solutions.

As you get going, remember not to be overly focused on complex formulas. Do regular reality checks to make sure your sales forecasts accord with common sense. Bounce forecasts off sales reps to get realistic feedback, and revise.

You will likely achieve greater accuracy if you build your forecasts based on unit sales wherever possible, because pricing can move independently from unit sales. Use data if you have it.

Benefits and Importance of Sales Forecasting

Sales forecasting helps your business by giving you data to make decisions concerning allocating resources, assigning staff, and managing cash flow and overhead. Using this data reduces your risk and supports your growth. 

Your sales forecast enables you to predict both short and long-term performance and customer demand for your product. In the short term, having a sales forecast makes it easy for you to spot when actual sales are not meeting estimates and gives you an opportunity to make corrections early in the period.

The forecast guides how much you spend on marketing and administration, and the projections generate your sales reps’ objectives. In this way, sales forecasts are an important benchmark for gauging the performance of your sales reps. 

Sales forecasts also lead to better management of inventory levels. With a good idea of how much product you will sell, you can stock enough to meet customer demand without missing any sales and without carrying more than you need. Excess inventory ties up capital and reduces profit margins. 

In the long term, sales forecasts can help you prepare for changes in your business. For example, you might see that within a few years, your company will require more manufacturing capacity to meet growing sales. To expand capacity, you may need to build a new factory, so now you can start planning how you will pay for it. Predictive sales forecasting is a critical part of your presentation if you are seeking equity capital from investors or commercial loans for expansion. 

In short, sales forecasting helps your business avoid surprises, so you aren’t making decisions in a crisis environment. Companies with trustworthy sales forecasts see a 10 percentage point  greater increase in annual revenues compared to counterparts without, according to research from the Aberdeen Group .

What Makes a Good Sales Forecast?

The most important quality for a sales forecast is accuracy. But, the benefits of accuracy must be weighed against the time, effort, and expense of the forecasting technique.

Useful sales forecasts are also easily understood and often include visual elements, such as charts, graphs, and tables, to make important trends visible. 

Ideally, you can quickly build a highly reliable sales forecast with simple, economical methods. The ultimate forecast method would automatically (i.e., without manual intervention) fetch the relevant data and make predictions using an algorithm finely tuned to your business. 

In reality, the forecasting process is more time consuming and subjective. Sales forecasts often depend on reps’ assessments of how likely their prospects are to close, and perceptions vary widely. (A conservative rep’s 60 percent probability may be understated, while another rep’s 60 percent may be overly optimistic.) 

Sales managers, who are usually responsible for forecasting, spend a lot of time factoring in these nuances and other market factors when calculating forecasts. 

Surprisingly, spending more time on forecasting does not always improve accuracy. According to research from CSO Insights, sales managers who spend 15 to 20 percent of their time producing their forecast had win rates for approximately 46.5 percent of deals. But, when they spend more than 20 percent of their time on forecasting, the win rate declined by more than two percentage points. 

An axiom of forecasting is that accuracy is highest during time periods that are close at hand and lowest during those that are far into the future. Short-term forecasts draw upon the following: deals that are already in the sales pipeline, the current economic environment, and actual market trends. So, the data underlying short-term forecasts is more reliable.

Forecasting for distant time periods requires bigger guesses about opportunities, demand, competitor activity, and product trends, so it makes sense that the forecast becomes less accurate the further into the future you go. (This concept applies to many companies, especially those that are young and growing; the concept becomes more relevant for all businesses at three years and beyond.) Bear this thought in mind when you look at your sales forecast in order to make long-term decisions.

Sales Forecasting Methods: Qualitative and Quantitative

Sales forecasting methods break down broadly into qualitative and quantitative techniques. Qualitative forecasts depend on opinions and subjective judgment, while quantitative methods use historical data and statistical modeling.

Qualitative Methods for Sales Forecasting

Sales forecasting often uses five qualitative methods. These are based on different ways of generating informed opinions about sales prospects. Creating and conducting these kinds of surveys is often expensive and time intensive. These five qualitative methods include the following: 

  • Jury of Executive Opinion or Panel Method: In this method, an executive group meets, discusses sales predictions, and reaches a consensus. The advantage of this method is that the result represents the collective wisdom of your most informed people. The disadvantage is that the result may be skewed by dominant personalities or the group may spend less time reflecting.
  • Delphi Method: Here, you question or survey each expert separately, then analyze and compile the results. The output is then returned to the experts, who can reconsider their responses in light of others’ views and answers. You may repeat this process multiple times to reach a consensus or a narrow range of forecasts. This process avoids the influence of groupthink and may generate a helpful diversity of viewpoints. Unfortunately, it can be time consuming.  
  • Sales Force Composite Method: With this technique, you ask sales representatives to forecast sales for their territory or accounts. Sales managers and the head of sales then review these forecasts, along with the product owners. This method progressively refines the views of those closest to the customers and market, but may be distorted by any overly optimistic forecasts by sales reps. The composite method also does not take into account larger trends, such as the political or regulatory climate and product innovation. 
  • Customer Surveys: With this approach, you survey your customers (or a representative sample of your customers) about their purchase plans. For mass-market consumer products, you may use market research techniques to get an idea about demand trends for your product.  
  • Scenario Planning: Sales forecasters use this technique most often when they face a lot of uncertainty, such as when they are estimating sales for more than three years in the future or when a market or industry is in great flux. Under scenario planning, you brainstorm different circumstances and how they impact sales. For example, these scenarios might include what would happen to your sales if there were a recession or if new duties on your subcomponents increased prices dramatically. The goal of scenario planning is not to arrive at a single accepted forecast, but to give you the opportunity to counter-plan for the worst-case scenarios.

Quantitative Methods for Sales Forecasting

Quantitative sales forecasting methods use data and statistical formulas or models to project future sales. Here are some of the most popular quantitative methods:

  • Time Series: This method uses historical data and assumes history will repeat itself, including seasonality or sales cycles. To arrive at future sales, you multiply historical sales by the growth rate. This method requires chronologically ordered data. Popular time-series techniques include moving average, exponential smoothing, ARIMA, and X11. 
  • Causal: This method looks at the historical cause and effect between different variables and sales. Causal techniques allow you to factor in multiple influences, while time series models look only at past results. With causal methods, you usually try to take account of all the possible factors that could impact your sales, so the data may include internal sales results, consumer sentiment, macroeconomic trends, third-party surveys, and more. Some popular causal models are linear or multiple regression, econometric, and leading indicators.

Sales Forecasting Techniques with Examples

In reality, most businesses use a combination of qualitative and quantitative methods to produce sales forecasts. Let’s look at the common ways that companies put sales forecasting into action with examples.

Intuitive Method

This forecasting method draws on sales reps’ and sales managers’ opinions about how likely an opportunity is to close, so the technique is highly subjective. Estimates from reps with a lot of experience are likely to be more accurate, and the reliability of the forecast requires reps and managers to be realistic and honest.

This method can be especially helpful if you do not have historical data or if you are assessing  new prospects early in your funnel. In these cases, a rep’s gut feeling after initial contact can be a good indicator. If you are a manager, you will review reps’ estimates with an eye for any outliers and work with those reps to make any necessary adjustments. 

Here is an example of the intuitive method in action: You manage a team of four sales reps. You go to each one and inquire about the leads they are nurturing. You ask each rep which opportunities they believe they will win in the next quarter and how much those sales will be worth. John, your strongest rep, tells you $175,000. Alice, another strong performer, says $115,000. Bob, who is in his second year at your company, reports $85,000. Jennifer, a recent college graduate, projects $100,000. You calculate the total of those forecasts and arrive at an intuitive forecast of $450,000. However, you suspect Jennifer’s forecast is unrealistic, because she is inexperienced, so you ask her more questions. Based on what you learn, you decide that only half of Jennifer’s deals are likely to close, so you reduce her contribution to $50,000 and revise your total quarterly forecast to $400,000.

Scenarios Method

Scenario forecasts are qualitative and involve you projecting sales outcomes based on a variety of assumptions. This process can also be a helpful business planning exercise, because once you identify major risks or uncertainty for your company, you can develop action plans to deal with these circumstances if they arise.

Scenario forecasts require an in-depth knowledge of your business and industry, and the quality of the forecast will vary with the expertise of the person or group who prepares the estimate.

To create a scenario forecast, think about the key factors that affect sales, external forces that could influence the outcome, and major uncertainties. Then, write a narrative and numerical description of how the scenario would play out under various combinations of these key factors, external forces, and uncertainties.

Here is an example of the scenarios method in action: Your company sells components for military vehicles. You notice that the most impactful things your sales reps do are meeting with procurement officers in the defense departments of major nations and holding factory tours and product demonstrations for them. These are your key factors. 

The external forces are the number of tenders or requests for proposals that military procurement departments announce, and the value of those items. The risk of conflict in various parts of the world, scarcity of your raw materials, and trends in budget authorizations for defense by major countries are your critical uncertainties. 

You look at how your key factors, external factors, and major uncertainties might combine. One scenario might entail the outcome if your reps increased the number of meetings and product events by 20 percent, the value of U.S. tenders launched rose by six percent, and France decreased defense spending by two percent. 

Under this scenario, you might forecast a six percent increase in unit sales resulting from the following: 

  • Having more in-person sales contacts should boost sales by five percent based on past performance.
  • You can increase revenue by three percent due to greater U.S. tender opportunities and your current market share.
  • Major customer France will not purchase anything, reducing sales by two percent.

Sales Category Method

The category forecasting method looks at the probability that an opportunity will close and divides opportunities into groups based on this probability. The technique relies somewhat on intuition, as does the intuitive method, but the sales category method brings more structure and discipline to the process.

The categories that each company uses vary widely, but they correspond broadly to stages in the sales pipeline. These are some typical labels and definitions:

  • Omitted: The deal has been lost or the prospect is no longer engaging. 
  • Pipeline: The opportunity will not realistically close during the quarter.
  • Possible, Best Case, Upside, or Longshot: There is a realistic possibility that the deal could close at the projected value in the quarter if everything falls into place, but this is not certain. Overall, fewer than half of the opportunities in this group end up closing in the quarter at the planned value.
  • Probable or Forecast: The sales rep is confident that the deal will close at the planned value in the quarter. Most of these opportunities will come to fruition as expected.
  • Commit or Confident: The salesperson is highly confident that the deal will close as expected in this quarter, and only something extraordinary and unpredictable could derail it. The probability in this category is 80 to 90 percent. Any deal that does not close as forecast should generally experience only a short, unanticipated delay, rather than a total loss.
  • Closed: The deal has been completed; payment and delivery have been processed; and the sale is already counted in the quarter’s revenue. 

To compile your forecast, look at the combined value of the potential deals in the categories under three scenarios:

  • Worst Case: This is the minimum value you can anticipate, based on the closed and committed deals. If you have very good historical data for your sales reps and categories and feel confident making adjustments, such as counting a portion of probable deals, you may do so, but it is important to be consistent and objective.
  • Most Likely: This scenario is your most realistic forecast and looks at closed, committed, and probable deal values, again with possible adjustments based on historical results. For example, if you have tracked that only 60 percent of your probable deals tend to close in the quarter, adjust their contribution downward by 40 percent.
  • Best Case: This is your most optimistic forecast and hinges on executing your sales process perfectly. You count deals in the closed, commit, probable, and possible categories, with adjustments based on past performance. The possible category, in particular, requires a downward adjustment.  

As the quarter or period progresses, you revise the forecast based on updated information. This method can quickly get cumbersome and time consuming without an analytics solution.

Here is an example of the sales category method in action: You interview your sales team and get details from the reps on each deal they are working on. You assign the opportunities to a category, then make adjustments for each scenario based on past results. For example, you see that over the past three years, only half the deals in the possible category each quarter came to fruition. Here’s what the forecast looks like:

Sales Category Method Table

Top-Down Sales Forecasting

In top-down sales forecasting, you start by looking at the size of your entire market, called the total addressable market (TAM), and then estimate what percentage of the market you can capture. 

This method requires access to industry and geographic market data, and sales experts say top-down forecasting is vulnerable to unrealistic objectives, because expectations of future market share are often largely conjecture.

Here is an example of top-down sales forecasting in action: You operate a new car dealership in San Diego County, California. From industry and government statistics, you learn that in 2018, 112 dealers sold approximately 36,000 new cars and light trucks in the county. You represent the top-selling brand in the market, you have a large sales force, and your dealership is located in the most populous part of the county. You estimate that you can capture eight percent of the market (2,880 vehicles). The average selling price per vehicle in the county last year was $36,000, so you forecast gross annual sales of $103.7 million. From there, you determine how many vehicles each rep must sell each month to meet that mark.

Bottom-Up Sales Forecasting

Bottom-up sales forecasting works the opposite way, by starting with your individual business and its attributes and then moving outward. This method takes account of your production capacity, the potential sales for specific products, and actual trends in your customer base. Staff throughout your business participates in this kind of forecasting, and it tends to be more realistic and accurate. 

Begin by estimating how many potential customers you could have contact with in the period. This potential quantity of customers is called your share of market (SOM) or your target market . Then, think about how many of those potential customers will interact with you. Then, make an actual purchase.

Of those who do purchase, factor in how many units of your product they will buy on average and then how much revenue that represents. If you aren’t sure how much your customers will spend, you can interview a few. 

Here is an example of bottom-up sales forecasting in action: Your firm sells IT implementation services to mid-sized manufacturers in the Midwest. You have a booth at a regional trade show, and 3,000 potential customers stop by and give you their contact information. You estimate that you can engage 10 percent of those people in a sales call after the trade show and convert 10 percent of those calls into deals. That represents 30 sales. Your service packages cost an average of $250,000. So, you forecast sales of $7.5 million.

Market Build-Up Method

In the market build-up method, based on data about the industry, you estimate how many buyers there are for your product in each market or territory and how much they could potentially purchase. 

Here is an example of the market build-up method in action: Your company makes safety devices for subways and other rail transit systems. You divide the United States into markets and look at how many cities in each region have subways or rail. In the West Coast territory, you count nine. To implement your product, you need a device for each mile of rail track, so you tally how many miles of track each of those cities have. In the West Coast market, there are a total of 454 miles of track. Each device sells for $25,000, so the West Coast market would be worth a total $11.4 million. From there, you would estimate how much of that total you could realistically capture.

Historical Method

The historical sales forecasting technique is a classic example of the time-series forecasting that we discussed under quantitative methods. 

With historical models, you use past sales to forecast the future. To account for growth, inflation, or a drop in demand, you multiply past sales by your average growth rate in order to compile your forecast. 

This method has the advantage of being simple and quick, but it doesn’t account for common variables, such as an increase in the number of products you sell, growth in your sales force, or the hot, new product your competitor has introduced that is drawing away your customers.

Here is an example of the historical method in action: You are forecasting sales for March, and you see that last year your sales for the month were $48,000. Your growth rate runs about eight percent year over year. So, you arrive at a forecast of $51,840 for this March.

Opportunity Stage Method

The opportunity stage technique is popular, especially for high-value enterprise sales that require a lot of nurturing. This method entails looking at deals in your pipeline and multiplying the value of each potential sale by its probability of closing. 

To estimate the probability of closing, you look at your sales funnel and historical conversion rates from top to bottom. The further a deal progresses through the stages in your funnel or pipeline, the higher likelihood it has of closing.

how to write sales forecast in business plan

The strong points of this method are that it is straightforward to calculate and easy to do with most CRM systems. 

But, opportunity-stage forecasting can be time consuming. 

Moreover, this method doesn’t account for the unique characteristics of each deal (such as a longtime repeat customer vs. a new prospect). In addition, the deal value, stage, and projected close date have to be accurate and updated. And, the age of the potential deal is not reflected. This method treats a deal progressing quickly through the stages of your pipeline the same as one that has stalled for months. 

If your sales process, products, or marketing have changed, the use of historical data may make this method unreliable.

Here is an example of the opportunity stage method in action: Say your sales pipeline comprises six stages. Based on historical data, you calculate the close probability at each stage. Then, to arrive at a forecast, you look at the potential value of the deals at each stage and multiply them by the probability.

Opportunity Stage Method

Length-of-Sales-Cycle Method

This is another quantitative method that shares some similarities with the deal stage method. However, this model looks at the length of your average sales cycle. 

First, determine the average length in days of your sales process. This figure is also known as time to purchase or sales velocity . Add the total number of days it took to close all of the past year’s deals and divide by the number of deals. Then, calculate the probability of new deals closing in a certain period of time as a percentage of the average sales cycle length. 

With this method, the biases of individual reps are less of a factor than with the deal stage model. Also, with this technique, you can fine-tune the probabilities for different lead types. (For example, prospects referred by current customers may close in an average of 27 days, while prospects who make contact after an online search need an average of 62 days.) But, this technique requires you to know and record how and when prospects enter your pipeline, which can be time intensive.

Here is an example of the length-of-sales-cycle method in action: You review the 37 deals your company won last year and see that they took a total of 2,997 days to close. To calculate the average length of the sales cycle, you divide 2,997 by 37 and see that the average sales cycle lasted 81 days. You then look at the five deals currently in your pipeline.

Length of Sales Cycle Method

Lead Scoring Method

This technique requires you to have lead scoring in place. With lead scoring, you profile your ideal customers based on attributes (like industry, size, and location) as well as behavior (such as whether they have recently raised capital or whether the contact person has requested a demonstration of your product). 

You then classify future leads based on how closely they match your ideal customer. You can label the categories with distinctions such as A, B, or C or hot, warm, or cold, or you can assign numbers up to one hundred using formulas that add and subtract points for different attributes and behaviors. (For example, “They requested a demo, which adds 15 points, but they are not in your ideal industry, which subtracts 10 points.”)  

To create your forecast, you then look at the historical close rate for leads in each category and multiply that by the value of the opportunities currently in the group. 

Here is an example of the lead scoring method in action: Your company sells textbooks for advanced math and science. Your ideal customer is a university with at least 25,0000 students that has an engineering school and is located on the east coast. These are your A prospects. B prospects have at least 10,000 students. C prospects have at least 10,000 students, but are located elsewhere in the country.

You then look at the close rates and potential deal values for each lead score. Finally, you multiply the close rate by the potential value of the deals in the category or by your average sales value.

Lead Scoring Method

Lead Source Method

This model forecasts future sales based on how you acquired the lead, using the behavior of previous leads as a benchmark.

For example, say your company sells a software application. Some leads come from search traffic to your website; some originate with demonstration requests at conferences, and some are referrals from existing customers. 

Look at your historical data to track the percentage of leads who converted to sales for each lead source. In addition, calculate the average value of a sale for each source. Then, by using the conversion probability and sales values, you can forecast the sales that the leads at the top of your funnel are likely to generate. 

Here is an example of the lead source method in action: Based on source, you compile your historical data and discover the following conversion rates and sales value for leads.

Lead Source Method Table

One advantage of this sales forecasting method is that you can project how many leads of each type you would need to generate in order to hit a target. Suppose you have a conference coming up where participants will be able to request demonstrations of your product, and you would like to win an additional $30,000 in sales from the demo leads. Based on the average lead value of $600, you know you will want to generate 50 leads who request demos at the conference. 

One drawback to lead source forecasting is that the method does not account for potential differences in the length of the sales cycle for the lead types. That makes it difficult to pinpoint the period in which the revenue will occur. Therefore, you should do a separate analysis of time to purchase in order to allocate sales to the right period.

Another challenge is that sometimes you may not be sure of the lead source. For example, suppose that another customer has recommended your product to a contact and that that contact decides to first check you out on your website. You might very well assign a lower lead value to this prospect, assuming they will behave like our web-originated leads, when, in reality, they will probably behave more like the customer referral leads. 

Lastly, remember that this method won’t account for changes in your marketing or pricing that influence conversion rates and customer behavior.

Sales by Row Method

This method is a good fit for small businesses that sell different products or services. Rather than forecasting sales for each individual product type, you project sales for categories. 

Each row in your forecast will cover different physical products (such as pick-up trucks, heavy trucks, and delivery vans) and service units (such as hours of labor or service types like replacing a faucet, unclogging a drain, or installing a toilet). 

You can employ this method to forecast units and then factor them by average prices to arrive at revenue. Or, you can look exclusively at revenue. If you sell a subscription service, you can calculate recurring revenue for each product type.

For each row, you would look at how much you sold in the same period a year earlier and then adjust for factors such as inflation, organic growth, new products, increased workforce, or special circumstances.

Here is an example of the sales by row method: You operate a combination fuel station and mini-market. Your forecast would cover the broad categories of your business, such as sales of gasoline, diesel, food, beverages, and sundries.

For March’s forecast, you take into account that the new housing development near your business, which was under construction last year, is now almost completely sold and that there are many more commuters filling up. Your gas sales have been growing by almost 15 percent year over year. Also, in March, there will be a special event at the nearby fairgrounds that could draw thousands of additional vehicles to your area. 

On the downside, a new retail complex with a full-service grocery store has opened nearby, so your sales of food and drinks have slipped. Also, increased congestion in the neighborhood has caused some long-haul truckers who used to stop for fuel to reroute.

Sales by Row Method

Regression or Multivariable Analysis Method

Regression or multivariable analysis is one of the most sophisticated forecasting methods, and allows you to build a custom model combining any factors that you feel are relevant to your sales.

For regression analysis, you need accurate historical data on all the variables under consideration, expertise in statistics, and, for practical purposes, an analytics solution or application that can perform the analysis. 

Because this method incorporates a multitude of influences on your sales, the resulting forecast is the most accurate. But, the costs tend to be high because of the data collection, expertise, and technology requirements.  

Regression analysis looks at the dependent variable (the factor that you are trying to predict, in this case, the amount of future sales) and independent variables (the factors that you believe affect sales results, such as opportunity stage or lead score). 

In a simple example, you would create a chart, plotting the sales results on the Y axis and the independent variable on the X axis. This chart will reveal correlations. If you draw a line through the middle of the data points, you can calculate the degree to which the independent variable affects sales. 

This line is called the regression line , and, by calculating the slope of the line, you can use numbers to represent the relationship between the variable and sales. The equation for this is Y = a + bX. Excel and other software will perform this analysis and calculate a and b for you. In more sophisticated applications, the formula will also include a factor for error to account for the reality that other variables are also at work.

Going further, you can look at how multiple variables interplay, such as individual rep close rate, customer size, and deal stage. Making these kinds of calculations becomes increasingly difficult with simple charts and demands more advanced math knowledge. 

Remember that correlation is not the same as causation. Bear in mind that while two variables may seem closely related to each other, the reality may be more subtle. 

Here is an example of the regression method in action: You want to look at the relationship between the amount of time a prospect has progressed in your sales cycle and the probability of the deal closing. 

So, plot on a chart the probability of close for past deals when they were at various stages of your sales cycle, which lasts an average of 100 days. Deals early in the sales cycle have a low probability of closing compared to those that occur in the later stages of negotiation and contract signing on day 85 and up. (Be sure to eliminate any prospects that stall or disengage at any stage.)

By drawing a line through those points (i.e., the intersection between the sales close probability and the percentage of the average sales cycle), you can see that there is a nearly one-to-one relationship between percentage point increases in time elapsed relative to the average sales cycle and percentage point increases in the probability of closing.

This calculation becomes more complex when you consider multiple variables. Let’s say you have two sales reps working with prospects. Gloria, your best closer, is giving a product demonstration to a new Fortune 500 account. Leonard, a strong performer, whose close rate is a little lower than Gloria’s, is negotiating with a repeat customer, a mid-sized company. 

Your multivariable analysis of these situations could take into account each rep’s average close rate for an opportunity, given the following factors: the specific stage; deal size; time left in the period; probability of close for a repeat customer versus a new customer; and time to close for an enterprise customer with more than 10 people involved in decision making versus a mid-sized business with a single decision maker.

Time Horizons in Sales Forecasting

Choosing the time period for your sales forecast is an important step. Depending on your business, the purpose of your forecast, and the resources you can devote to making forecasts, the time frame you target will vary. 

A short-term forecast will help set sales rep bonus levels for next quarter, but you need a long-term forecast to decide whether you should plan to build a new factory. A startup that has been doubling revenue every year will have more difficulty making a 20-year forecast than a century-old concern in a mature industry. Here are the three time frames for forecasts: 

  • Short-Term Forecasts: These cover up to a year and can include monthly or quarterly forecasts. They help set production levels, sales targets, and overhead costs.
  • Medium-Term Forecasts: These range from one to four years and guide product development, workforce planning, and real estate needs.
  • Long-Term Forecasts: These extend from five to 20 years and inform capital investment, capacity planning, long-range financing programs, succession planning, and workforce skill and training requirements.

Getting Started with Sales Forecasting: What You Need to Know

Regardless of the sales forecast method you use, you generally need to have certain pieces of information and conditions in place. These include the following:

  • Well-Documented and Defined Sales Process: You need to understand your customer journey and have an established sequence for nurturing each prospect. Without this, you cannot predict which opportunities are getting closer to purchasing. This structure creates accountability. 
  • Consensus on Pipeline Stages: Your sales team needs to have a clear and shared understanding of what you mean by lead, prospect, qualified, possible, probable, committed, and other relevant terms. 
  • Definition of Success: Communicate clearly what your sales team is striving for in terms of sales quotas or goals; include these quotas and goals for each individual rep, for the team as a whole, and for conversion through each stage of your pipeline.
  • Historical Data: You require benchmarks for data points, such as average time to close, conversion rates, average deal size, lifetime customer value, win-loss ratio, and seasonal sales trends. These sales metrics and KPIs are often critical pieces of your forecast.
  • Current Status: Up-to-date knowledge of your pipeline is essential, including how many opportunities are at each stage and the potential value of these sales.
  • Forecasting Tools: This will almost always include a CRM application and may also include financial management or accounting software, analytics solutions, and spreadsheets.

Influences and Assumptions in Sales Forecasting

Sales forecasting should not happen in a vacuum. Take into account changes in the business environment and question assumptions, such as that past growth will continue. Also, be sure to factor in your ideas about global economic trends and competitor behavior.

Here are some common factors to consider regarding your sales forecast. Many of these can have either a positive or negative influence on sales. For example, changing reps’ account assignments may reduce sales, because members of your team will have to familiarize themselves with customers that are new to them. However, sales could increase if your new hotshot gets your biggest opportunity.

  • Economic Trends: Inflation, growth, consumer sentiment, risk appetite, and purchasing power
  • Regulation: Trade policies such as tariffs, duties, and quotas; health, safety, and environmental rulings on products or processes; court decisions; intellectual property disputes; and competition policy
  • Seasonal Trends: Cyclical demand fluctuation, production patterns, and variation in raw material availability 
  • Competitor Behavior: New product innovations, pricing changes, and market entries and exits
  • Business Economics: Selling prices, direct prices, unit costs, gross margins, and the impact of accrual versus cash accounting on when you can book a sale
  • Staffing and Compensation: Hiring or firing new reps, changes in leadership, policies on commissions and bonuses, and training
  • Territory Management: Redrawing of territories and changes in account assignments
  • Products and Services: Product lifecycle, new products and services, user experience, defects, ticket resolution, changes in distribution, and market entries and exits
  • Marketing: Demand generation, advertising, pricing, special campaigns, social media activity, and prospecting

Sales Forecasting for New Businesses and Products

If you are starting a new business or launching a new product, your sales forecasts are crucial because they will determine how much you can spend in order to break even. However, when dealing with a new entity, you lack the advantage of historical data, which you need for almost every forecasting technique. 

If you don’t have historical data, you can use industry benchmarks from trade publications, industry associations, and consultants. For example, if you are launching a new recipe app, look at market research on how other cooking apps have performed. 

Dining establishments can look at number of tables, hours of service, and menu prices to estimate average order amounts and table turnover. Retail outlets use square feet, foot traffic, and average selling prices to forecast sales.

If you are adding a new product to your line, you can forecast sales by looking at how your most similar existing product performed at launch. Then, you can make tweaks based on other relevant information, such as that the new product is harder to master than its predecessor, that it is a later entrant into a crowded space, or that it already has a backlog of orders before launch.

New service businesses can base forecasts on capacity, such as number of staff and service hours and how much to charge for the most popular services. Once you have this data, you can make adjustments accordingly.

Michael Barbarita

Michael Barbarita, President of Next Step CFO , works as a contracted CFO to produce sales forecasts for companies. He likes to tie the sales forecast for service businesses to a metric called sales per direct labor hour , which you can calculate this by dividing sales by the working hours of people in the field performing customer work. For example, an electrical contractor would calculate the sales per direct labor hour of its electricians and multiply that figure by the number of electricians and the hours they work.  

For instance, you may decide that operating at half capacity is a good estimate for your first six months in business. Then, you may operate at three-quarters capacity for the second six months. Therefore, you would multiply maximum capacity by average revenue and then multiply that resulting figure by 0.50 and 0.75, respectively.

Quick-Start: Sales Forecasting Formulas

If you are eager to dive in and want to generate some simple sales forecasts, you can make use of basic equations. Here are a few easy ones:

  • Simple Forecast with No Organic Growth: This formula assumes that this period will duplicate the prior period, except for the impact of inflation.  Revenue Prior Period) + (Revenue Prior Period x Inflation Rate) = Sales Forecast  
  • Historical Plus Growth: This formula helps you reflect current trends.You look at the prior year and then factor it by your recent growth rate. (Last Year Revenue x Percentage Growth Rate) + Last Year Revenue = Sales Forecast
  • Partial Year: In this method, you project the rest of the year based on historical patterns and early results. Imagine that you know your sales for the first two months of the year and that last year these months represented seven and nine percent of your sales respectively and totaled $100,000. Using the formula below, you would forecast sales of $625,00 for the year: ($100,000 x 100) ÷ 16 = $625,000. (Current Period Revenue x 100) ÷ Percent That Equivalent Period Represented Last Year = Forecast Sales
  • Pipeline Formula: This formula replicates the opportunity stage method that we discussed earlier. You calculate the value of deals at each stage of your pipeline by multiplying the potential deal value by the close probability and adding up the result for each stage. (Deal Amount x Close Probability) + (Deal Amount x Close Probability) etc. = Sales Forecast

How to Make a Basic Sales Forecast Step by Step

Here are step-by-step instructions for a manually generated sales forecast:

  • Pick Your Time Period: The way in which you will use your forecast determines the most appropriate time interval, whether that be monthly, quarterly, annually, or on an even longer timeline. If you are making your first forecast, estimating on a monthly or quarterly basis for the upcoming year is a good starting point. Experts suggest doing monthly estimates for the first year and then doing annual forecasts for years two through five. 
  • List Products or Services: Write down the items or services that you sell. If you have a lot of them, group them into categories. For example, if you sell clothing, your rows might include shirts, pants, and shoes. Match these revenue streams to the way you organize your accounting. So, if your books look at women’s and men’s clothing separately, do the same for your sales forecast. That way, you can pair your sales forecast with information on your cost of goods sold and overhead to project profit.  
  • Estimate Unit Sales: Predict how many units you will sell in the selected time period. If you have historical data, use that and then factor in assumptions about demand for the upcoming period. For example, is your business growing? Is the economy in recession? Did you launch a big promotion? Use the answers to these questions to make downward or upward adjustments to the historical figure. You can also interview some customers to get insights into their likely purchasing plans. Lastly, don’t forget to factor in seasonal fluctuations. 
  • Multiply by the Selling Price: Multiply the unit sales numbers by the average selling price (ASP). Determine the ASP by analyzing historical sales and adjusting for inflation and other factors. To obtain this figure, you also need to consider discounts, free trials, and unsold inventory. 
  • Repeat for Each Forecast Period: Go through the same calculation for each category and time interval. As you forecast more distant periods, your estimates are likely to be less accurate, so you may want to make a range of forecasts, such as for best, worst, and average scenarios. As time passes, add the actual values and fine-tune your forecast. For instance, you may see that for the first few months of the year, you underestimated sales by 12 percent. Therefore, you decide to increase your forecasted sales amounts in the upcoming months.

How to Forecast Sales in Excel

Here is a step-by-step guide to building your own sales forecast in Excel:

  • Enter Historical Data: Open a worksheet and enter your past date data in the first column. Then, in the second column, enter the corresponding sales values. If possible, make sure you space the dates consistently (e.g., the first day of every month). 
  • Create Forecast: In the date column, fill out the next date cell with the future date you are forecasting. Select the corresponding sales value cell and in the function field, type: =(FORECAST( A10, B2:B9, A2:A9)), where A10 is the future date cell, B2 to B9 are the historical sales amounts, and A2 to A9 are the historical dates. Hit enter and the forecast sales amount will appear.
  • Repeat: Continue the pattern for your remaining future dates. Remember that the formula uses only known variables, so do not add forecasted amounts to the cell ranges. This function is a linear forecasting method.
  • Power Up: If you have Excel 2016, you can use the forecast sheet function, which automates forecasting and adds a chart. To use this function, select both data columns, and, on the data tab, click the forecast sheet. In the create forecast worksheet box, select whether you want a line or bar chart. In the forecast end field, choose an ending date and then click create. Excel will create a new worksheet that contains both historical and forecast sales data as well as a visual representation. 

For a pre-made basic sales forecast, download this template that projects product sales with both units and sales amount.

Basic Sales Forecast Template

Basic Sales Forecast Sample Template

Excel | Google Sheets | Smartsheet

For a wide range of pre-built sales forecast templates in a variety of formats, see this comprehensive collection .

How to Choose the Right Sales Forecasting Methodology

Your goal is to build the most reliable forecast possible, with the minimum amount of resources you need to be effective. To choose the method that fits best, consider these seven questions:

Tyson Nicholas

  • Is the Time Frame Short, Medium, or Long Term? Qualitative methods are a good choice for short-term horizons, but they generally underperform quantitative methods for periods beyond a few months. Similarly, consider where you are in your business or product lifecycle. If you are ramping up or in a high-growth phase, you may be making costly investment decisions, so you need a method with a high degree of accuracy, but also relatively quick production time. When you are in a mature phase of your business, decisions about production and marketing are more routine. 
  • How Much Data Do You Have? The less data you have, the more likely you will be to select a qualitative technique. If you have limited data, you will turn toward more simplistic models. A company that has collected a lot of data and has great confidence in its reliability can choose sophisticated quantitative models. 
  • How Relevant Will History Be in Predicting the Future?  If your business has undergone big changes, such as launching major new products, experiencing large growth in the sales force, or introducing a different pricing structure, your past results will have less value as a guide to future performance. So, methods that diminish the weight put on historical data and qualitative techniques are a better choice.  
  • In Terms of Time and Money, How Much Does It Cost to Produce the Forecast? How Does This Cost Compare to the Value of the Potential Benefits?You will need to make tradeoffs between the time and cost to build your forecast and the potential benefits, such as cost savings. Also, consider the potential cost of error. For example, suppose you are contemplating a high-cost sales-forecasting technique (one that takes a lot of data gathering, the creation of a custom model, and expensive staff and technology to produce). The forecast could allow your company to reduce the amount of inventory it holds. Weigh the value of inventory savings against the forecasting cost. If you reduce inventory and the forecast proves inaccurate, what are the potential costs of lost sales — because you did not stock adequately or because you did not cut back enough?  
  • What Degree of Accuracy Do You Need?  Forecast accuracy rises with the cost and complexity of the methodology. Depending on how you will use the forecast, the size of your company, and the variability of your business, you may feel that it’s not cost effective to produce a maximum-accuracy forecast. If you are a giant global company, a fraction of a percentage point error in your sales forecast could represent many millions. So, the bigger the dollar values, the more meaningful every degree of enhanced accuracy becomes.
  • How Complex Are the Factors That Will Drive the Forecast?   If your sales dynamic is straightforward — the more sunny days there are, the more beach umbrellas you sell at your beach kiosk — then building a sophisticated, AI-driven forecasting model will be overkill. “It's important not to spend time and energy developing a complex model, when a much simpler one will do the job,” says Nicholas. But when you are facing a subtle and complex interplay of variables, you need a technique that accounts for them. Suppose you have new products, changes in your marketing, and additional sales reps. A sophisticated model would allow you to forecast the net effects and also try out different scenarios in which the variables fluctuated.

Why Accuracy Is Important in Sales Forecasts

According to CSO Insights, 60 percent of forecasted deals do not close and 25 percent of sales managers are unhappy with the accuracy of their forecasts. Inaccuracy in sales forecasts causes problems for businesses and impacts performance. 

People throughout your company depend on your forecasts to make a multitude of decisions — from pay raises to real estate acquisitions. Let’s look at some of the important reasons to strive for accuracy:

  • Early Warning: Your sales forecast helps you spot trouble early, like when revenues are not materializing as expected; the forecast also allows you to intervene and problem solve before this underperformance becomes a crisis.
  • Decision Making: The forecast gives leaders confidence and a sound basis for deciding how much and where to spend or invest. Production planners, HR, and others will use the forecast.
  • Goal Setting: You set achievable targets for sales reps when you have an accurate forecast. Goal setting prevents sales reps from getting discouraged by unrealistic expectations. Following this strategy also ensures that your commission and bonus scale are calibrated appropriately. 
  • Customer Satisfaction: When you are prepared for the right level of demand, your company can improve its record of fulfilling orders on time and in full.
  • Inventory Management: You will be more likely to have the right level of inventory if your sales forecasts are accurate. Making accurate predictions allows you to better manage your supply chain and order raw materials or parts in a timely fashion. You also gain more control over your pricing if you have the right amount of inventory. When you have to resort to discounting to get rid of excess inventory, your profitability suffers.

How to Improve Sales Forecast Accuracy and More Best Practices from Experts

Producing high-quality forecasts takes organizational commitment and long-term effort, and best practices will help improve accuracy.

Charlene DeCesare

”Sales forecasting is both an art and a science. Where companies tend to go wrong is relying too heavily on one or the other. You need a consistent process and reliable data,” says Charlene DeCesare, CEO of sales training and advisory firm Charlene Ignites .

She emphasizes five best practices:

  • Ensure that the pipeline feeding the forecast is accurate. You don't need historical data to predict the future when you have a well-defined sales process.
  • Everyone must use the CRM, and should enter notes and coding opportunities in a clear, consistent way. 
  • Buyer behavior is a much more reliable predictor of future sales than gut feel. Challenge optimism that doesn't align with the applicable stage in the sales cycle or isn't supported by clear, mutually agreed-upon next steps.
  • In general, buyer/seller behavior is the leading indicator to rely upon. Too many companies rely on results, which is actually the lagging indicator.
  • Sales leadership can have a huge impact. Sales reps must be rewarded for both honesty and accuracy. Sales forecasting must be an individual, team, and company priority. 

Rob Stephens

Rob Stephens, a CPA whose firm CFO Perspective advises businesses on forecasts, adds: “A big planning mistake is spending too much of your precious time trying to find the one right scenario… Start with a range of reasonable forecasts based on solid fundamentals. For example, you may project from historical growth rates, customer indications of future sales, or projections of market growth. A company with a new product may need to extrapolate from existing products or early indications from potential customers. Use a higher-probability scenario as a beginning base scenario, but identify why the future may deviate from it.”

Common Mistakes and Pitfalls in Sales Forecasts

Sales pros say they see the same sales forecasting errors on a regular basis and that these often relate to letting the discipline of the forecasting process lapse. 

Bob Apollo

“The most common operational mistakes are basing forecasts on hope rather than evidence, ignoring repeated close date slippage, failing to take into account the historic forecast accuracy (or inaccuracy) of the salesperson concerned, and failing to hold salespeople accountable for the relative accuracy of their forecasts,” notes Bob Apollo, Founder of Inflexion-Point Strategy Partners, a sales training firm.  

“The most common cultural mistake is when sales leaders press salespeople to forecast a target number without any evidence or confidence that it will actually be achieved," he notes.

Evan Lorendo

Evan Lorendo , Director of Revenue Accelerator, which advises service companies on revenue strategies, says he sees companies with monthly recurring revenue (MRR), such as software as a service (SaaS), frequently make mistakes in sales forecasting.

He gives the example of a company with an MRR product that wants to generate $120,000 in revenue a year. How much in new sales do they need each month? “Most of my clients say $10,000/month, but that is wrong. Because a client is paying on a monthly basis, a client that signs up in January is actually paying 12 times during the year. On the flip side, a client signing up in July will make six payments during the year,” he explains. 

That means there are a total of 78 potential payment configurations per year, not 12. The customer who buys in January will make 12 payments, but November’s buyer will make two. (12 + 11 + 10 + 9 + 8 + 7+ 6 + 5 + 4 + 3 + 2 + 1 = 78.)

“If you want to know how much you need to sell in new sales each month to hit that $120,000 goal, the answer is $1,539 ($120,000/78). That actually seems much more manageable, doesn't it? Based on poor forecasting, a miscalculation can turn off good salespeople who can't hit their quota,” he says.

KPIs for Sales Forecasting

As your sales forecasting improves, you reap bigger benefits, such as better planning and higher profits. So, you will want to assess and monitor your forecasting effort by using key performance indicators (KPIs).

Below are the main KPIs for sales forecasting. Some of them draw from statistics concepts, such as standard deviation, and computer applications and statistics guides can help you calculate them.

  • Bias or Variance: This KPI tells how much the actual results deviated from the forecast over a given period of time. Calculate bias as an absolute number of dollars or units or as a percent of sales. A positive number means sales exceeded projections and a negative number indicates underperformance. Actual Units - Forecast Units = Bias
  • Mean Absolute Deviation (MAD): This metric describes the size of your forecast error in total units or dollars. You calculate how much the actual results deviated from the forecast average, add the deviations, and divide the result by the total number of data points.   
  • Mean Absolute Percentage Error (MAPE): This is similar to MAD, but gives the forecast error as a percent of sales volume. 
  • Tracking Signal: This is another expression of forecast error and looks at how the error rate varies among forecast values. Normally, you expect all forecast amounts to be wrong by about the same degree. If, from one data point to another, there is a large variation in the error rate, you need to rework your model.  Tracking Signal = Accumulated Forecast Errors ÷ Mean Absolute Deviation
  • Forecast Value Added: This metric measures how much better the forecast was than simply using unadjusted historical data. If your forecasting effort got you closer to actual than the so-called naive forecast (i.e., using historical figures as your forecast), you have added positive value. You calculate this metric by comparing the MAPE of your forecast to the naive forecast.
  • Linearity: This looks at how sales are paced over the course of the period. As your reps seek to meet quota, you might see a flurry of deals at the end of the quarter. Or, deals might be spread evenly across the time period. The most stable situation is a deal cadence or velocity that is constant. If expressed as a trend line, this stable situation would appear visually as a flat line. This pattern is called highly linear .

Application of Sales Forecasting

Your sales forecast obviously gives you an idea of how much you will sell in the future, but sales forecasting has other important use cases. Here are five ways you can apply your forecast to business questions:

  • Sales Planning: As noted earlier, your sales plan encompasses your goals, tactics, and processes for achieving your sales forecast. As part of this plan, your sales forecast helps you decide if you need to hire more sales reps to achieve your forecast and if you need to put more energy and resources into marketing.
  • Demand Planning: Demand planning is the process of forecasting how much product your customers will want to buy and making sure inventory aligns with that forecast. In ideal conditions, forecast demand and sales would be virtually the same. But, consider a scenario in which your new product becomes the hot gift of the holiday season. You forecast demand of 100,000 units (the number consumers will want to buy). A large shipment turns out to be defective, and the product is unsellable. So, you forecast sales of just 75,000 units (how much you will actually sell.)   
  • Financial Planning: Your sales forecast is vital to the work of your finance department. The finance team will rely on the forecast to build a budget, manage overhead, and figure out long-term capital needs. 
  • Operations Planning: The unit-sales numbers in your forecast are also important for operations planners. They will look at the production required to meet those sales and confirm that manufacturing capacity can accommodate them. They will want to know when sales are likely to rise or fall, so they can avoid excess inventory. A big increase in sales will also require operations managers to make changes in warehousing and distribution. Retailers may change the product mix at individual stores based on your sales forecast.
  • Product Planning: The trends you foresee in sales will have big implications for product managers too. They will look at products that you forecast as top sellers for ideas about new products or product modifications they should introduce. A forecast of declining sales may signal it is time to discontinue or revamp a product.

Levels of Maturity in Sales Forecasting

Sales forecasts can be simply scribbled-down estimates, or they can be statistical masterpieces produced with the aid of the most sophisticated technology. The style you pursue relates in large part to your level of forecasting maturity (as well as the size and history of your business). 

Below is a description of the four levels of the sales forecasting maturity model:

  • Level One: In the beginning stages of sales forecasting, the estimates are usually not very accurate and take a lot of time to produce. The forecasting process depends on reps’ best guesses, and sales managers spend a lot of time gathering these guesses by interviewing each rep. Then, they roll them up into a consolidated forecast. Inconsistent data collection and personal bias can skew the results. Sales managers use spreadsheets, which quickly become outdated, and the forecasts often reflect little more than intuition.
  • Level Two: As your forecasting culture grows, you are probably still inputting data by hand, and the forecast is often inaccurate or outdated. But, a CRM solution is enabling your team to have a shared repository for contacts, sales activity, and deal status. Reps don’t see value in spending time contributing to the forecast, and quality is weak. Your CRM automatically aggregates those results, so you can start to examine trends and anomalies. But, your system is not very flexible, and forecasting remains unwieldy and resource intensive.
  • Level Three: At this point, automation starts to offer radical improvements in sales forecasting. Solutions backed by artificial intelligence automatically bring together data from a multitude of sources, including email, CRM, marketing platforms, chat logs, and calendars. There is no more manual data entry, and sales managers gain increased visibility into the sales pipeline. KPIs become reliable and an important tool for monitoring performance.
  • Level Four: Technology ensures sales that data is accurate and timely. AI and machine learning find patterns and correlations in your historical data, and predictive analytics offer robust forecasting. The forecasting model is continually refined. Forecast accuracy rises, and sales managers can focus more of their time on supporting reps and developing opportunities. These tools make it apparent when reps are sandbagging or being too optimistic, and accountability increases.

Advances in Sales Forecasting Methodologies

While sales forecasting has been around as long as private enterprise, the field continues to evolve, and researchers are looking at ways to improve sales forecasting methodologies. 

Indiana University Professor Douglas J. Dalrymple performed an influential study in 1987 that surveyed how businesses prepared sales forecasts. He found that qualitative and naive techniques predominated, but that early adopters were reducing errors by using computer analysis. At this time, PCs were starting to proliferate and come down in price. 

By 2008, Zhan-Li Sun and his researchers at the Institute of Textiles and Clothing at Hong Kong Polytechnic University were experimenting with an advanced AI-driven technique called extreme learning machine to see if they could improve forecasts for the volatile retail fashion industry by quantifying the influence of factors such as design on sales.  

Scholars F.L. Chen and T.Y. Ou at the National Tsing Hua University in Taiwan took this further with a 2011 study. The study documented sales forecasting advances when combining extreme learning-machine, so-called Taguchi statistical methods for manufacturing quality with novel analysis theories that work on variables with imperfect information.

Features to Look for in a Sales Forecasting Tool

Paper forecasts and Excel spreadsheets quickly become cumbersome. Sales forecasting capability is available in CRM software, sales analytics and automation platforms, and AI-driven sales technology. These capabilities often overlap among these applications.

Here are some of the features to look for when evaluating a sales forecasting tool:

  • Integrations with other software, such as ERP, CRM, marketing suites, contact management, calendars, and more
  • Automated collection of data and sales rep activity
  • Real-time reporting
  • Robust data security
  • Analytics and automated scoring of deals
  • Insights on most promising deals
  • Scenario modeling
  • Lead scoring
  • Automated forecast roll-ups or summaries by category and team
  • Dashboards and graphic displays of KPIs
  • Benchmarking
  • Customizable forecasting algorithms
  • Forecast auditing and error analysis

Improve Sales Forecasting with Smartsheet for Sales

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The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

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How to Create a Sales Forecast that Scales: 7 Key Steps

Michael Lowe headshot

Michael Lowe Director, Content Marketing, Clari

Published February 26, 2020

Updated November 27, 2023

Ready to take your revenue to new heights?

how to write sales forecast in business plan

The sales forecast is the single most important number in the company. It dictates how a business can invest and grow. There’s just one problem: It’s really hard to get right. And even when you do get it right, chances are you’ll grow out of that solution and have to readjust as you scale.

Yet no matter how mature your company is or how fast it grows, one thing remains certain: It is absolutely critical to nail your sales forecast .

What is a Sales Forecast?

A sales forecast is a roadmap that guides the company to where it aspires to be. Your sales forecast predicts how much revenue each sales rep, team, or division expects to bring in within a given time period. Sales forecasts use current sales activity data and historical trends to evaluate which deals in your pipeline will close—and at what value—over the course of a quarter, month, or year.

It enables revenue teams to prioritize actions that the organization will need to execute to reach its desired goal. Forecasting sales with the right model and sales forecasting method is vital to the success of any given company, small business or multinational enterprise.

To help get you started with sales forecasting, we’ve put together this step-by-step guide. Click the links below to jump to the section. You’ll learn how to think about the critical steps in establishing your forecast, including:

  • Start with the goals of your forecast
  • Understand your average sales cycle
  • Getting buy-in is critical to your forecast
  • Formalize your sales process
  • Look at historical data
  • Establish seasonality
  • Determine your sales forecast maturity

The ultimate result? More reliability and efficiency in every area of your business.

Set Sales Forecasting Goals

Before you start your sales forecast , you need to define the goals, which can include (but are not limited to): ARR, new logos, number of products sold and renewals.

Your sales forecast goals typically depend on the stage of your organization. If you’re an early stage startup, you might be very focused on obtaining new logos to increase customer base and get market validation, regardless of the ARR. A more mature company with multiple product lines may focus on number of products sold in a particular line versus another.

Let’s dive a little deeper.

Annual Recurring Revenue

If you’re in the SaaS business, you’re most likely looking closely at your ARR or annual recurring revenue . ARR is the sum of contracted revenue that the company is going to recognize in any given fiscal year.

ARR basically tells a company how much they can expect to receive from customers in one year and is used to evaluate a company’s growth, which is why it’s often used for long-term forecasting. ARR looks at both net new bookings and upsells, though you can certainly calculate them separately.

The common way ARR is calculated is by taking total value of a contract divided by the number of contract years.

For a 3-year contract totaling $60,000, it would be $60,000/3 = $20,000.

When looking at multiple contracts, you would just add up the total ARR. So if you have a 3-year contract totaling $60,000, a 2-year contract totaling $50,000 and a 5-year contract totaling $100,000, you would add up $20,000, $25,000 and $20,000 to get $65,000 in ARR.

New logos mean new business and it goes without saying that new business is important for the long-term growth of a company. There are a few reasons a company may want to focus on new logos for their forecast:

Maybe the company is young and their goal is to build influence and validation in the marketplace. They may place value in customer base over ARR to show prospects they have earned the trust of those customers.

If a company’s strategy is to ‘land and expand’, getting new logos in the door at any cost may be the top priority. In this scenario, a company may opt for minimal initial contracts with the belief that they will be able to upsell that new customer for additional ARR.

Number of Products Sold

Another option to consider for sales forecasting is the number of products sold or available for sale. Also the types of products available can also make a difference. If you sell slightly different bundles of products depending on the vertical, this might affect your sales forecast. For example, let’s say your hospitality industry customers buy at a lower price than your retail industry customers. The number of products you would need to grow would be much larger otherwise.

Forecasting with product in mind allows you to predict sales for each business line is running and if you can re-invest funds into R&D or even develop a new product to bolster your offerings.

Thinking about the end business goal in mind gives you a better direction for developing your forecast.

Understand Your Average Sales Cycle

How long does it take your organization to close a deal? Understanding your average sales cycle is a critical piece in the sales forecasting process because your forecast is really based on the velocity of your business.

Let’s take a look at several different time periods:

  • Weekly: Highly-transactional companies will forecast on a weekly basis.
  • Monthly: For sales cycles that last around 30-60 days, a monthly forecast would work best.
  • Quarterly: Companies with longer sales cycles tend to forecast on a quarterly basis.

Your forecast really depends on the average sales cycle that best matches your business. And if you play in several verticals, you might even have differences in time periods when building forecasts.

Get Buy-In from Finance, HR, Marketing, and Sales

Forecasting can mean different things for different people — and each team and team member will have a different reason for using the forecast. However, they all should be bought into the idea that an accurate sales forecast is critical for organizational success.

Finance, HR, marketing and product all rely on sales forecast accuracy to make confident business decisions.

Reps may think the sales forecast is just a number for the higher-ups, but they are mistaken. This approach ignores the important fact that the forecast is not just a number, but a process — and one that starts at the bottom. You need to make sure every team and every member of that team not only has an understanding of what the sales forecast is but how they will contribute to it.

A single source of truth, available to all teams in the revenue operations organization, not only encourages buy-in but also gives them full transparency to make collective decisions. Formalize your sales forecast in a document or, even better, a Revenue Operations Platform that encourages compliance.

Formalize Your Sales Process and Definitions

The next step is to build a clear sales process and sales definitions that every member of every team follows with consistency.

A good sales team always puts the customer first — not the other way around. Study and define your buyer’s journey and then develop a sales process and sales cycle that complement it. Establish how many stages your sales cycle will include and the criteria that qualify a deal in each one.

For example, let’s say your prospects typically buy more in November/December when they have end-of-year funds that need to be used up. If you reached out to a prospect in July and they weren’t quite ready at the time to move to a closed deal due to funds not being available at the moment, you might want to set up a stage where you can track it as a stalled account and create a task to reach back out in late September/early October.

So you would have created the opportunity in July, decided to designate the opportunity as a “Stalled account due to current budget” and then re-assess the opportunity later on in the year. Even if the opportunity ends up as a closed/lost, following this process helps you understand whether these types of deals are still worth the time and effort — and how to properly incorporate them into your forecast.

Your organization must make process a policy. You should train every rep on your sales process, circulate definitions and process to your sales team consistently, and train your managers to consistently review and reinforce the process in their one-on-one sales meetings with sales reps.

Uniformity is the only way toward widespread adoption. Without a formal sales process, it is much harder to make an accurate sales forecast because you cannot easily predict how deals are moving through each stage, especially as your organization scales.

If you have multiple teams across the United States or around the world, sales process adoption becomes even more critical in order to create accurate sales forecasts.

Revenue Operations Platforms can assist sales teams implement their sales process and make sure reps are compliant, alerting when deals haven’t been updated properly or show risk based on historic data.

Look at Historical Data and Reports

Once you have your overall sales run rate, you have to reflect on previous historical data. You want to make sure you didn’t just have an exceptional quarter or year that then skews your numbers. You should pull all available reports that look at critical sales forecasting metrics :

  • Average annual contract value or ACV
  • Conversion rates
  • Average deal cycle
  • Sales pipeline
  • Sales linearity
  • Deal slippage
  • Pipeline coverage
  • Sales Activity data

While you can look at these numbers at an aggregate level, it’s also important to drill down into individual performance. It’s a good time to reflect and see how individual members of your sales team are executing on their deals and provide coaching to those who may be falling behind.

With this historical data, you should be able inspect your in-quarter and out-quarter pipeline and improve sales effectiveness across the board. For example, if you see your conversion rates are dropping, sales and marketing can figure out if there is a lead quality issue or lack of proper follow-up.

Predictive analytics can play a big role here because it helps you understand historical data to make future sales predictions. Clari’s Time Series Forecasting enables teams to connect their Salesforce to Clari, where we start ingesting all of your CRM and activity signals and snapshotting them in real time.

Our AI and analytics engine then automatically discovers insights in a user-friendly way that is perfectly integrated with your sales forecasting process.

Establish Seasonality and Big Market Events to Forecast Sales

Seasonality is defined as an anticipated positive or negative impact to sales performance due to industry events such as summertime vacations. You can easily do this as part of the previous exercise by making sure you’re looking for trends over a given period of time. We all know that it’s hard to close deals in the fourth quarter, so your forecast should reflect that slowdown and your team should be ready to adapt by making sure you have a solid plan in Q2 to make up for it, for example.

This is where historical data plays a big part. Look at seasonality over the last 3-4 years and ask yourself how much did you close the same time last year?

If major industry conferences dramatically influence the revenue you generate — or perhaps there is some industry-wide legislation on the horizon that introduces additional regulation, include that into your forecast as well.

Determine Your Sales Forecast Maturity

How do you calculate sales forecast? What is a sales forecast example? What are the methods of sales forecasting ?

All these questions matter and can have a huge impact on the success of your forecasting efforts. We have found that most organizations work through several stages of forecasting maturity on their journey to a defined and accurate sales forecasting process.

Not all companies and revenue teams are ready for the most mature stage of sales forecasting, but for those who want the highest level of sales forecasting accuracy should look to emulate the most mature companies. If you are the early stage where you are using verbal reports and static spreadsheets, you’re limiting yourself to an inaccurate forecast and lots of manual labor that is prone to error.

  • Notebook: Built from written notes on conversations with sales reps, highly reliant on word of mouth
  • Spreadsheets: Static file that is updated individually by each rep, requires manual consolidation and prone to error
  • CRM: Dependent on proper data management by the rep, which isn’t fool-proof all the time and lacks visibility
  • CRM + Spreadsheets + BI: Takes data that already exists in the CRM or manual spreadsheets and presents it in a visual BI tool, which still relies on potentially bad or incomplete data
  • Automated activity tracking: Uses artificial intelligence and automation to capture sales activity data increasing data hygiene for every opportunity for better visibility into the health of the deal
  • Predictive analytics: Uses AI to forecast based on past sales data, current activities and other data
  • Revenue Operations Platform: Harnesses automation and AI to manage revenue creation, growth and retention processes, eliminating do-it-yourself spreadsheets, reports, and off-line conversations to give you better forecast accuracy, more visibility into your pipeline, and control over your revenue. Learn how to improve sales forecasts with Clari .

Grow Your Sales Forecasting Maturity with Predictive Analytics

Find out how a Revenue Operations Platform like Clari can help take your sales forecast to a higher level. Schedule a free demo today to learn more. 

Ownr Blog  > Ownrship 101  > Business Stages  > Growing Your Business  > Levelling Up  > How to Create a Sales Forecast That Boosts Your Business

How to Create a Sales Forecast That Boosts Your Business

Ownr Author

Are you working on a business plan for a new venture, making changes to an existing business, or looking to gain a deeper understanding of your enterprise so that you can make more informed decisions? At every stage of your business, a sales forecast is a powerful tool that can help you make better predictions about the future. It may seem daunting at first, but with many useful sales forecast templates available for free online, it is easier than ever to create your own sales forecast and take control of your future success.

  • What is a sales forecast, exactly?

As the name suggests, a sales forecast is a document that outlines what a company’s forecasted future sales will be. There are many sales forecast methods that you can use to make informed predictions of your sales numbers.

A sales forecast isn’t something you only create once as part of your business plan when you launch, and then forget about. It’s a tool that you should return to regularly to measure how you’re performing against your predictions and to help guide your decision making. In most cases, your sales forecast will cover the 12 months ahead. You can also add annual forecasts for subsequent years, although you will probably revise these forecasts since it’s difficult to forecast accurately far into the future.

  • Why are sales forecasts so important?

This is a great question because it’s not immediately obvious why predicting your future sales matters. Shouldn’t you just be focused on the all-important task of selling? The reality is, a thoughtfully created sales forecast can not only help you sell more, but it can help you adjust your strategy to make sure your business is focusing on the strategies that work. A sales forecast encourages you to:

  • Conduct quality research. If you’ve been in business for a while, you can use your historical sales to calculate your monthly growth and project into the future. However, if you’re just starting, the best way to build your sales forecast is to research your industry. You’ll want to gain a strong understanding of what kind of sales you can expect based on your competitor’s sales figures, information from your relevant industry association, or your local Chamber of Commerce. 
  • Set realistic goals. Armed with all the useful information you gained from your research, you can set goals for your business that are based in reality. If you just plug huge, wishful numbers into your sales forecast template, it won’t be of much use, but if you forecast your sales based on reliable data, you can be confident of what is achievable for your business and set goals based on this. 
  • Be smart about budgeting . Since you’ll have a rough idea of what your sales will look like, you will be able to make sure that any expenditures your business makes are sustainable in the long run.
  • Notice problems before they get too big. For example, if your sales were tracking your forecast, but have been off for a couple of months, what changed? Have you tried implementing a new strategy that needs to be refined? Or is there a seasonal variation to your business that you hadn’t considered when building your sales forecast? Regularly checking your bookkeeping ledger against your sales forecast is a great way to spot potential issues and keep yourself accountable. 
  • Make better decisions. Maybe a large portion of your business revenue is coming from a source you didn’t expect, while the product you thought would sell quickly isn’t performing as well as you anticipated. Tracking these disparities against your sales forecast will help you spot where your efforts should be focused so that you’re not wasting your time on unproductive activities. 
  • How to create a sales forecast for your business
  • Choose your sales forecast interval

The first thing to consider is the time interval you want to use in your sales forecast. For example, you can forecast your sales on a weekly, monthly or quarterly basis, and check in at each interval to see how you performed against your forecast. For many businesses, a monthly schedule is perfect. It’s frequent enough to allow you to include things like seasonal fluctuations in sales, but not so frequent that it becomes a guessing game. However, you should think about the needs of your particular business and choose a time interval that works best for you.

  • Define your sales units

Another factor to consider is how you will define your sales units. There is no one-size-fits-all approach to this since it will vary quite a bit depending on the type of business you have. 

For example, if you have a toy company, you may have 30 different SKUs on offer. You could count each SKU as a unit, but it might be too difficult to predict sales at such a detailed level. Instead, grouping your SKUs by the age group they are appropriate for will reduce the units in your sales forecast to a manageable number and still be detailed enough to help you track important sales data. The trick is to pick a category system that is appropriate for your business. 

Defining your units gives you a birds-eye view of which aspects of your business are doing best, so you can be responsive. In this example, you might tweak your email marketing strategy in response to a boost in interest in toys for children aged 3-6 by promoting new toys in that category.

  • Choose your sales forecast method

There are many ways to come up with reliable, informed numbers for your sales forecast. Some options include:

  • Historical forecasting. If you have historical data to draw from, creating a new sales forecast based on that data can be a part of your year-end checklist . You can also do a version of this if you are a brand new business by using historical sales data from similar businesses in your industry. Search online for sales forecast examples from businesses similar to your own.
  • The bottom-up approach. If you don’t have historical sales data, you can consider how many potential clients you can potentially reach in a given time period. Consider your resources, and what percentage of those can reasonably become paying customers, to arrive at realistic sales forecast numbers. 
  • Opportunity stage forecasting . This involves assigning a likelihood of closing a sale based on the stage of the sales pipeline it is in. For example, if you are a freelancer and have a 30% chance of closing with clients you meet for a second time, and the value of a potential client contract is $1000, that would go into your forecast as $300. This type of forecasting is most appropriate for businesses that have longer sales cycles and require multiple interactions with a client. It works best if you update your sales forecast template regularly to reflect changes. 
  • Length of sales cycle forecasting . With this method, you assign a likelihood of closing to the age of your prospect, rather than to the stage of the sales cycle you are in. For example, your chance of closing a deal with a new client may be higher at 40 days than at 10 days.
  • Use online sales forecast templates

A good way to get started is to look at a few different free sales forecast templates to see what people choose to include in theirs. That way, you can choose one that best fits the needs of your business, and you don’t have to build a new sales forecast template from scratch. 

No matter what stage you are at with your business, dedicating some time to creating a realistic and informed sales forecast is a valuable use of time for any entrepreneur. Remember, what makes a sales forecast useful is checking in and measuring your performance against it, so make sure to set some time aside each month to check in and see how your business is doing.

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How to create a sales forecast for your small business

May 21, 2024 | 7 minute read

What you know about tomorrow can help you make better decisions about running your small business today. A sales forecast can be a helpful tool in estimating future sales, so you can take that information into account in your planning. Simply put, a sales forecast estimates the quantity of goods and services you can reasonably expect to sell over a specified period, the cost of those goods and services and the potential profit. It’s based on your sales in the past, industry benchmarks and market conditions. 

A sales forecast is an invaluable tool for better  managing your cash flow , spending, staffing and more. Once you complete your forecast, you’ll have a better sense of what’s driving your revenues and profits, know where to put your time and resources and be able to identify efforts that are not fueling growth so you can consider eliminating them. 

Why sales forecasting is important

A sales forecast helps you understand your financial position. It can be a good starting point for setting goals and provides guidance in many areas of your business, such as planning for new hires, purchasing inventory and equipment, knowing when to preserve cash, increasing your marketing budget or alerting you that you need to find new  ways to make more money . It can also help you illustrate your business’s potential to investors.

What factors impact a sales forecast?

A forecast is really an educated guess. There are any number of conditions that might shake up your projections, such as new laws and regulations. A downturn in the economy could mean a change in business conditions, making it harder to get credit. A dip in consumer confidence could lead to less spending on your company’s goods and services. New competition in your market, a drop in customer satisfaction or extreme weather (a major storm that essentially shuts down a city for a few days, for example) could all make a difference in what you thought was going to happen. Something like seasonality can also impact your forecast. Internal factors like new production processes and procedures can also keep you from hitting your target. 

Sales forecasting methods

There are several methods to creating a sales forecast. Here are three that many small businesses use:

Historical forecasts

This method is based on your business’s past performance. If you’ve been in business for a year or more, you can look back at data by the week, month, quarter or year. If you’ve launched your business recently, this option won’t work well because you won’t have enough data available. 

Bottom-up forecasts

To come up with these forecasts, you must project the number of units you will sell, then multiply that figure by the average cost per unit. If you run a larger small business, you can also include metrics like the number of locations, sales representatives or online interactions. The rationale behind a bottom-up sales forecast is to begin with the smallest components of the forecast and build up from there. The advantage of this type of forecast is that if any variables change (like cost per item or number of reps), the forecast is easy to adjust. 

Top-down sales forecasts

Start with the total size of the market and estimate what percentage of the market the business can capture. If the size of a market is $20 million, for example, a company may estimate it can win 10% of that market, making its sales forecast $2 million for the year. If you’re a natural optimist, it’s a good idea to ask an advisor to provide a reality check on the percentage of customers in your market that you can reasonably expect to attract and serve so that your projections are more accurate. 

How to create a sales forecast

Once you’ve selected a sales forecasting method, you’ll want to take several steps.

1. List the goods and services you sell

In a sales forecast, you’ll want to account for each product or service that you are selling so your forecast is accurate. 

2. Quantify your sales

Each sales forecasting method has its own way of estimating future sales: 

In  historical forecasting , you will need to project the quantity of each product or service you will sell and multiply the unit price by that number. In this type of forecasting, you can base your estimate on the sales figure you brought in last month as long as nothing major has changed in the marketplace. So, if you sold $50,000 worth of your product in July, you might estimate selling $50,000 worth in August. 

In  bottom-up forecasts , you must first estimate the total number of orders that customers will place for your products or services through your website, social media channels and other places you make sales. Then you estimate the average price minus any discounts you offer. Finally, you must multiply the estimated number of orders for each item by the average price to get estimated revenue. 

In  top-down forecasts , you start by estimating the total market for each item you sell. For example, if you were lucky enough to capture 100% of the sales, how much would you have sold? Then project how much of that market you can realistically capture. So, for instance, if the total addressable market for what you sell is $1 million, and you capture 7% of that with your product, your estimated sales will be $70,000. 

3. Make adjustments

Some owners adjust their forecasts to reflect projected market conditions, regulatory changes, new marketing efforts and other variables.

4. Subtract costs

Business owners will typically subtract the costs of creating each good or service they sell from their estimated sales forecast to understand how much profit would be generated from sales. Let’s say you sell a backyard game you invented by outsourcing the manufacturing to a local factory. You might subtract  overhead expenses , such as paying the factory and buying materials, from your projected revenue to anticipate how much money would be left over as profit. Or if you run a social media agency that has taken on new clients who’ve hired you on retainer, you might subtract costs, such as paying freelancers to write social media posts and subscribing to a website that provides stock photos, to get a clearer picture of future profits. 

Tools for sales forecasting

If you haven’t done so already, you might want to consider software to help with sales forecasting. 

Sales forecasting software

Sales forecasting software can use historical business data and trends to create a report of expected sales revenue. Forecast reports can compare sales targets with actual sales. 

Ideally, sales software can help you answer questions like: 

What is your expected revenue? 

Which forecasting method produces the most accurate forecast for your business? 

How did actual sales compare with expected sales?

Sales pipeline forecasting software

With sales pipeline forecasting software, you’ll get an analysis of existing opportunities and a calculation of your success rate in pursuing them, helping you prioritize your efforts. This method focuses on pipeline management and calculates a historical win-rate percentage based on the value and age of the opportunity and the sales representative working on it. Some software programs include features that will give you the ability to view pipeline activity and internal sales data or save you time, letting you integrate information from third-party sales software, for instance. You can create sales forecasts using software such as QuickBooks, Salesforce Sales Cloud, Zoho CRM and Pipedrive.

Historical sales forecasting software

Historical sales forecasting software analyzes previous company performance to calculate a mean (or average) sales level you can expect for the following month, quarter or year. It emphasizes historical trends and seasonality of products and services sold, but it does not consider the opportunities in your pipeline. This software is ideal for small businesses that don’t have big swings in their monthly sales. 

Bottom line

Your sales forecast can be a vital tool as you make plans to grow your business or adjust to challenges. By comparing your actual performance to your forecasts, you’ll be able to get a clear handle on your success and failures, fine-tune your strategies and capitalize on what is working for you so you can keep your business moving to the next level. 

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How to Create a Sales Forecast Business Plan

Sales forecasting is a powerful way to improve decision-making and make smarter choices as a business. But the reality is, many organisations don’t get it right.

Accurate sales forecasts rely on astute insights driven from robust, holistic data. If your business has struggled to accurately predict future sales revenue in the past, our guide could help you get it right in the future.

Ready to get started? Use the links below to navigate or read on for our full guide to accurate sales forecasting.

Quick Links

What is a Sales Forecast?

Why is sales forecasting important, what factors can affect sales forecasting, how to create a sales forecast, tools to help with sales forecasting.

A sales forecast is an estimate of what a company will sell in a week, month, quarter or year. It’s used to predict future revenue, accounting for the number of units an individual, team or company is likely to sell over a set period.

Sales forecasting offers many benefits when leveraged as part of a broader business strategy. At all levels and across all functions within a business, forecasting can facilitate shrewd decision-making, whether that’s setting goals and budgets, prospecting for new leads, deciding on the best time to hire new staff, or effective stock management to help maximise cashflow.

Accurate sales forecasting is a projection of where a company will stand in the future. And that’s important, not only for business continuity and growth, but for cultivating credibility, trust and advocacy with key stakeholders – be it partners, investors, clients or customers.

sales team having a discussion

Let’s take a look at some of the reasons why sales forecasting matters:

  • Bolsters decision-making – accurate predictions about future revenue can facilitate improved decision-making across all business functions, from hiring managers tasked with recruiting new talent, to procurement teams discerning when and how much stock to source.
  • Adds value to all business functions – sales forecasting defines the value brought by different departments across the business. It highlights how different functions and channels contribute to revenue generation, helping businesses manage their resources.
  • Accurate sales and buying for reduced costs – a sales forecast simplifies inventory management, with accurate stock predictions reducing costs and freeing up valuable resources, like warehouse space.
  • Allocation of sales and marketing budget – Forecasting helps account for peaks and troughs in sales, so you can assign marketing budgets and determine which products and services need attention.
  • Guarantees timely recruitment and outsourcing to drive business growth – understanding the areas of your business that drive the most revenue can make for seamless recruitment. Reinvesting revenue in personnel is a seismic driver of business growth, and sales forecasting can help you decide where to make hires and when. Not only that, but it can help companies decide whether they should look at outsourcing or whether to bring outsourced activities back in-house, e.g., the use of courier companies versus investing in your own delivery fleet.
  • Provides valuable revenue expectations to outside stakeholders, like investors – sales forecasting quantifies your revenue predictions, making it easier and less risky to attain outside support from investors and stakeholders.
  • Allows for simple company benchmarking against competitors – where your business ranks against competitors is important, and sales forecasting highlights how your trajectory compares to your closest rivals.
  • Offers a powerful means of motivating sales personnel – a sales forecast is the best way of benchmarking the performance of salespeople within your business. It’s also a great motivator, particularly for staff incentivised by the promise of commission.

bussinesswoman looking at notes

Many internal and external factors can impact the accuracy of your sales forecasts. You’ll need to account for all sorts of influences when predicting sales activity, including:

  • Economic uncertainty and conditions
  • Competitor changes
  • Market trends and seasonality
  • Product changes and future innovations
  • Internal pricing or policy changes
  • Available marketing spend and budgets
  • Staff levels (more or fewer sales personnel will affect figures, for example)
  • Future business plans e.g., expansion or diversification plans

This isn’t an exhaustive list of factors that can affect sales forecasting, but it does provide a steer for the types of influences that you’ll need to factor into your predictions.

Sales forecasting isn’t rocket science, but it does require a methodical approach to guarantee accuracy. Here, we’ll demonstrate how to make accurate sales predictions in five easy-to-follow steps.

Step 1: Consider Sales History

The first step to accurate sales forecasting is to look not to the future, but the past. By examining sales data over the past 12 months, you’ll glean insights that you can use as the basis of your future sales predictions, noting things like volumes, trends, and seasonality changes that caused peaks and troughs in demand.

When exploring historic sales data, be mindful of your ‘sales run rate’ – the number of projected sales for a particular period. For example, sales data may reveal a large disparity between quarterly sales figures, affecting the overall run rate; you’ll need to factor this into your forecasts for the future.

hand holding stylus over tablet

Step 2: Anticipate Changes and External Influences

While historic sales data provides a clear view of when and where sales typically happen over a year, it doesn’t guarantee the same sales figures for the future. Depending on a plethora of external and internal influences, next year’s sales could be up or down – so how do you accurately predict future revenue?

Start by taking each influence in turn and assess how such a force would have impacted last year’s sales figures. For example, do you plan to increase prices over the next 12 months? If so, how might this affect sales in relation to previous figures?

Here are some of the factors you should consider when predicting future sales performance:

  • Pricing changes – will your prices change? How might this affect custom?
  • Customer changes and trends – are consumer trends turning in your favour, or going the other way? Market awareness is crucial for accurate sales forecasting.
  • Promotions – do you have any sales or promotions lined up to increase demand? How might these affect sales targets?
  • Product alterations – are you improving your products and services?
  • Sales channels – do you plan to expand into additional sales channels in the near future or acquire new branches?

Step 3: Lean on the Right Systems for Accurate Data Capture and Analysis

Sales forecasting becomes much simpler and more accurate when the right tools are used to capture and analyse data. Integrated ERP software, for example, collates sales data from every channel of your business – including trade counter or EPOS sales, telesales, sales rep orders, ecommerce etc. – so you can make data-backed predictions with confidence.

A great example of the types of tools you can use for accurate sales forecasting is predictive stock management. Automating the forecasting process, it presents the user with a forecast prediction aligned to their stock preferences, e.g., how much buffer stock you want to carry, as well as stock lead times.

warehouse worker and manager smiling at laptop

Presented with this data, the procurement team can then use their insight and knowledge to tweak this forecast where necessary. It’s a great example of the marriage of automation to reduce manual work, whilst still allowing people to have input on the end result.

Elsewhere, utilising customised dashboards or control desks, instead of static reports, to differentiate pipeline value by rep, branch, prospect customer etc., can give businesses dynamic information to adjust their forecasts and be agile around expectations and demand.

What’s more, clever use of the CRM in conjunction with opportunity probability management enables you to allocate an estimated percentage chance that you think you will win a sales deal. By giving each sales opportunity/quotation a probability, you can produce a sales weighting forecast that will give you a fairly accurate idea of what your sales will be.

This will give you a better chance of forecasting the revenue and stock position of months and years ahead.

Step 4: Align Sales Predictions with Your Business Strategy

Many businesses have a five-year plan, a strategy that looks to drive business growth and profitability. But remember, such a plan will impact sales in one way or another, so it’s important that you align your sales forecasts with your short and long-term business objectives.

Say, for example, your business plan sets out a period of growth in the form of new hires or the creation of a whole new department. How will this affect sales? And to what extent should it be factored into your revenue forecasts?

Aligning your business strategy and sales forecasts is a crucial step. It helps prioritise business activity, ensuring that the right decisions are made to drive the business forward.

warehouse workers scanning boxes

Step 5: Set Out Your Sales Forecasts in the Right Way

Charts, graphs and annotations can all be used to set out your sales forecasts for the year ahead. These should be included in your business plan, providing an accessible means of sharing forecasts with key stakeholders, personnel and investors.

As well as charting forecasts in number terms, you should set out your sales strategy, including how you arrived at the quoted figures. This not only quantifies your reasoning, but serves as a reminder of the market position at the time of writing – something that could prove useful if you need to refer back to where the figures came from at a later date.

Sales forecasting can be a laborious process, particularly if you want to guarantee accuracy. There are, however, a range of tools and software which can be leveraged to automate some elements of the process, removing some of the legwork associated with sales forecasting.

At Intact, we’re well aware of the importance of sales forecasting – and the arduous nature of it. That’s why we offer specialist expertise and solutions to help automate and simplify the process, from ERP software and predictive stock management to data analytics tools designed to improve data-driven decision-making.

We hope this guide helps you take stock of sales forecasting. If you’d like to optimise this area of your business, the Intact team can help. For more information or to speak to a member of our specialist team, visit the homepage . Alternatively, for more help and advice on ways to manage your inventory, take a look at our free guide to effective stock management .

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Fiona McGuinness

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Run » finance, how to create a financial forecast for a startup business plan.

Financial forecasting allows you to measure the progress of your new business by benchmarking performance against anticipated sales and costs.

 A man uses a calculator with a pen and notebook on his desk.

When starting a new business, a financial forecast is an important tool for recruiting investors as well as for budgeting for your first months of operating. A financial forecast is used to predict the cash flow necessary to operate the company day-to-day and cover financial liabilities.

Many lenders and investors ask for a financial forecast as part of a business plan; however, with no sales under your belt, it can be tricky to estimate how much money you will need to cover your expenses. Here’s how to begin creating a financial forecast for a new business.

[Read more: Startup 2021: Business Plan Financials ]

Start with a sales forecast

A sales forecast attempts to predict what your monthly sales will be for up to 18 months after launching your business. Creating a sales forecast without any past results is a little difficult. In this case, many entrepreneurs make their predictions using industry trends, market analysis demonstrating the population of potential customers and consumer trends. A sales forecast shows investors and lenders that you have a solid understanding of your target market and a clear vision of who will buy your product or service.

A sales forecast typically breaks down monthly sales by unit and price point. Beyond year two of being in business, the sales forecast can be shown quarterly, instead of monthly. Most financial lenders and investors like to see a three-year sales forecast as part of your startup business plan.

Lower fixed costs mean less risk, which might be theoretical in business schools but are very concrete when you have rent and payroll checks to sign.

Tim Berry, president and founder of Palo Alto Software

Create an expenses budget

An expenses budget forecasts how much you anticipate spending during the first years of operating. This includes both your overhead costs and operating expenses — any financial spending that you anticipate during the course of running your business.

Most experts recommend breaking down your expenses forecast by fixed and variable costs. Fixed costs are things such as rent and payroll, while variable costs change depending on demand and sales — advertising and promotional expenses, for instance. Breaking down costs into these two categories can help you better budget and improve your profitability.

"Lower fixed costs mean less risk, which might be theoretical in business schools but are very concrete when you have rent and payroll checks to sign," Tim Berry, president and founder of Palo Alto Software, told Inc . "Most of your variable costs are in those direct costs that belong in your sales forecast, but there are also some variable expenses, like ads and rebates and such."

Project your break-even point

Together, your expenses budget and sales forecast paints a picture of your profitability. Your break-even projection is the date at which you believe your business will become profitable — when more money is earned than spent. Very few businesses are profitable overnight or even in their first year. Most businesses take two to three years to be profitable, but others take far longer: Tesla , for instance, took 18 years to see its first full-year profit.

Lenders and investors will be interested in your break-even point as a projection of when they can begin to recoup their investment. Likewise, your CFO or operations manager can make better decisions after measuring the company’s results against its forecasts.

[Read more: ​​ Startup 2021: Writing a Business Plan? Here’s How to Do It, Step by Step ]

Develop a cash flow projection

A cash flow statement (or projection, for a new business) shows the flow of dollars moving in and out of the business. This is based on the sales forecast, your balance sheet and other assumptions you’ve used to create your expenses projection.

“If you are starting a new business and do not have these historical financial statements, you start by projecting a cash-flow statement broken down into 12 months,” wrote Inc . The cash flow statement will include projected cash flows from operating, investing and financing your business activities.

Keep in mind that most business plans involve developing specific financial documents: income statements, pro formas and a balance sheet, for instance. These documents may be required by investors or lenders; financial projections can help inform the development of those statements and guide your business as it grows.

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How to calculate a sales forecast for a new business

Table of Contents

Definition of a sales forecast

The uses of a sales forecast, how to calculate sales forecast for a new business, calculate a sales forecast using the accounts of your competition , calculate a sales forecast using a target market, manage your finances with countingup.

When you’re running a business, you should always keep one eye on the future. If you don’t have a rough idea of what the next week, month, or year might bring, you’ll be at a disadvantage when making business decisions. This means that calculating a sales forecast is essential, especially when you’re just starting a business or beginning to write a business plan . 

Sales forecasting can be tough if you don’t have much business experience, but we’re here to help. This article will cover a range of different topics related to sales forecasting, including:

Creating a sales forecast is the first step in managing your company’s cash flow . Your cash flow is the movement of money in and out of your business. By forecasting your sales, you’ll be able to predict your gro s s profit and net profit , which means you can start anticipating what money you’ll have to spend on running your business for the next month. 

Put simply, a sales forecast is a prediction of how much you’re going to sell in the coming month. This forecast doesn’t need to be a guess — it’s possible to calculate a fairly accurate forecast with some thorough research. The focus of your research will differ depending on which sales forecast method you pick.

Firstly, your sales forecast is important because it helps you set sales goals . Measuring the success of your business is a vital part of deciding its future, and setting sales goals is one of the simplest ways to measure success. 

If you have an accurate sales forecast, you’ll be able to set realistic sales goals. You’ll want your goals to be realistic, as this will give the clearest picture of how well your company is doing and if significant changes are needed.

Similarly, sales forecasts can also help create an accurate budget for your business. As a sales forecast is essential for predicting the money your business will make, it also plays an important part in working out how much money you’ll have to spend. 

Finally, sales forecasts help with finding investors for your business . If you’re looking for financial support to start your business, any investor you approach will likely be interested in the amount of money you expect the business to make. If you’ve created a sales forecast, you’ll be able to provide this information.

Large, well-established businesses rely on the sales figures of previous months to calculate their sales forecasts for the future. While having previous sales figures helps create more accurate forecasts, it’s not essential. There are a couple of methods new businesses can use to calculate their sales forecasts, even if they don’t have a sales history to look back at.

It’s always a good idea to research the competition when you’re setting up a new business. This is also true when calculating a sales forecast, but it depends on the type of businesses that make up your competition.

If any of your competitors are registered with the government as limited companies , they will have to make their accounts publicly available. These accounts will contain things like their monthly expenses, total profits, and (most importantly) the money they’ve made from sales. 

Using this last figure, you can work out how much your competitors are making from sales each month, and get a reasonable estimate of your own sales. You can find these accounts by searching for your competitor’s business on Companies House .

Please note that this method isn’t effective if your competitors are sole traders , as this means they won’t need to publish their accounts publicly. In this instance, you should use the forecasting method below. 

This method is known as ‘bottom-up’ forecasting, as you start at the bottom — your potential market of customers — and then work up to a forecast — the percentage of those customers that make a purchase.

The first step of this method is identifying your target market . This is the section of the population that you think will be interested in your product. With a little market research — things like sending out surveys, or posting polls on social media — you can work out how many people are in your target market. 

Once you have the size of your target market, you need to make realistic estimates of how many people will make a purchase. For example, if 1000 people in the local area are potential customers, you should expect 10% to visit your store or website, and 1% to actually make a purchase.

This method of calculating a sales forecast is good because it’s very adaptable. If you get many more or far fewer sales than you originally calculated, then you can adjust your figures accordingly and record the new forecast. 

It’s also a good idea to categorise this sort of sales forecast. Instead of estimating your overall sales, estimate the sales of each type of product you sell. That way, you can use the forecast to work out how many of each product to make or order each month. 

Creating a sales forecast is a great start, but it’s only the first part of managing your sales revenue. Once you start making sales and money starts coming in, you’ll need to track that cash so you can work out where to spend it. If you think you might have trouble with this, try using a financial software tool like Countingup.

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward!  Find out more here .

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How to Create a Sales Forecast

Every Business Needs One

Susan Ward wrote about small businesses for The Balance for 18 years. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

how to write sales forecast in business plan

Sales Forecasting is the process of estimating what your business’s sales are going to be in the future. A sales forecast period can be monthly, quarterly, half-annually, or annually.

Sale forecasting is an integral part of business management. Without a solid idea of what your future sales are going to be, you can’t manage your inventory or your cash flow or plan for growth . The purpose of sales forecasting is to provide information that you can use to make intelligent business decisions.

For example, if your forecast indicates a 30% increase in sales of products or services, you may wish to begin searching for larger business premises and hire additional staff to meet the demand. Conversely, a forecast of shortfalls in sales can allow you to mitigate the effect by taking advance measures such as reducing expenses or reorienting your marketing efforts.

How to Create a Sales Forecast

A sales forecast is an estimate of the quantity of goods and services you can realistically sell over the forecast period, the cost of the goods and services , and the estimated profit.

Typically this is done by:

  • Making a list of the goods and services to be sold
  • Estimating of the number of each to be sold
  • Multiplying the unit price by the estimated number of goods or services to be sold
  • Determining the cost of each good or service
  • Multiplying the cost of each good or service by the estimated number to be sold
  • Subtracting total cost from the total sales 

If your business has a huge number of items in inventory it may be necessary to condense unit sales/costs into categories.

Sales Forecast Assumptions

There are many factors that can potentially affect sales that should form the basis for your sales forecast, including:

  • The economy and your particular industry:  Is the economy slowing? Is the market for your goods and services growing or declining? Is there more competition entering the marketplace? Are you likely to gain or lose any major customers? Your sales forecast should include an estimate of percentage growth or shrinkage in the market.
  • Regulatory changes:  sometimes new laws or regulations can affect your sales prospects, either positively or negatively.
  • Your products or services:  Are you launching any new products or services that may increase sales, or are sales of your existing products/services declining due to better products/services or lower prices from competition? Will you be forced to raise prices due to increased material, labor, or other costs and how might this affect sales?
  • Your marketing efforts:  Are you embarking on any new marketing campaigns or spending more or less on advertising? Perhaps bringing a new company website online, beefing up your email marketing , or branching into social media to increase sales? Are you hiring additional sales staff or losing your best salesperson?

Sales Forecasting for Existing Businesses

Sales forecasting for an established business is easier than sales forecasting for a new business ; the established business already has a sales forecast baseline of past sales. A business’s sales revenues from the same month in a previous year, combined with knowledge of general economic and industry trends, work well for predicting a business’s sales in a particular future month.

If your business has repeat customers, you can check with them to see if their purchase levels are likely to continue in future. If you don't wish to contact them directly you can infer future activity based on the health of the customer industry.

Sales Forecasting for New Businesses

Sales forecasting for a new business is more problematical as there is no baseline of past sales. The process of preparing a sales forecast for a new business involves researching your target market , your trading area and your competition and analyzing your research to guesstimate your future sales. See Three Methods of Sales Forecasting and Sales Forecasting for Your Business Plan for further explanation.

Sample 6 Month Sales Forecast

Jan Feb Mar Apr May Jun Total
Widget 1 10 10 15 15 15 15
Widget 2 20 20 25 25 25 25
Widget 1 $50 $50 $50 $50 $50 $50
Widget 2 $35 $35 $35 $35 $35 $35
Widget 1 $500 $500 $750 $750 $750 $750
Widget 2 $700 $700 $875 $875 $875 $875
$1200 $1200 $1625 $1625 $1625 $1625
Widget 1 $25 $25 $25 $25 $25 $25
Widget 2 $30 $30 $30 $30 $30 $30
Widget 1 $250 $250 $375 $375 $375 $375
Widget 2 $600 $600 $750 $750 $750 $750
Widget 1 $250 $250 $375 $375 $375 $375
Widget 2 $100 $100 $125 $125 $125 $125

Create a Range of Forecasts

It is a good idea to create multiple sales forecasts using a range of predictions, particularly for new businesses. After creating an initial forecast using your best estimates create another forecast based on  optimistic numbers and another based on pessimistic ones. Update your forecast with the actual values as time progresses.

Sales forecasting done on a month by month basis will give you a much more realistic prediction of how your business will perform than one “lump” sales forecast for the year. You can also update your forecasts on an even more granular basis if needed, for example, you might want to do it on a weekly basis if you are concerned about hitting a monthly sales target. 

Accounting Software Makes Forecasting Easier

Business accounting software packages such as QuickBooks can perform sales forecasts, including individual forecasts, by customer, based on existing sales data. See 6 Advantages of Using Small Business Accounting Software,  Before You Buy Accounting Software for Your Small Business , and  The Best Accounting Software for Small Business .

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Forecast and plan your sales

Accurately forecasting your sales and building a sales plan can help you to avoid unforeseen cash flow problems and manage your production, staff and financing needs more effectively.

A sales forecast is an essential tool for managing a business of any size. It is a month-by-month forecast of the level of sales you expect to achieve. Most businesses draw up a sales forecast once a year.

Armed with this information you can rapidly identify problems and opportunities - and do something about them.

While it's always wise to expect the unexpected, a well-constructed sales plan, combined with accurate sales forecasting, can allow you to spend more time developing your business rather than responding to day-to-day developments in sales and marketing.

This guide shows you how to put together a sales forecast and a sales plan.

A basis for sales forecasts

Your sales assumptions, developing your forecast, avoiding forecasting pitfalls, creating a sales plan.

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 acquire 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 good judgement.

Every business can also add in the new customers that it expects to attract without actually knowing who they are, or what they will buy. Simply enter "new customer" on your forecast.

Depending on your type of business, you may want to specify the volume of sales in the forecast - for example, how many 3.78-litre cans of paint you sell - as well as the value of sales. By knowing the volume, you can plan the necessary resources in areas such as production, storage and transport.

Every year is different so you need to list any changing circumstances that could significantly affect your sales. These factors - known as the sales forecast assumptions - form the basis of your forecast.

Wherever possible, put a figure against the change - as shown in the examples below. You can then get a feel for the impact it will have on your business. Also, give the reasoning behind each figure, so that other people can comment on whether it's realistic.

Here are some typical examples of assumptions:

  • The market you sell into will grow by 2 per cent.
  • Your market share will shrink by 2 per cent, due to the success of a competitor.

Your resources

  • You will double your sales force from three people to six people, halfway through the year.
  • You will spend 50 per cent less on advertising, which will reduce the number of enquiries from potential customers.

Overcoming barriers to sale

  • You are moving to a better location, which will lead to 30 per cent more customers buying next year.
  • You are raising prices by 10 per cent, which will reduce the volume of products sold by 5 per cent but result in a 4.5 per cent increase in overall revenue.

Your products

  • You are launching a range of new products. Sales will be small this year and costs will outweigh profits, but in future years, you will reap the benefits.
  • You have products that are newly established and that have the potential to increase sales rapidly.
  • You have established products that enjoy steady sales but have little growth potential.
  • You have products that face declining sales, perhaps because of a competitor's superior product.

For new businesses , the assumptions need to be based on market research and good judgement.

Start by writing down your sales assumptions. See the page in this guide on your sales assumptions.

You can then create your sales forecast. This becomes easy once you've found a way to break the forecast down into individual items.

  • Can you break down your sales by product, market, or geographic region?
  • Are individual customers important enough to your business to warrant their own individual sales forecast?
  • Can you estimate the conversion rate - the percentage chance of the sale happening - for each item on your sales forecast?

For example, you might predict that a customer will purchase $1,000 worth of products. If you estimate that there's a 70 per cent chance of this happening, the forecast sales for this customer are $700, i.e. 70 per cent of $1,000.

Selling more of your product to an existing customer is far easier than making a first sale to a new customer. So the conversion rates for existing customers are much higher than those for new customers.

You may want to include details of which product each customer is likely to buy. Then you can spot potential problems. One product could sell out, while another might not move at all.

By predicting actual sales, you're forecasting what you think will be sold. This is generally far more accurate than forecasting from a target figure and then trying to work out how to achieve it.

The completed sales forecast isn't just used to plan and monitor your sales efforts. It's also a vital part of the cash flow.

There is a wide range of sales forecasting software available that can make the whole process much simpler and more accurate. This software generates forecasts based on historical data. If you are considering buying software, get advice from an IT expert, your trade association, your business advisors and businesses of a similar size and in similar markets.

Five common forecasting pitfalls are:

Wishful thinking

It's all too easy to be over-optimistic. It's a good idea to look back at the previous year's forecast to see if your figures were realistic. New businesses should avoid the mistake of working out the level of sales they need for the business to be viable, then putting this figure in as the forecast.

You also need to consider if it is physically possible to achieve the sales levels you're forecasting. For example:

  • one taxi can only make a certain number of airport trips each day
  • a machine can only produce a given number of components on each shift
  • a sales team can only visit a certain number of customers each week

Ignoring your own assumptions

Make sure your sales assumptions are linked to the detailed sales forecast, otherwise you can end up with completely contradictory information. For instance, if you assume a declining market and declining market share, it's illogical to then forecast increased sales. For more information, see the page in this guide on your sales assumptions.

Moving goalposts

Make sure the forecast is finalised and agreed within a set timescale. If you're spending a lot of time refining the forecast, it can distract you from focusing on your targets. Avoid making excessive adjustments to the forecast, even if you discover it's too optimistic or pessimistic.

No consultation

Your sales people probably have the best knowledge of your customers' buying intentions, therefore:

  • ask for their opinions
  • give them time to ask their customers about this
  • get the sales team's agreement to any targets that will be set

No feedback

Having built your sales forecast, you need someone to challenge it. Get an experienced person - your accountant or a senior sales person - to review the whole document.

The questions you should answer in your sales plan are:

  • What are you going to focus on?
  • What are you going to change?
  • In practical terms, what steps are involved?
  • What territories and targets are you going to give each salesperson or team?

The sales plan will start with some strategic objectives . Here are some examples:

  • break into the municipal market by adapting your product for this market
  • open a store in an area that you believe has the potential for generating lots of sales
  • boost the average sale per customer

You can then explain the stepping stones that will allow you to achieve these objectives. Use objectives which are SMART - Specific, Measurable, Achievable, Realistic, Time-bound.

Using the example of breaking into the municipal market, the stepping stones might be to:

  • hire a sales person with experience of the municipal market on a salary of $48,000 by the beginning of February
  • fully train the sales person by mid April
  • ensure that any changes the product development team has agreed to make are ready to pilot by the beginning of April

As well as planning for new products and new markets, explain how you're going to improve sales and profit margins for your existing products and markets. It is often helpful to identify how you will remove barriers to sales:

  • Can you increase the activity levels of the sales team - more telephone calls per day, or more customer visits per week?
  • Can you increase the conversion rate of calls into sales - through better sales training, better sales support materials or improved sales incentives?

Original document, Forecast and plan your sales , © Crown copyright 2009 Source: Business Link UK (now GOV.UK/Business ) Adapted for Québec by Info entrepreneurs

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9 Free Sales Forecast Templates to Super-Charge Sales Growth in 2024

9 Free Sales Forecast Templates to Super-Charge Sales Growth in 2024

Sales forecasting templates might not sound all that exciting. Fair enough. After all, who wants to create more reports—on top of all your other responsibilities?

If you're feeling a little skeptical, take a walk with me and imagine this scenario involving two different sales managers :

Which of these sales managers is more likely to get the budget they want?

No brainer. It's Sales Manager 2 every day of the week.

What's the difference between their pitches? A solid sales forecast to back up the substantial investment they're asking the VP to make.

Sales forecasts can be exciting—they give you the superpower to see what's coming down the pipeline. More importantly, they're easy to create using the right sales forecasting templates.

In this guide, we'll give you a step-by-step method to create a sales forecast and access to several free sales forecast templates (in both Microsoft Excel & Google Sheets format).

But first, let’s quickly touch on why sales forecasts are key to growing your sales team—and your business.

Why are Sales Forecasts Crucial for Sales Teams?

Sales forecasting provides a window into your business's future. Depending on the template, it can help you:

  • Predict sales figures for the next quarter: Much like projecting total contract value growth, sales forecasting provides a roadmap for anticipated revenue, enabling you to plan and allocate resources accordingly.
  • Make more accurate cash flow projections
  • Predict expenses
  • See where to invest marketing dollars
  • Better allocate hiring budgets
  • Spot emerging trends early on
  • Diagnosis of potential issues in your sales flow early

Lastly, it is a powerful motivation tool for your sales team—especially if you have a longer sales cycle. It allows you to paint a clear picture showing how the work your team is doing today will pay off.

9 Best Sales Forecast Templates (Free Google Sheets + Excel Templates)

Not every sales team needs a super complex sales forecasting model. For instance, small businesses only want (and need) to track a few important metrics. On the other hand, eCommerce companies must track multiple products, which is challenging without a template.

So, we've sorted through all the free sales forecast templates we could find (in Excel + Google Sheets format) and even created one of our own. Choose the best template for your company, sales team, and industry.

1. Best General Forecast Template (without a CRM)

This sales forecasting template from Close provides a simple way to track and forecast two years of sales. The first tab allows for adjusting funnel metrics depending on your sales cycle, average deal size, lead growth, and number of leads.

The second tab forecasts sales by month based on meetings booked, new opportunities created, and leads closed/won. A chart at the bottom displays expected growth.

The only thing better than this is having sales forecasting built right into your CRM ( like with Close ), which enables you to have powerful integrations that enrich your forecasting accuracy and pipeline health over time.

GET THE FREE TEMPLATE HERE

2. Best Forecast Template for a Lead-Driven Sales Process

This template is ideal for companies that track their lead generation efforts and monitor their monthly sales forecast. You’ll see it breaks the year into quarters and tracks leads in all stages of the sales funnel .

The best part? This is a Google Sheets template (which can be accessed via Google apps and can also be downloaded for use in Microsoft Excel).

This template tracks the deal value and uses a weighted forecast model. It can also predict the probability of closing, which is a helpful metric for B2B companies. You can download it right here .

3. Best Free Forecasting Template for Multiple Product Businesses

Does your company sell multiple products or services? This sales projection template could be a great choice for a business with more complex offerings. It tracks the number of units sold for each product line over 12 months on a single spreadsheet to streamline your forecasting accuracy.

It also carries over sales history from three previous years, making it easy to compare sales by unit, month, or year. You can download it right here in Google Sheets or Microsoft Excel format. Just make a copy and start editing the sheet.

4. Best Forecasting Template for Retail Businesses

This template is ideal for retail stores that want to forecast sales, track gross sales, and mark up percentage and profit margin for each item to generate more new business. The yellow cells allow you to input your own data, and the spreadsheet uses smart Excel automation formulas to calculate forecasts.

While it doesn't display the previous year's data in this view, you could easily create a pivot table in Excel or Google Sheets to pull data from several years. That way, you can compare average sales, total sales, and other sales KPIs that matter to your leadership. You can pick this one up right here .

5. Best for Long-Term Future Sales Analysis (36 Months of Historical Data)

This is one of the most colorful templates on the list, but that's not why we included it. This template is ideal for companies that want to monitor long-term data closely.

In addition to 12 months of full historical sales data, you'll also see detailed insights and data for the past five years, including overall revenue for each type of item. This is a good option if you want to focus your sales analysis on the long and short term. You can grab this one right here .

6. Best Sales Forecasting Model for Scenario Planning (New Product Launches)

Forecasting sales for a new product launch can be a challenge—which is why many companies do a soft launch without high expectations.

After a soft launch, use this forecasting template to track initial sales data and project your next five years of sales. Head over here to download this one .

7. Best Free Template for Multiple Products at Different Growth Rates

Looking to track product sales that grow at different rates? This spreadsheet tracks growth and forecasts revenue for 12 months—even if the products or services grow at different rates. This is a great fit for businesses with legacy products that regularly launch new products.

This forecasting chart also includes five years of historical data so you can see overall sales growth at a glance. Pick this template up right here .

8. Best for Short-Term Forecasts

Want to plan your inventory or marketing campaigns for just the next few weeks? This 3-month forecast template can help.

Customize the start date, then enter your number of units and price per unit to get projections. It’s simple and effective. Download this template right here .

9. Best for Daily Forecasts

Now, let’s shorten the projections even more—to a daily window. This one is primarily useful for businesses in the retail, restaurant, and hospitality industries.

With this template, predict your sales on a daily or weekly time frame. This granular vision can help you optimize day-to-day sales. Plus, you can rely on historical sales data and add weekly notes.

Grab this forecast template here .

How to Choose the Right Sales Forecast Template (& Forecasting Methods for Your Business)

The right forecasting template provides access to the sales KPIs that matter most to your sales team. But not all businesses are the same.

Retail businesses may need to track hundreds of products and dozens of different suppliers, while a SaaS company might only offer three pricing plans—but have a really long sales cycle.

You need to find the right template for your business needs. Otherwise, you'll be left floundering in a sea of useless data.

Here's how to select the right sales forecast template for your organization.

Get Clear on Your Sales Goals & Set Realistic Sales Revenue Targets

Different sales goals and revenue targets rely on different data. For example, if you want to predict sales over the next two years, you'll want a forecast template that covers a longer time period.

Goals can also impact which template will work best for your team.

For example, suppose an eCommerce company wants to increase monthly sales by 10 percent and boost customer lifetime value . In this case, they'll need a different template than a small business looking to increase sales from a specific customer segment.

Next, set realistic revenue targets using overall market growth as a benchmark. If your industry expands by 25 percent, a 10 percent growth rate might be too low, while 50 percent is likely too high.

Look for a template that fits your business goals and revenue targets.

Consider Your Business Type & Plan Ahead for Sales Fluctuations

Your business type is one of the most important factors to consider when selecting a template. The size, industry, age, and growth rate can all impact which template will work for you.

Also, consider how often your sales fluctuate. For example, an eCommerce store may have 10 to 15 fluctuations a year, so they need a template that can handle their data. On the other hand, a small fly fishing business may have just two fluctuations—on and off-season.

Look for a template that suits your business model and accommodates your sales fluctuations.

Decide Which Method of Sales Forecasting to Use for Your Sales Team

When it comes to sales forecasting methods, there is no one-size-fits-all solution.

You'll need to adjust your forecasting based on your historical data, the metrics you need to track, and your confidence in the data. Your goals and KPIs also impact the forecasting methods you use.

Here are seven sales forecasting methods, including who should use them:

  • Lead-driven forecasting : Looks at previous lead conversion rates and projects future sales based on current lead volume. Best for organizations with clear historical data and a steady stream of inbound leads, such as SaaS or technology companies.
  • Length of sales cycle forecasting : Tracks how long a typical lead takes to close based on lead type. Best for organizations with insights into the entire sales pipeline and well-aligned sales and marketing teams, especially B2B.
  • Opportunity stage forecasting: Calculates how likely a lead is to close based on specific actions and lead type. Ideal for businesses with good historical data on closing rates.
  • Test-market analysis forecasting: Leverages data from a soft release to get a sense of projected revenue. Best for startups or businesses launching a new product line or service.
  • Historical forecasting : Forecasting data based on historical data and market trends. Works well for any business with at least a year of historical data.
  • Multivariable analysis: A complex analysis that considers multiple factors and closing ratios. Best for companies with varying deal sizes and close rates or selling multiple products or services.

Make sure whatever template you choose fits your analysis method.

Look at Historical Data & Past Sales Metrics

We've already discussed how historical data can impact your sales forecasting, but it's also an important factor in choosing the right template.

Before choosing a template, look at your past metrics and historical data. How much data do you have? Consider a template with a longer forecasting model if you have several years' worth of data.

What data do you want to include based on your business type and forecasting methods? Make sure the template you choose includes the fields important to your business.

Research External Market Conditions to Create an Accurate Sales Forecast

Finally, spend a few hours researching current market conditions and consider how they may impact your sales forecast. For example, if your industry is growing fast, you might select a forecasting template that updates in near real-time.

On the other hand, if a large competitor is acquiring another company, growth might be more challenging, and you might need to lower your growth expectations.

Look for a template that works well with current market conditions.

How Do You Calculate Sales Forecasts Quickly?

Here’s a simple formula that SaaS businesses can use for a specific forecast period:

Number of expected new customers x Average deal size

The accuracy of such a forecast depends on various factors, including your churn rate, upsells, changes to your existing subscriptions, market conditions, etc. The more informed your assumptions, the better your accuracy.

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How to Create a Custom Sales Forecast Template: Five Easy Steps

Sometimes, you need to do it yourself. Sales forecasting can be simple—especially if you create a forecasting template based on your own sales process and KPIs. Assuming you’re already tracking your sales, here are the steps to create your own template.

Step 1: Choose Sales Performance Metrics

What do you want to track? Whether it’s the sales quotas of individual sales reps, your gross profit, or simply one-year sales projections, choose KPIs based on your goals.

You can check out this exhaustive list of KPIs , but most SaaS businesses can start by calculating their run rates. Keep in mind that it requires a few months of revenue data to project your annualized revenue.

Here's the sales run rate formula :

Projected sales = Run rate (Current sales/number of sales periods elapsed) X the remaining number of sales periods

This is one of the easiest ways to predict future growth, and it’s a great starting point. We’ll refine it in the fourth step, but now, let’s start creating a template.

Step 2: Create a Layout for Your Template and Add Formulas

Now, add relevant formulas for your chosen metrics so that your sheet can make automatic forecasts based on your data input.

The specific columns you include in your layout depend on the KPIs you want to track and the information you want to include.

If we were calculating the annual run rate, you could use one column for the month, another for the sales in that month, and another for calculating the total sales up to the current month.

Next, you want to create formulas for the average monthly rate and the annual run rate formula (ARR), which will be your average monthly sales X 12. These two can be additional columns.

Step 3: Calculate Your Sales Forecast

Now, it’s time to test your template. Input data and let the spreadsheet automatically calculate your sales forecast. In our example, after inputting data for January through March, here’s what the forecasted annual run rate looked like:

Step 4: Adjust for External Factors and Strategic Business Plans

Our simple run rate formula doesn't consider seasonality, competition, market changes, or business growth.

If seasonality or trends impact your sales, calculate the percent change from your average month during periods of spike or dip. For example, if your sales typically spike by 30 percent in November, you can adjust your sales run rate to account for these trends.

Internal changes can also impact sales forecasting. Are you launching new products ? How have product launches performed in the past? Are you marketing to new customer segments? How many new customers do you expect these new markets to add to your customer file?

Refining your formula will improve your forecast's accuracy, leading to informed sales plans and decisions.

If you want to create a comprehensive SaaS revenue forecast model from scratch in Excel, check out this tutorial .

Step 5: Integrate the Template Into Your Process (& Keep Improving It)

Most sales reps spend only one-third of their day selling to prospects. So, you want to integrate the sales forecasting template into your workflow naturally so it doesn’t diminish productivity. Work to blend it with your team's existing spreadsheets or software.

Set up a regular cadence for importing data into the template—either manually or automatically from another software. Then, generate forecasts based on inputted data.

To keep your forecasts relevant, regularly review the accuracy of the results. Adjust your template as needed, and remember that a change in business strategy or market conditions should also invite revisions.

Want to sophisticate your forecasts and consider advanced trends? Then, you must use evolved sales forecasting methods. Get more detailed insights into sales forecasting here .

Using Forecasting Templates to Predict + Optimize Future Revenue

When it comes to sales forecasting, the right template can make all the difference. If you're still doing the process manually, you might miss out on actionable insights that could help your team meet and exceed your sales goals. Plus, manual forecasting takes a lot of valuable time—and is prone to error.

So, choose one of the above templates to create a standardized forecasting approach for your company, but don’t be afraid to make it your own. Add columns, include metrics that matter, and even plug in your brand color and name.

Or, you can just design a template from scratch.

Remember that your template isn’t static. Keep refining your forecast assumptions, and iterate to improve accuracy. Over time, you'll end up with a custom sales forecasting spreadsheet that makes you look like a superstar—and boosts your revenue potential.

Want even more actionable insights? See how Close gives you access to the reporting metrics that matter .

But even if you’re working without a CRM or using another product to manage your sales process, grab our free sales forecast template to achieve your goals that much faster.

Steli Efti

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Financial forecast example for new businesses and startups

The financial forecast is an essential step when creating a business plan. The financial forecast allows you to anticipate the revenues and expenses of your new business over a given period.

Even if the exercise is sometimes delicate to carry out, it is nevertheless essential for any entrepreneur. Indeed, it allows you to define quantified objectives, which, if meticulously tracked, will allow you to grow your business in good conditions.

To help you, here's a financial forecast example as well as tools you can use to create yours. 

financial forecast example for new businesses and startups

Financial forecast examples for new businesses

Example of a sales forecast.

The sales forecast is used to estimate the company's turnover. It is generally presented by category of products and services, types of customers, or time slots.

In our financial forecast example, we have included below a sales forecast for a hostel, organised by categories of services with the bed's occupancy forecast broken down based on seasonality:

financial forecast example for a hostel business lines

To ensure a fair and realistic evaluation of your company's revenues, You will need to base your forecast on thorough and reliable market analysis, including an analysis of what your competition offers. You will also need to think carefully about your pricing policy and distribution strategy beforehand.

Examples of financial statements to include in your forecast

Your forecast will need to include 3 financial statements:

  • The P&L statement
  • The cash flow statement
  • The balance sheet

P&L statement

The profit and loss statement enables you to assess:

  • the growth of the company by analyzing the evolution of the turnover over several years;
  • the profitability of the company by looking at the difference between the expected revenues and the costs which will need to be incurred to generate these sales.

financial forecast example P&L statement

The main shortcoming of the projected income statement is that it does not take into account cash flows. Your profits should turn into cash at some point, but based on when your clients pay you, how much inventory you keep, or when you pay your suppliers, the cash flow could be very different from your profit.

To overcome this shortcoming, we need to look at the forecasted cash flow statement included in our financial forecast example.

Cash flow statement

The cash flow statement shows all anticipated cash movements for a given year.

It enables you to evaluate:

  • the ability to generate operating cash flow;
  • the company's investment and financing policies.

financial forecast example new businesses and startups cashflow

The cash flow statement is highly complementary to the P&L statement. Together they provide a clear view of the company's profitability, the cash generated by the operations, the investments made and the financing flows.

Balance sheet

The forecasted balance sheet, the last link in the chain, provides an overview of the company's net worth at a given moment in time and is part of our financial forecast example. It enables you to evaluate:

  • the value of the company's assets;
  • the weight of its working capital;
  • the level of financial indebtedness;
  • the book value of shareholders' equity.

financial forecast example balance sheet

The forecasted balance sheet complements the other two tables. Nevertheless, it has two weak points:

  • It provides a snapshot of the company's net worth at a specific moment in time - giving a very static view of the company. Especially given the balance sheet is usually produced several months after the end of the financial year (and therefore the information it contains is already stale!)
  • It gives an accounting vision of the company, based on historical cost, and not a financial vision, based on market value.

Where can I find other financial forecast examples?

At The Business Plan Shop, we offer an online software that includes a financial forecasting tool and helps you throughout the drafting of the business plan on top of financial forecast examples included in our business plan templates . 

Using a software like ours to realize your business plan has several advantages:

  • You can easily create your financial forecast by letting the software take care of the calculations and financial aspects for you.
  • You are guided in the drafting process by detailed instructions and examples for each part of the plan.
  • You get a professional document, formatted and ready to be sent to your bank or investors.

If you are interested in our solution, you can try our software for free here .

Our article is coming to an end. We hope that our financial forecast example has given you a better understanding of what this exercise is all about.

The forecast is a crucial element of a business plan that will be of particular interest to your financial partners if you are looking for financing; but don't forget that it is also a mean for you, as an entrepreneur, to evaluate the viability of your new business idea.

Also on The Business Plan Shop

  • How to do financial projections for a new business?
  • How to establish a Profit & Loss forecast in your business plan?
  • How to do a financial forecast for a restaurant?

Guillaume Le Brouster

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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What is Sales Planning? How to Create a Sales Plan

Jay Fuchs

Published: December 06, 2023

Sales planning is a fundamental component of sound selling. After all, you can‘t structure an effective sales effort if you don’t have, well, structure . Everyone — from the top to the bottom of a sales org — benefits from having solid, actionable, thoughtfully organized sales plans in place.

how to create a sales plan; Sales team creating a sales plan for the upcoming quarter

This kind of planning offers clarity and direction for your sales team — covering everything from the prospects you‘re trying to reach to the goals you’re trying to hit to the insight you're trying to deliver on.

But putting together one of these plans isn‘t always straightforward, so to help you out, I’ve compiled this detailed guide to sales planning — including expert-backed insight and examples — that will ensure your next sales plan is fundamentally sound and effective.

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In this post, we'll cover:

What is a sales plan?

Sales planning process.

  • What goes in a sales plan template?

How to Write a Sales Plan

Tips for creating an effective sales plan, sales plan examples, strategic sales plan examples.

A sales plan lays out your objectives, high-level tactics, target audience, and potential obstacles. It's like a traditional business plan but focuses specifically on your sales strategy. A business plan lays out your goals — a sales plan describes exactly how you'll make those happen.

Sales plans often include information about the business's target customers, revenue goals, team structure, and the strategies and resources necessary for achieving its targets.

how to write sales forecast in business plan

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Outline your company's sales strategy in one simple, coherent sales plan.

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What are the goals of an effective sales plan?

how to write sales forecast in business plan

And if (or more likely when ) those goals change over time, you need to regularly communicate those shifts and the strategic adjustments that come with them to your team.

Your sales strategy keeps your sales process productive — it offers the actionable steps your reps can take to deliver on your vision and realize the goals you set. So naturally, you need to communicate it effectively. A sales plan offers a solid resource for that.

For instance, your sales org might notice that your SDRs are posting lackluster cold call conversion rates. In turn, you might want to have them focus primarily on email outreach, or you could experiment with new sales messaging on calls.

Regardless of how you want to approach the situation, a thoughtfully structured sales plan will give both you and your reps a high-level perspective that would inform more cohesive, effective efforts across the team.

An effective sales org is a machine — one where each part has a specific function that serves a specific purpose that needs to be executed in a specific fashion. That's why everyone who comprises that org needs to have a clear understanding of how they specifically play into the company's broader sales strategy.

Outlining roles and responsibilities while sales planning lends itself to more efficient task delegation, improved collaboration, overlap reduction, and increased accountability. All of which amount to more streamlined, smooth, successful sales efforts.

Sales planning can set the framework for gauging how well your team is delivering on your sales strategy. It can inform the benchmarks and milestones reps can use to see how their performance stacks up against your goals and expectations.

It also gives sales leadership a holistic view of how well a sales org is functioning as a whole — giving them the necessary perspective to understand whether they have the right people and tools in place to be as successful as possible.

Sales planning isn‘t (and shouldn’t) be limited to the actual sales plan document it produces. If that document is going to have any substance or practical value, it needs to be the byproduct of a thorough, well-informed, high-level strategy.

When sales planning, you have some key steps you need to cover — including:

  • Gather sales data and search for trends.
  • Define your objectives.
  • Determine metrics for success.
  • Assess the current situation.
  • Start sales forecasting.
  • Identify gaps.
  • Ideate new initiatives.
  • Involve stakeholders.
  • Outline action items.

When putting this list together, I consulted  Zach Drollinger — Senior Director of Sales at edtech provider Coursedog — to ensure the examples detailed below are sound and accurate.

Step 1: Gather sales data and search for trends.

To plan for the present and future, your company needs to look to the past. What did sales look like during the previous year? What about the last five years? Using this information can help you identify trends in your industry. While it's not foolproof, it helps establish a foundation for your sales planning process.

For the sake of example, let‘s say that I’m a new sales director for an edtech company that sells curriculum planning software to higher education institutions. My vertical is community colleges, and my territory is the East Coast.

Once I assume this new role, I‘m going to want to gather as much context as possible about my vertical and how my company has approached it historically. I would pull information about how we’ve sold to this vertical.

How much new business have we closed within it in the past five years? How does that compare to how we perform with other kinds of institutions? Are we seeing significant churn from these customers?

I would also want to get context about the general needs, interests, and pain points of the kinds of institutions I‘m selling to. I’d look for insight into figures like degree velocity, staff retention, and enrollment.

Ultimately, I would get a comprehensive perspective on my sales process — a thorough understanding of where I stand and what my prospects are dealing with. That will ensure that I can deliver on the next step as effectively as possible.

Step 2: Define your objectives.

How do you know your business is doing well if you have no goals? As you can tell from its placement on this list, defining your goals and objectives is one of the first steps you should take in your sales planning process. Once you have them defined, you can move forward with executing them.

To extend the example from the previous step, I would leverage the context I gathered through the research I conducted about both my and my prospect's circumstances. I would start setting both broader goals and more granular operational objectives .

For instance, I might want to set a goal of increasing sales revenue from my vertical. From there, I would start putting together the kind of specific objectives that will facilitate that process — like connecting with administrators from at least 30 community colleges, booking demos with at least 10 schools, and successfully closing at least five institutions.

Obviously, those steps represent a streamlined (and unrealistically straightforward) sales process, but you get the idea — I would set a concrete goal, supplemented by SMART objectives , that will serve as a solid reference point for my org's efforts as the sales process progresses.

Step 3: Determine metrics for success.

Every business is different. One thing we can all agree on is that you need metrics for success. These metrics are key performance indicators (KPIs). What are you going to use to determine if your business is successful? KPIs differ based on your medium, but standard metrics are gross profit margins, return on investment (ROI), daily web traffic users, conversion rate, and more.

I kind of covered this step in the previous example, but it still warrants a bit more elaboration. The “M” in SMART goals (“measurable”) is there for a reason. You can‘t tell if your efforts were successful if you don’t know what “successful” actually means.

The edtech sales example I‘ve been running with revolves mostly around me assuming ownership of an existing vertical and getting more out of it. So it’s fair to assume that sales growth rate — the increase or decrease of sales revenue in a given period, typically expressed as a percentage — would be an effective way to gauge success.

I might want to structure my goals and objectives around a sales growth rate of 20% Y/Y within my vertical. I would make sure my org was familiar with that figure and offer some context about what it would take to reach it — namely, how many institutions we would need to close and retain.

Step 4: Assess the current situation.

How is your business fairing right now? This information is relevant to determining how your current situation holds up to the goals and objectives you set during step two. What are your roadblocks? What are your strengths? Create a list of the obstacles hindering your success. Identify the assets you can use as an advantage. These factors will guide you as you build your sales plan.

Continuing the edtech example, I would use the historical context I gathered and the objectives I set to frame how I look at my current circumstances. I might start by considering my goal of increasing revenue by 20% Y/Y. In that case, I would look at the company's retention figures — ideally, that would give me a sense of whether that needs to be a major area of focus.

I would also try to pin down trends in the colleges that we've already closed — are there any pain points we consistently sell on? I might take a closer look at how we demo to see if we might be glossing over key elements of our value proposition. Maybe, I would use conversation intelligence to get a better sense of how reps are handling their calls.

Ultimately, I would try to identify why we're performing the way we are, the inefficiencies that might be resulting from our current strategy, and how we can best set ourselves up to sell as effectively as possible.

Step 5: Start sales forecasting.

Sales forecasting is an in-depth report that predicts what a salesperson, team, or company will sell weekly, monthly, quarterly, or annually. While it is finicky, it can help your company make better decisions when hiring, budgeting, prospecting, and setting goals.

After the COVID-19 pandemic, economics has become less predictable. Claire Fenton , the owner of StrActGro — a professional training and coaching company — states, “Many economic forecasters won't predict beyond three months at a time.” This makes sales forecasting difficult. However, there are tools at your disposal to create accurate sales forecasts .

In our edtech example, I would approach this step by trying to estimate how my sales org is going to fare with the specific vertical we‘re pursuing in the time window we’ve allotted.

The method I decide to go with will depend on factors like how many concrete opportunities we have lined up — in addition to elements like the kind of historical data we have handy, how the reps working these deals tend to perform, and the degree of insight we have about our potential customers.

Let's say I consider those factors and decide to run something called a multivariable analysis. In that case, I could start by taking stock of the opportunities my reps have lined up. Then, I could look at the reps working those deals, their typical win rates, and the time they have to close — among other factors.

For instance, I might calculate that a rep working with a particularly large institution has a 50% chance of closing within the window we‘ve allotted. Using that insight, we could attribute 50% of the potential deal size to our forecast — we’d repeat that process with all of the opportunities in question and ideally get a solid sense of the revenue we can expect to generate in this window.

Step 6: Identify gaps.

When identifying gaps in your business, consider what your company needs now and what you might need in the future. First, identify the skills you feel your employees need to reach your goal. Second, evaluate the skills of your current employees. Once you have this information, you can train employees or hire new ones to fill the gaps.

Continuing the edtech example, let‘s say my forecast turned up results that weren’t in keeping with what we need to reach our goals. If that were the case, I would take a holistic look at our process, operations, and resources to pin down inefficiencies or areas for improvement.

In my search, I find that our sales content and marketing collateral are dated — with case studies that don‘t cover our product’s newest and most relevant features. I also might see that our reps don‘t seem to have too much trouble booking demos, but the demos themselves aren’t converting due to a lack of training and inconsistent messaging.

And finally, I find that a lack of alignment with marketing has prospects focusing on unrealistic outcomes our sales team can‘t deliver on. Once I’ve identified those gaps, I would start to hone in on ways to remedy those issues and improve those elements.

Step 7: Ideate new initiatives.

Many industry trends are cyclical. They phase in and out of “style.” As you build your sales plan, ideate new initiatives based on opportunities you may have passed on in previous years.

If your business exclusively focused on word-of-mouth and social media marketing in the past, consider adding webinars or special promotions to your plan.

In the edtech example we've been running with, I would likely ideate initiatives based on the gaps I identified in the previous step. I would start a push to ensure that our sales content and marketing collateral are up-to-date and impressive.

I would also consider new training programs to ensure that our coaching infrastructure is prioritizing how to conduct effective demos. Finally, I would start to work on a plan with marketing to ensure our messaging is aligned with theirs — so we can make sure prospects' expectations are realistic and effective.

One way or another, I would take the gaps I found and find concrete, actionable ways to fill them. I would make sure that these initiatives aren't abstract. Just saying, " We're going to be better at demos," isn‘t a plan — it’s a sentiment, and sentiments don't translate to hard sales.

Step 8: Involve stakeholders.

Stakeholders are individuals, groups, or organizations with a vested interest in your company. They are typically investors, employees, or customers and often have deciding power in your business. Towards the end of your sales planning process, involve stakeholders from departments that affect your outcomes, such as marketing and product. It leads to an efficient and actionable sales planning process.

This step is sort of an extension of the previous two — once I‘ve identified the key issues and roadblocks obstructing my edtech startup’s sales org, I would start identifying the right people to fulfill the necessary initiatives I've put together.

In this example, I would tap some stakeholders in charge of our sales content and marketing collateral to produce newer, more relevant case studies and whitepapers we can pass along to the institutions we're working with.

I would also go to middle management and either offer more direction for coaching on demos or bring in a third-party training service to offer more focused, professional insight on the issue.

Finally, I would connect with marketing leadership to align on the benefits and outcomes we generally stress when pitching the schools we sell to. That way, we can ensure that the institutions we're connecting with have realistic expectations of our product or service that we can speak to more clearly and effectively.

Step 9: Outline action items.

Once you have implemented this strategy to create your sales planning process, the final step is outlining your action items. Using your company's capacity and quota numbers, build a list of steps that take you through the sales process. Examples of action items are writing a sales call script, identifying industry competitors, or strategizing new incentives or perks.

In our edtech example, some key action items might be:

  • Revamp our prospecting strategy via more involved coaching and re-tooled sales messaging.
  • Revamp administrator and college dean buyer personas.
  • Conduct new trainings on demoing our software.
  • See our new prospecting strategy from ideation to execution.
  • Align with our sales enablement stakeholders for new, more relevant case studies and whitepapers.

Obviously, that list isn‘t exhaustive — but those are still the kinds of steps we would need to clarify and take to structure a more effective high-level strategy to produce different (ideally much better) results than we’ve been seeing.

One thing to keep in mind is that sales planning shouldn't end with creating the document.

You‘ll want to reiterate this process every year to maintain your organization's sales excellence.

Now that you‘re committed to the sales planning process, let's dive into the written execution component of sales planning.

Featured Resource: Sales Plan Template

HubSpot's Sales Plan Template: 10 Section Prompts for Outlining Your Sales Plan

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Blog Business How to Create a Sales Plan: Strategy, Examples and Templates

How to Create a Sales Plan: Strategy, Examples and Templates

Written by: Aditya Rana Mar 25, 2024

how to create a sales plan: strategy, examples, templates

The difference between a company struggling to drive sales and one that’s hitting home runs often boils down to a well-crafted sales plan.

Without knowing how to write a sales plan , your sales reps will lack vision, not understand the market, and be ineffective at engaging potential customers.

Most businesses fail in sales planning because they don’t focus on their unique value. If you’re struggling with sales, here’s what you need to do: define your goal(s), create customer personas, and create an action plan for success.

One of the best ways to organize this information in one place is to use sales planning templates . In this post, I’ll show you how to write a sales plan (…with plenty of template examples included of course!).

Click to jump ahead:

What is a sales plan?

Benefits of a sales plan, how to create a sales plan, sales plan example, sales plan templates.

A sales plan is a strategic document that outlines how a business plans to convert leads into sales. It typically details the target market, customer profile, and actionable steps that must be taken to achieve revenue targets.

Here’s a great example of a sales plan that includes all these elements neatly packed into one document.

Colorful Food Retailer Sales Action Plan

Every company needs a sales plan, but have you ever wondered why?

Why should businesses invest time and resources in creating sales plan when they could…well…be focusing on sales?

Sales plans are worth it because they tell sales employees what to do.

Without a sales plan, your sales efforts will end up becoming a disorganized mess. Let’s explore the benefits of sales plans in detail.

Help you identify and target the right market

A sales plan helps you figure out the target market that’s most likely to be responsive to your messaging.

I mean do you really want to waste your time trying to sell to someone who has no need for your product or isn’t interested in your offering?

But if you know who your customer is, you can target their pain points.

Cream Purple Customer Range Pictograms Charts

Help you set goals

All great sales plans require you to set goals that are actually attainable and budgeted for.

Without goals, your sales team essentially operates in the dark unsure of what success looks like and how to achieve it.

One of the best ways to set goals is by conducting a SWOT analysis (strengths, weaknesses, opportunities, and threats) to understand the market landscape.

Sales SWOT Analysis

Help you forecast sales

Since sales plans require you to study historical sales data , you have the ability to understand trends, seasonality, and customer buying patterns.

This information can be used to accurately forecast future sales performance.

And when you chart it out visually like in this example, you can make data-driven decisions to optimize your sales strategy.

Sales Projections Line Chart

Help you identify risks

Because sales plans require you to study the market, you’ll be able to uncover risks such as market saturation, competitors, and shifting customer needs.

With this knowledge, you have the ability to be flexible in your approach.

Besides market risks, sales plans also help you pinpoint risks within your company such as a lack of qualified leads or unclear communication between departments.

Risk Management Plan Templates

Improve customer service

It may sound counterintuitive but creating a sales plan also actually improves your customer service.

Researching and trying to understand customer needs means new insights that you can share with the customer service team which allows them to tailor their approach.

You’ll also be able to train sales service reps to anticipate questions and concerns so that they can communicate effectively.

Increases sales efficiency

Sales plans help standardize sales tactics and ensure sales reps follow the same best practices to reduce inconsistencies and improve effectiveness.

One of the best ways to standardize practices is to use a flowchart like in this example to make sure everyone knows what to do when facing a decision.

Sales Flowchart

Increases your profits

Sales plans generally guarantee a boost in profits because it allows sales team to laser-focus on high-value opportunities instead of being headless chickens.

Reducing wasted effort and a higher frequency of closed deals is a win in my book any day.

One of the best ways to measure changes in profits is to use a simple template to review performance like in this example.

Free Bar Graph Template

Help you understand customer needs

Contrary to what you might think, sales plans aren’t just about selling but also about understanding customers at a deeper level.

The process of creating a plan forces you to analyze customer data, buying habits, and pain points, all of which will help you understand what makes your customers tick and build trust and loyalty.

Here’s a great example of a customer persona you can edit to include in your sales plan.

Purple Persona Guide Report

A sales plan is a document that helps you maximize profitability by identifying valuable segments and outlining strategies to influence customer behavior.

Common elements most sales plans include:

  • Sales goals : Information on revenue, market share, and more.
  • Sales strategy: Information on how to reach potential customers and convert them.
  • Target audience: Information on ideal customers and their needs.
  • Metrics : Methods to track progress.
  • Resources :  Tools, budget, and personnel needed to achieve sales goals.

Let’s take an in-depth look at how to create a sales plan.

( Note : You don’t need to include each of these points in your sales plan but I recommend you cover most of them to build a plan that’s well-rounded).

Define your business mission and positioning

Before you jump into tactics, build a strong foundation by defining your company’s mission and positioning.

Here’s why this step is a must-do:

  • Your mission statement defines your company’s purpose and values and gives your sales team and customers something to relate to.
  • Your positioning statement defines how your product or service meets a specific need and sets you apart from the competition.

Trying to sell without any alignment to company values will lead to inconsistent messaging and damage your brand reputation.

Here’s a great example of a sales plan template you can customize with your own brand’s mission and positioning statements.

Dark Sales Action Plan

Define your target market

Unless you think you can sell to every person possible, you’ll need to define your ideal target market.

Study your customer base and ask questions like: do most of the customers belong to a specific industry? Or do they all face the same pain point?

Also, keep in mind that target market can change over time due to changes in your product, pricing, or factors out of your control, so it’s important to review and update your target market frequently.

Market Infographic

Understand your target customers

This step often gets mixed with the previous one, so pay close attention.

Your target customers are those who your business wants to target because they’re most likely to make a purchase.

You can figure out who your target customers are by creating customer profiles by breaking down your target market into smaller groups based on geography, behavior, demography, and more.

Here’s a great sales plan template where you can edit in your own customer persona.

Food Customer Sales Action Plan

When making your buyer personas, make sure you answer the following questions.

  • Motivations and challenges:  What are customer pain points? What drives purchasing decisions?
  • Behaviors and preferences:  How do customers research products? What communication channels do they prefer?
  • Goals and aspirations:  What are your prospective customers trying to achieve? How can your product or service help them get there?

Define sales objectives and goals

Setting clear, measurable goals gives you a method to measure performance of your sales strategies.

More importantly though, they give your sales team targets to aim for which then allows them to work in a structured and focused manner.

Your sale goals should be specific, measurable, achievable, relevant, and time-bound (SMART). This is to make sure they’re realistically achievable within a set timeframe.

Here’s a comparison of good sales goal setting vs a bad one.

  • ✅Drive $100,000 in sales of product X by Y date using Z tactics
  • ❌ Increase overall sales in each product line

You can organize this information using a template like in this example, especially if you have multiple product lines.

Vintage Food Retailer Sales Action Plan

Define your value proposition

Your value proposition is a concise statement that explains why a customer should choose your product or service over the competition.

Here’s an example of a value statement:

“For busy small business owners, we provide a user-friendly accounting software that saves you time and money, allowing you to focus on growing your business.”

Here are some tips on defining your value proposition:

  • Identify customer needs:  What are the core challenges and pain points your ideal customer faces? Understanding their needs allows you to position your offering as the solution.
  • Highlight your unique benefits:  What sets your product or service apart? Focus on benefits you deliver that address the customer’s needs.
  • Quantify the value:  When possible, quantify the value you offer. Can you demonstrate a cost savings, increased efficiency, or improved outcomes?

Map out the customer journey

Unless you’re extremely lucky, no one is going to purchase from you during the first interaction.

That’s why it’s crucial for you to know the steps a customer takes from initial awareness to purchase. Mapping out their journey allows you to personalize messaging and influence behavior.

Here are some tips on how to create a customer journey map :

  • Identify the stages:  Break down the journey into distinct stages, such as awareness, consideration, decision, and post-purchase.
  • Define touchpoints: Pinpoint the different touchpoints where your customer interacts with your brand (example: website, social media, customer reviews).
  • Understand customer needs at each stage: What information are they looking for at each stage? What are their concerns and motivations?
  • Identify opportunities to engage:  Identify opportunities to engage with your potential customers and move them along the buying journey.

Want some help creating customer journeys?

This customer journey map template is an excellent way to bring customer journeys to life.

Purchase Customer Journey Map

Gather existing sales data

This step involves collecting and analyzing all available data on past sales performance.

This data is critical in helping you spot trends, patterns, and areas for improvement in your sales operations.

Blank 5 Column Chart Template

Perform sales forecasting

Sales forecasting is the practice of estimating future sales which can be presented as a report highlighting expected sales volume weekly, monthly, quarterly, or annually.

Though not always 100% accurate, sales forecasting is key to writing sales plans because it’ll provide you with a clear picture of the ground reality which leads to better decisions on budgeting.

Here’s a template you can use to perform sales forecasting to makes the sales planning process effective.

Monthly Sales Report

Define your sales KPIs

KPIs are a fancy way of saying that you need to set metrics to track effectiveness of your sales strategy and team’s performance.

Some example KPIs you can include in sales plans are:

  • Number of sales
  • Sales revenue
  • Average deal size

This sales report template is a great example of how you can include KPIs in your meetings to test performance and adjust strategy.

Weekly Sales Report

Identify gaps in the sales process

This step is all about analyzing your current sales process to figure out gaps and/or potential obstacles preventing you from achieving goals.

When you identify a gap, brainstorm potential solutions so that you can create a specific action plan.

Understand the sales stages

When writing a sales plan, make sure you cover each stage of the sales cycle. If you’re unsure of what the sales stages are, here’s a quick recap.

Prospecting

This is the foundation of the sales process where you identify potential customers who might be a good fit for your product or service.

Preparation

Once you have a list of prospects, you need to research their needs, challenges, and buying habits.

This is all about how you contact and communicate with prospects.

Presentation

This section is your opportunity to showcase the value proposition of your product or service. Tailor your presentation to address the prospect’s specific needs and demonstrate how your offering can solve their problems.

Handling objections

Identify common objections your sales team might encounter related to price, features, competition, or need. Develop clear and concise responses to address these concerns proactively.

Equip your sales team with effective closing techniques to secure commitments from prospects who are interested but might hesitate.

Plan your follow-up strategy based on the prospect’s decision timeline and the stage of the sales cycle. For longer timelines, periodic updates and information sharing through digital sales rooms can maintain engagement and provide valuable resources conveniently.

Organize the sales team

Organizing the sales team entails defining roles and responsibilities clearly to cover all aspects of the sales process effectively.

This might involve segmenting the team based on product lines, customer segments, or territories.

Here’s an example of how it might look:

Sarah — Sales Director — will lead the sales team, set overall strategy, goals and direction. Michael and Jessica — Business Development Executives — will focus on prospecting new leads. They will research potential customers, identify those who might be a good fit for the product, and qualify leads by gathering information and assessing their needs. William — Sales Development Manager — will manage the business development executives and ensuring they follow best practices. Chris and Lisa — Account Executives — will handle qualified leads. They build relationships with potential customers, present product demos, address objections, and close deals.

Using an org chart like in this example is a great way to visualize this information.

Simple Corporate Organizational Chart

Outline the use of sales tools

Sales tools play a crucial role in streamlining the sales process and enhancing productivity.

Make sure you outline the tools your team will use, how they fit into different stages of the sales process, and any training required to maximize their utility.

This ensures that your team has the resources needed to engage effectively with prospects and customers.

Set the budget

Setting the budget involves allocating resources efficiently across various sales activities to achieve your objectives without overspending.

This includes expenses related to personnel, marketing initiatives, customer entertainment, and tools like CRM software, automation, cybersecurity solutions, and even a corporate travel platform .

A well-planned budget balances investment in growth opportunities with the overall financial health of the business.

Create a sales strategy and action plan

Now that you’ve laid the groundwork of what you want to achieve and how you plan to achieve it, it’s time to bring it all together into a single view.

Create an action plan which not includes your strategy but also concrete steps.

Your action plan should outlines specific activities for each stage of the sales funnel from prospecting (lead generation channels) to closing (structured process and follow-up strategy with timelines) and everything in between.

Vibrant Sales Action Plan

Performance and results measurement

Last but not least, your sales plan should present a clear and quantifiable means to track the effectiveness of sales activities.

How are you going to measure outcomes against predefined targets?

Performance measurement is key because it builds accountability and allows you to always have a pulse on customer behavior, preferences, and trends that’ll help you make decisions based on data.

If you’ve made it this far, give yourself a pat! I’ve covered A LOT on elements that you can include in a sales plan.

However, in most cases, you don’t always need to go that in-depth and instead should aim for brevity so that anyone in your team can stay up-to-date without having to worry about the nitty gritty details.

Here’s a sales plan example that’s brief but highly effective. It includes a summary of all you need in one document, a target market analysis, a customer profile, and an action plan.

Red Customer Sales Action Plan

Want even more sales plan templates for design inspiration or to customize and make your own?

This 30-60-90 day sales plan provides a great way to organize goals, priorities, performance goals, and metrics of success over three three timeframes: first 30 days, first 60 days, and first 90 days.

30 60 90 Day Plan Template

This sales plan is structured around key components that drive the sales process: objectives, strategies, tactics, and key metrics. It emphasizes a multi-channel approach to sales,, with a strong focus on measuring performance through metrics.

Territory Sales Plan Template

This sales roadmap is a great way to visualize activities such as defining strategy and generating leads to more advanced steps.

Blue and Orange Sales Roadmap

Conclusion: Save time on designing and updating sales plans and focus on growing your business with Venngage templates

Though there’s no secret formula for effective sales plan design, it’s good practice to include the basics or information on the target market, a customer persona, and a strategy on how you plan to sell.

What you definitely shouldn’t do is write a sales plan and then never look at it again.

And trust me, I know how time-consuming and frustrating it can be to edit your sales plan especially if you don’t have design skills. One small change might make the icons or numbers go all out of whack.

That’s why I recommend customizing our sales plan templates instead so that you can focus your energy on strategy.

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The Complete Guide to Building a Sales Forecast

Sales leader looking through a telescope at an arrow going up: sales forecast

Set your company up for predictable revenue growth with the right forecasting processes and tools.

how to write sales forecast in business plan

Paul Bookstaber

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Building a sales forecast is both an art and a science. Accurate sales forecasts keep your leaders happy and your business healthy. In this guide, we’ll explain everything you need to know about sales forecasting — so you can get a clear picture of your company’s projected sales and keep everyone’s expectations on track.

We’ve organised this reference guide by the top questions sales teams have about the sales forecasting process, based on our internal conversations and more than 20 years of experience developing  sales solutions .

Hit your forecast with real-time pipeline insights

What could you do with relevant insights at your fingertips? Sell smarter, take action, and hit your forecasts. That’s how Sales Analytics works.

how to write sales forecast in business plan

What you’ll learn:

What is a sales forecast, why is sales forecasting important, who is responsible for sales forecasts, who uses sales forecasts, what are the objectives of sales forecasting, how do i design a sales forecasting plan.

  • What happens to sales forecasting in unpredictable times?

How accurate are sales forecasts?

What tools do you use to forecast sales revenue and how do crm systems forecast revenue, how is forecasting better with crm vs. other methods.

If you’re a sales leader who’s already well-versed in the who and what of sales forecasts, skip to the sections on  designing a sales forecasting plan  and  tools to improve sales forecasts  for more relevant knowledge. Sales forecasting can become especially tough when we face an unexpected turn of events, so head to the section on  what happens to sales forecasts in unpredictable times  for more on that.

A sales forecast is an expression of expected sales revenue. A sales forecast estimates how much your company plans to sell within a certain time period (like a quarter or year). The best sales forecasts do this with a high degree of accuracy, and they’re only as accurate as the data that fuels them.

A strong data culture is at the heart of an accurate sales forecast. This means all sales data is available to everyone at the company, and all teams do their part in keeping it updated, leaning on AI and automation to help. More on that in the section on  tools used to forecast sales revenue .

All sales forecasts answer two key questions:

  • How much:  Each sales opportunity has its own projected amount it’ll bring into the business. Whether that’s €500 or €5 million, sales teams have to come up with one number representing that new business. To create the number, they take everything they know about the prospect into account.
  • When:  Sales forecasts pinpoint a month, quarter, or year when the sales team expects the revenue to hit.

Coming up with those two sales projections is no easy feat. So sales teams factor in the important ingredients of who, what, where, why, and how to make their forecasts:

  • Who:  Sales teams are responsible for sales forecasting.
  • What:  Forecasts should be based on the exact solutions you plan to sell. In turn, that should be based on problems your prospects have voiced, which  your company can uniquely solve .
  • Where:  Where is the buying decision made, and where will the actual products be used? Sales teams see better accuracy when they get closer (at least for a visit) to the centre of the action.
  • Why:  Why is the prospect or existing customer considering new services from your company in the first place? Is there a compelling event making them consider it now? Without a forcing function and a clear why, the deal may stall inevitably.
  • How:  How does this prospect tend to make purchasing decisions? If you’re not accounting for how they do it now and how they’ve done it in the past in your forecast, it may be fuzzy math.

Forecasting lets leaders set realistic sales targets, create attainable and motivating quotas for sales reps, and gauge expected revenue, aiding in budgeting and spending decisions for the whole company. If forecasts are inaccurate, businesses may overspend (putting themselves in a risky spot), and set unreachable quotas (which is demoralising for reps).

To understand why sales forecasting is so important to business health, think about two example scenarios: one with a car manufacturer and another with an e-commerce shop.

In the case of a car manufacturer, cars take a long time to build. The manufacturer has a complex supply chain to ensure every car part is available exactly when they need to build cars, so the number of cars available to purchase will meet demand.

When you buy something online, whether that’s from a large marketplace or a small boutique, you get a delivery estimate. If your delivery comes a day or a week after it’s promised, that’ll affect your satisfaction with the company — and decrease your willingness to want to do business with them again.

Sales forecasting is similar in both cases. Sales forecasts help the entire business plan resources to ship products, pay for marketing, hire employees, and beyond. Accurate sales forecasting yields a well-oiled machine that meets customer demand, both today and in the future. And internally on sales teams, sales revenue that delivers in its estimated time period keeps leaders and collaborators happy, just like a shipment that arrives on time.

If forecasts are off, the company faces challenges that affect everything from pricing to product delivery to the end user. Meanwhile, if forecasts are on point and  sales quotas  are met, the company can make better investments, perhaps hiring 20 new developers instead of 10, or building a much-needed new sales office in a prime new territory.

Each organisation has its own sales forecast owners. These are some of the teams who are usually responsible:

  • Product leaders:  They put a stake in the ground for what products will be available to sell when.
  • Sales leaders:  They promise the numbers that their teams will deliver. Depending on the seniority of the leader, how they forecast varies. For example, first-line managers forecast collections of opportunities, where third-line managers consider a wide set of numbers and traditional close rates to come up with an overall forecast.
  • Sales reps:  They report their own numbers to their managers.

No matter how a company calculates its sales forecasts, the process should be transparent. And at the end of the day, sales leadership has to be responsible to call a number. Whether met, exceeded, or missed, the forecast responsibility falls on them.

Sales forecasts touch virtually all departments in a business. For example, the finance department uses sales forecasts to decide how to make annual and quarterly investments. Product leaders use them to plan demand for new products. And the HR department uses forecasts to align recruiting needs to where the business is going.

At some level, sales forecasting affects everyone in the company.

The main objective of sales forecasting is to paint an accurate picture of expected sales. Leaders are looking to these numbers when they’re building out their operational roadmap and budget. If they’re confident in the projected growth, they can get to planning.

They could decide to staff more customer service touchpoints, fund more external marketing events, or invest more in the community. They could get ahead of purchasing new equipment or upgrades that get more expensive the longer they wait. Without a sales forecast, leaders are making critical spending decisions in the dark. If sales don’t go as planned, it could lead to cutting workforce, reducing support, or halting product development.

Sales forecasting is a muscle, not an item to check off your to-do list. While you should absolutely design a framework for your sales forecasting plan each year, you should also change up your strategies from time to time so new muscles develop.

Craft a sales forecasting plan with your team by focusing on three primary activities:

  • Calculating number and time period:  Your plan should explain how you’ll calculate the estimated monetary amount and what the timeframes will be. See the section on  how a CRM can help with forecasting  later in this guide for more on the sales forecasting tools you can use to do this.
  • Reviewing and revising:  You should also plan to review the forecast at key milestones and revise it if necessary. Most sales leaders track progress against their forecast daily! But you’ll also want to schedule designated check-ins throughout the quarter. Make sure you’re reviewing the latest numbers with  sales automation tools  that sync your CRM’s forecast data.
  • Breaking the patterns:  Even the best sales organisations need to shake up their  sales process  once in a while. Breaking your patterns can help you find new ways of crafting even more accurate forecasts. Try skip-level forecasting, ask different questions, have executive sponsorship reviews, and take different angles on the data.

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how to write sales forecast in business plan

What happens to sales forecasts in unpredictable times?

Unpredictable events have an enormous impact on your sales forecast. Extreme weather or economic crises all dramatically change your forecast. What you thought you knew about expected revenue growth can be suddenly flipped on its head.

As soon as an extraordinary event hits, sales and finance leaders at your company will quickly want to know:

  • How’s our  sales pipeline  looking today?
  • What are the best- and worst-case scenarios?
  • How has the forecast changed from a week or a month ago?

Your forecast implicates resourcing, headcount, and more (see the section on  sales forecasting objectives ). So although things may be changing quickly, you don’t want to give up on your forecast.

Rather than attempt to recalculate your forecast based on dubious estimates or conjecture, your best bet is to  rely on a CRM solution  to get an accurate view of deal status and pipeline in real time.

During a crisis, reps need to feed their CRM with data as events unfold so leaders have clear visibility into the rapidly evolving pipe. That data enables those leaders to support their reps with corporate-level decisions about where they should be focusing their time — and craft the new forecasts. Your forecast is only as good as the data coming into it from your sales teams.

In uncertain times, quick access to sales data and the ability to pivot  sales territory  and resource deployment accordingly can make the difference between business continuity and dissolution. There’s no silver bullet to forecast perfectly in a crisis or unforeseen scenario. But vigilantly updating what’s in the pipeline and analysing sales data more frequently than usual will help you see trends and retool your forecast accordingly.

Empathy and care are always fundamental, but this is especially true in these situations. Empathising with your customers’ challenges and caring for your own sales reps should come before anything else. Build trust with internal and external partners. That trust will help you grow again in the future. Learn more about  maintaining customer relationships as a sales leader .

Only 45% of sales leaders are confident in their organisation’s sales forecasts,  according to Gartner . While it’s natural for sales reps to bring in some intuition to their sales forecasts, that’s where room for error can creep in.

This brings us back to embracing a  strong data culture . To get a more accurate forecast, everyone in the sales cycle — from reps to managers to execs — should have a stake in making sure those numbers reflect the latest reality. Reps can keep all prospect info up to date, managers can track pipeline progress, and leaders can review how all teams are tracking toward those forecast numbers, with AI playing backup to spot any inaccuracies or chances to adjust along the way.

A  CRM  gives sales leaders a real-time view into their entire team’s forecast. The tool forecasts revenue by giving you:

  • An accurate view of your entire business.  Comprehensive forecasts in a CRM come with a complete view of your pipeline.
  • Tracking of your top performers.  See which reps are on track to beat their targets with up-to-the-minute leaderboards.
  • Forecasting for complex sales teams.  Overlay splits allow you to credit the right amounts to sales overlays, by revenue, contract value, and more.

A forecast is based on the gross roll-up of a set of opportunities. You can think of a forecast as a rollup of currency or quantity against a set of dimensions: owner, time, forecast categories, product family, and territory. You can collaborate on forecasts with all the necessary people to see how opportunities are stacking up. Drill down into opportunities by sales leader, operating unit, manager, and individuals.

We also love a CRM with  reports and dashboards . These highlight where the business challenges are, in plain and simple terms. It could be that four of five selling teams are at the right growth rate, and we just need to focus on another one. It could be that a certain product is challenged. The data opens up new doors to grow sales and see what could be working more effectively.

Another thing that’s great about a CRM is the guidance from AI. An  AI for sales  tool offers a neutral perspective on what’s actually happening in sales. For example, AI might note that an opportunity has been pushed out three quarters in a row — a finding that would’ve taken an individual reviewing the data longer to discover. Think of AI as your personal data scientist , taking your forecasting and entire sales operations to a new level.

Predictive AI tools take a look at historical sales data to give you a glimpse of what you might expect in the future. The AI will analyse factors like win rate or number of customer meetings. It takes some of the guesswork out of sales forecasting and helps you get to more accurate numbers. Try to analyse sales data for at least 12 months. Otherwise, there may not be enough data to get accurate sales predictions.

Sales forecasting is significantly more accurate when using a CRM instead of a spreadsheet. When a company is just starting out, sales teams usually rely on spreadsheets or back-of-the-napkin ways to calculate their sales forecasts. This may work for a while, but eventually, you’ll find this doesn’t scale.

The reality is, selling is more complex than ever. It involves everything from how demand generation campaigns are performing to how your phone calls to prospects are landing. The more you want to sell, the more you’ll want to  rely on a CRM .

See how Salesforce manages forecasts with confidence

The secret to an accurate forecast? Reliable, well-maintained pipelines. See how we manage both efficiently (with the help of the right technology), and use our best practices in your business.

how to write sales forecast in business plan

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How Do I Create A Financial Forecast In Excel?

How do I create a financial forecast in Excel

What Is The Formula For Forecast In Excel?

When building an Excel financial forecast template, it’s essential to understand Excel’s fundamental tools for forecasting. One such powerful tool is the FORECAST.ETS function. This function is part of the broader suite of forecasting models in the Excel template and is particularly useful for generating accurate future estimates based on historical data. Incorporating budgeting and forecasting services into the template enhances its capability to not only predict future trends using data-driven insights but also to create detailed budgets that align with projected financial scenarios.

Introduction to the FORECAST.ETS Function

The FORECAST.ETS function is specifically designed to handle time series financial forecasting , making it ideal for business owners and entrepreneurs who need to predict future revenue, costs, or other crucial financial metrics. This function uses Exponential Smoothing (ETS) algorithms, which are more sophisticated than simple linear regression models, providing more reliable and nuanced predictions.

Syntax and Arguments of FORECAST.ETS

Understanding the syntax and arguments within the FORECAST.ETS function is vital for accurate forecasting:

FORECAST.ETS(target_date, values, timeline, [seasonality], [data_completion], [aggregation])

  • target_date: The data point for which you want to predict a value.
  • values: The array or range of numeric data to forecast.
  • timeline: The array or range corresponding to the timeline for the values.
  • [seasonality]: An optional argument that specifies the periodic pattern of the data.
  • [data_completion]: An optional argument specifying handling missing data points.
  • [aggregation]: An optional argument that specifies how to aggregate data when the timeline contains duplicate points.

Example Usage in a Simple Forecast Scenario

Let’s consider a basic example. Imagine you have monthly sales data for the past two years and want to forecast sales for the next six months. First, ensure your data is organized in two columns: one for the timeline (e.g., dates) and one for the values (e.g., sales figures). Using the FORECAST.ETS function:

=FORECAST.ETS(A25, B2:B24, A2:A24)

Here, A25 is the target date, B2:B24 represents historical sales figures, and A2:A24 represents the corresponding dates.

Explaining the Importance of Historical Data

Historical data serves as the backbone of any forecasting effort. This data provides the context and patterns necessary to project future outcomes. Without robust and accurate historical data, forecasts can become unreliable. Therefore, it’s crucial to ensure that your historical data is as complete and accurate as possible before applying any forecasting models in Excel.

In summary, mastering the FORECAST.ETS function allows business owners and entrepreneurs to leverage historical data for better decision-making, ultimately helping to create a more reliable financial forecast Excel template for their business plans.

How To Create A Financial Forecast

Choosing the right forecasting model.

Creating a financial forecast begins with selecting an appropriate forecasting model . Financial models in Excel vary widely based on the business type and forecasting goals. Common models include time-series analysis, regression models, and the FORECAST.ETS function. Choose a method that aligns with your data set and business nuances for accurate results.

Step-by-Step Guide to Gathering Historical Data

Accurate historical data is the foundation of any reliable financial forecast. Start by aggregating data such as past sales, expenses, and other relevant financial metrics. Ensure the data is clean, consistent, and free from anomalies that could skew your forecast. This historical insight forms the baseline for projecting future trends.

Configuring Your Excel Worksheet for Forecasting

Once you’ve selected your model and gathered data, it’s time to configure your Excel worksheet. Create a dedicated tab for your historical data and another for your forecast. Structure your worksheet with clearly defined rows and columns encompassing periods, revenue, expenses, and other financial indicators. Use Excel’s built-in functions and formatting features to keep your worksheet organized and readable.

Using Excel Tools Such as Forecast Sheet and Data Analysis Add-in

Excel offers robust tools like the Forecast Sheet and Data Analysis Add-in that simplify forecasting. Forecast Sheet in Excel automatically generates a forecast from your historical data, providing an intuitive visual representation of future trends. The Data Analysis Add-in offers advanced statistical functions, allowing you to perform complex analyses and validate your forecast assumptions.

Review and Validation of Forecast Results

After creating your forecast, it’s crucial to validate the results. To ensure realism, compare the forecast outcomes against any known future events or market conditions. Run sensitivity analyses by adjusting key assumptions to see the impact on the forecast. This iterative review and adjustment process helps refine your forecast and build confidence in the results. Find out more about other budgeting and forecasting softwares .

How To Make A 5-Year Projected Income Statement?

Setting realistic revenue assumptions and growth rates.

The foundation of a credible five year financial projection lies in setting realistic revenue assumptions. Analyze your business’s historical revenue and market trends to estimate future income. Use industry benchmarks and market research to ensure your projections align with economic conditions and competitive dynamics. It’s crucial to be neither overly optimistic nor pessimistic, as this will significantly affect the reliability of your projections.

Entering Expense Categories and Applying Growth Trends

As with revenue, enter all relevant expense categories, including fixed and variable costs. Use historical data to identify growth trends or changes in expenses over the years and apply these trends to forecast future expenses. Remember to factor in inflation rates and other economic variables that might affect cost components.

Using Excel Formulas to Project Revenue and Expenses Over 5 Years

Excel provides powerful tools to make long-term projections. Use formulas like FORECAST.LINEAR and TREND to automate the calculation of future revenues and expenses based on historical data. Additionally, you can create dynamic models using cell references and mathematical functions to handle complexities and unique business conditions.

Creating Summaries and Charts to Visualize the Income Statement

Once the data is projected, it’s essential to visualize your projected five year income statement . Use Excel’s charting tools to create graphs that display revenue and expense trends over the forecasted period. Summaries and visual aids make your data more digestible and provide a clear overview for stakeholders and investors.

Ensuring Consistency and Accuracy in Long-term Projections

Consistency and accuracy are paramount in creating reliable financial projections. Ensure that your assumptions are applied uniformly and check for any discrepancies in your data. Regularly review and update your assumptions as more data becomes available or the business environment changes. A consistent and accurate forecast will instill confidence in your business plan and aid in strategic decision-making.

How To Create A Financial Plan In Excel

Creating a financial plan is critical for any business, as it lays the groundwork for achieving long-term financial goals. An effective financial plan in Excel should encompass a comprehensive view of your business’s financial metrics, from revenue forecasts to capital expenditures. Here’s a step-by-step guide to constructing a robust financial plan.

Components of a Comprehensive Financial Plan

A thorough financial plan includes key financial statements: the income statement, balance sheet, and cash flow statement. Each of these components provides unique insights into your company’s financial health. Start by outlining your revenue streams, categorizing your expenses, and making projections based on historical data and strategic plans.

Linking Income Statement, Balance Sheet, and Cash Flow Statement

To build an integrated financial model, link the income statement to the balance sheet and the cash flow statement. For example, net income from the income statement impacts the equity section of the balance sheet and the cash flow from operations. Create dynamic links in Excel to ensure changes in one statement are reflected across all documents.

Detailing Capital Expenditure, Funding Requirements, and Debt Schedules

Include detailed schedules to account for capital expenditures and funding requirements. This step involves listing all expected investments in long-term assets and the corresponding financing strategies, whether through debt, equity, or internal sources. Ensure that debt repayment schedules and interest expenses are incorporated to maintain a realistic financial outlook.

Using Scenario Analysis to Test Different Assumptions

Scenario analysis is a powerful tool to test various assumptions in your financial plan. By modeling different scenarios, such as best-case and worst-case situations, you can prepare for potential risks and opportunities. Use Excel’s scenario management tools to automate and visualize these analyses, ensuring your planning is resilient and adaptable.

Creating a Dynamic and Interactive Financial Model

A well-built financial model should be dynamic and interactive, allowing you to adjust assumptions and instantly see the impact. Utilize Excel’s advanced features, such as data validation, drop-down lists, and conditional formatting, to enhance usability and clarity.

Are you looking to enhance your financial strategy? Visit Milestone Inc. for our expert budgeting and forecasting services, tailored to help small businesses reach their full potential. Click here to discover how we can assist you in achieving success.

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State Rundown 6/26: Summer Special Sessions Are In, Anti-tax Ballot Initiatives Out

June 26, 2024

ITEP

.ITEP Staff

Many families are heading out on summer vacations, but legislators across the country are heading back to statehouses for special sessions, most of which are focused on tax cuts. Arkansas and Kansas both gaveled in to enact hundreds of millions of dollars in income and property tax cuts. Connecticut lawmakers convened to address an issue with the state’s vehicle tax. And Gov. Jim Pillen of Nebraska announced a special session on property taxes after the legislature failed to pass his plan to slash property taxes and increase sales taxes to make up for lost revenue.

In other states, proposed constitutional amendments and movements on ballot initiatives are making headlines. In a major decision, California’s Supreme Court ruled unconstitutional an anti-tax measure that would have retroactively increased voter thresholds to raise state and local taxes, barring it from moving to the ballot this November. In North Carolina, legislators are discussing a constitutional change to lower the state’s already stringent cap on personal and corporate income tax rates, inhibiting the state’s ability to raise progressive revenue going forward and tying the hands of future lawmakers.

Major State Tax Proposals and Developments

  • Gov. Sarah Huckabee Sanders has signed legislation that will cut income tax rates in ARKANSAS for the fourth time in less than two years. The most recent cut will lower the state’s top personal income tax rate to 3.9 percent, reduce its corporate income tax rate to 4.3 percent, and increase the state homestead property tax credit. The legislation is expected to cost $483 million the first year with nearly 75 percent of the cut going to households in the top 20 percent of income earners. – NEVA BUTKUS
  • The CALIFORNIA Supreme Court ruled that the anti-tax Taxpayer Protection Act cannot appear on the November ballot. The measure would have severely limited the state’s ability to raise revenue by retroactively requiring two-thirds voter approval on all local tax increases and requiring state tax increases to also go to the ballot for majority support. The court unanimously ruled that the measure “would substantially alter our basic plan of government” and therefore would require two-thirds approval by the legislature and a revision to the constitution. – ELI BYERLY-DUKE
  • KANSAS Gov. Laura Kelly and the state legislature came to a tax cut compromise during their special session. The result: $2 billion in lost revenue via tax cuts over the next five years. The legislation will reduce the state’s personal income tax brackets from three to two, increase the state standard deduction and personal exemption, create a new dependent exemption, exempt all Social Security income from tax, increase the nonrefundable child and dependent care credit, and increase the homestead exemption to $75,000 (up from $42,000).  – NEVA BUTKUS

State Roundup

  • CONNECTICUT lawmakers will meet for a special session this week to consider a measure that will affect the state’s vehicle tax. The goal is to avoid an unintended tax increase on commercial vehicles registered in municipalities where the mill rate is higher than the statewide cap.
  • LOUISIANA Department of Revenue Secretary Richard Nelson is making the case that the state should expand its sales tax base and eliminate sales tax exemptions to “buy down” the state’s personal and corporate income tax rates.
  • NEBRASKA Gov. Jim Pillen announced that he will call the legislature into a special session between July 25 and August 15 to work on property tax reductions. He has not yet released his proposal for doing so but recently said he would like the state to take over K-12 education funding entirely .
  • A vote on NEW JERSEY ‘s state budget could come as early as this week after lawmakers agreed on a deal that includes a 2.5 percent surtax on corporations earning over $10 million in profit. Notably, this means legislators will not pursue a proposal that would have increased the sales tax rate from 6.625 percent to 7 percent.
  • NORTH CAROLINA lawmakers are pursuing a more stringent constitutional amendment that would lower the cap that corporate and personal income taxes can be set from 7 percent to 5 percent. If passed by the legislature, the constitutional amendment would require a simple majority vote by North Carolina voters to be enacted. According to an ITEP analysis, this would result in nearly $9 billion in potential lost revenue with $7 billion of that alone from lost personal income tax revenue. If passed, well over two-thirds of the total would flow to the top 20 percent of households in the state with average annual incomes of more than $300,000.
  • An OREGON initiative petition to create a universal basic income funded by an increase in corporate minimum taxes seems likely to be included on the November ballot. The measure would establish a 3 percent tax on corporations’ sales in Oregon above $25 million and distribute that money equally among Oregonians of all ages, which would be about $750 per person, according to the proponents of the measure.
  • With gas tax collections falling and transportation funding suffering, WASHINGTON state legislators are looking into imposing a retail delivery fee that consumers would pay on products delivered to them.

What We’re Reading

  • Pediatrician Dr. Céline Sparrow discusses for Brazelton Touchpoints Center at Boston Children’s Hospital the connections she sees between state and federal Child Tax Credits and outcomes for her patients and their families, particularly those living at or near the poverty line.
  • Steve Wamhoff, ITEP’s federal policy director, offers helpful commentary on the U.S. Supreme Court’s recent decision upholding the constitutionality of a tax on offshore corporate profits, which will also have major implications on the potential for future attempts at enacting a tax on wealth or unrealized gains. Moreover, Professor Brian Galle explains how states could play a big role in implementing wealth taxes.
  • ITEP’s Brakeyshia Samms wrote last week about how tax policy has long been embedded in the Black American story , and earlier this week about the potential for property tax “circuit breaker” policies to improve equity in state tax codes.

If you like what you are seeing in the Rundown (or even if you don’t) please send any feedback or tips for future posts to Aidan Davis at [email protected] . Click here to sign up to receive the Rundown via email.

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State rundown 6/13: decisions are falling into place, but some states will come back for more, state rundown 6/6: a tale of two tax laws, state rundown 5/30: sessions are in for summer.

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Nike posts surprise drop in sales, sending shares tanking: slowdown ‘hard to ignore’.

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Nike on Thursday forecast a surprise drop in fiscal 2025 sales, after disappointing fourth-quarter sales laid bare the company’s weakening market share and its faltering direct-to-consumer strategy.

Shares of the company were down 12% in extended trading after Nike also forecast a wider-than-expected drop in first-quarter revenue.

The company’s efforts to drive more sales through its direct-to-consumer channel have failed to reap rewards as customers turn more picky about non-essential spending and splurge on fashionable and innovative brands such as On and Deckers’ Hoka .

Nike sneakers

Nike expects annual revenue to be down in the mid-single digits compared with estimates of a rise of 0.91%.

“The slowdown in total sales and for Nike Direct is hard to ignore. We continue to rack our brain for where Nike can get its next leg of growth,” said Zachary Warring, equity analyst at CFRA Research.

Nike is also losing ground to rival  Adidas ‘ retro-style Gazelle and Samba sneakers, which have helped the European sportswear maker see a rebound in demand after its damaging break-up with rapper Ye .

Even though Nike has outlined a plan to streamline its portfolio , analysts note that it would be some time before the sportswear company can revive demand as innovation and launches of new product lines take time.

The Air Jordan maker’s strategy to double down on wholesale partnerships helped wholesale revenue in the reported quarter rise 5%, while growth in its direct-to-consumer business fell 8%.

Hoka sneakers

Nike’s net revenue fell 1.71% to $12.61 billion, compared with analysts’ average estimate of $12.84 billion, according to LSEG data.

However, the company’s $2 billion cost savings plan  including layoffs, helped the company adjusted earnings of $1.01 top estimates of 83 cents.

Nike is also struggling with weak demand in international markets, including China, where brick and mortar traffic declined in double digits versus prior year, executives said.

Nike apparel

Headwinds including weakness in its digital business, soft store traffic and higher promotions are expected to have a “more pronounced impact” in fiscal 2025, CFO Matthew Friend added.

Nike expects first-quarter revenue to fall about 10% compared with expectations of a 3.16% fall.

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Election latest: 'Days left to save Britain from Labour,' Sunak warns; Starmer tells voters to avoid more 'economic chaos'

Sir Keir Starmer and Rishi Sunak are set to begin a frantic final few days of campaigning as polling day rapidly approaches. Both men will today reiterate their core messages as they try to motivate their backers to get out to the polling booths on Thursday.

Monday 1 July 2024 08:42, UK

  • General Election 2024
  • Leaders ramp up attacks as final days of campaigning begin
  • Minister criticises 'celebrating' of Banksy migrant boat inflatable
  • Ed Conway: The science and security of the exit poll
  • Polls open in just three days on 4 July
  • Live reporting by Faith Ridler

Election essentials

  • Manifesto pledges: Conservatives | Greens | Labour | Lib Dems | Plaid | Reform | SNP
  • Trackers:  Who's leading polls? | Is PM keeping promises?
  • Campaign Heritage:  Memorable moments from elections gone by
  • Follow Sky's politics podcasts:  Electoral Dysfunction | Politics At Jack And Sam's
  • Read more:  Who is standing down? | Key seats to watch | What counts as voter ID? | Check if your constituency is changing | Guide to election lingo
  • How to watch election on Sky News

Jonathan Ashworth, the shadow paymaster general, has insisted that the election isn't over until "the final whistle blows" as politicians gear up for polling day.

Labour has consistently been 20 points ahead of the Conservatives throughout the six-week campaign, with all pollsters pointing to a victory on Thursday.

But despite this, the party has continued to emphasise that it will fight for every vote.

Mr Ashworth said: "There's an election on Thursday, and if people want to bring an end to the chaos, to the scandals from the party in Number 10 to the insider gambling scandals, if people have had enough of being stuck on an NHS waiting list, if people who've had enough of having their family finances hammered and pay more on their mortgage, they've got to come out and vote Labour.

"Don't wake up, don't switch on Sky News on Friday morning and hear that Rishi Sunak has been re-elected. 

"If you don't want that, we don't want that feeling in the pit of your stomach."

He does on to explain that there are still "a lot of undecided voters".

"But let me give you some meat," Mr Ashworth adds.

"We're going to deliver 40,000 extra appointments in the National Health Service. 

"We are going to help young people get on the housing ladder by significant reforms to planning."

By Tom Cheshire , online campaign correspondent 

If you want a good idea of what matters to each party - its deepest desires, its darkest fears - look at where it's spending money.

What it shows is a story of Labour spending big and spending everywhere, as it pursues a plausible supermajority, while the Conservatives retreat to fight for some of their heartland constituencies, and spend much less. 

It shows the current state of play for all parties across the country. The map shows which is the biggest spender in each constituency - which parts of the country they're fighting to win, or not to lose.

The map was created by Who Targets Me (WTM), which tracks digital political advertising and has partnered with Sky News as part of our online campaign team.

"Our map of advertising activity shows where the parties have targeted their Facebook and Instagram ads in the last week," Sam Jeffers, executive director of WTM, says.

Steve Reed, the shadow environment secretary, just handed out pillows to journalists on the Labour campaign bus - emblazoned with Rishi Sunak's face.

The pillows are printed with a mocked-up photo of the prime minister in bed and the words "Don't wake up to five more years of the Tories".

By Nick Martin , people and politics correspondent

"We eat according to price rather than enjoyment," Sarah Bowmer tells me when we meet on the high street of her hometown of Bakewell, Derbyshire.  

It's a sunny day and the tourists have flocked to this picturesque market town in the heart of the Peak District.

Day-trippers wander around the souvenir shop and queues have formed to buy the famous Bakewell pudding, which has made this town famous since the 1820s.

But Sarah isn't feeling it.

Food prices are still 25% more expensive than when I first met Sarah and Paul in 2022. She calls that period the "dark days".

Home Secretary James Cleverly is now asked about a migrant boat artwork that appeared above the crowds during a set at Glastonbury.

The inflatable boat, seemingly created by Banksy, was filled with dummies designed to look like migrants attempting to cross the Channel.

While the anonymous artist doesn't usually explain his work, he is known for using art to make political commentary and it seems clear the installation was designed to highlight the tragedy of these desperate journeys, which after dipping last year are now rising again. 

It was hoisted above the crowd and passed around by festival-goers during Idles' performance on the Other Stage at Worthy Farm on Friday night.

Asked about this, Mr Cleverly criticises what he perceived as "joking and celebrating about criminal actions which cost lives".

He says: "People die - people die in the Mediterranean, they die in the Channel.

"This is not funny, it is vile.

"It is a celebration of loss of life in the Channel."

Mr Cleverly is asked how he knows this installation is not a commentary on the Conservative inability to handle the situation.

He dodges the question, saying he is "determined to break the criminal gangs".

Mr Cleverly says the art installation was "deeply distasteful".

Home Secretary James Cleverly says high taxes under the Tories are down to "genuinely unique circumstances".

Pushing the line that taxes will rise from their already modern-high record level if Labour wins on Thursday, he says: "We are committed to cutting taxes. 

"Taxes are higher than we would like, we've said that, and as Conservatives we are determined to bring them down.

"Labour will send them up."

Mr Cleverly goes on to reiterate: "We are determined to bring taxes down, we have started to do that.

"That is in contrast with the Labour Party, who we know because they've said so, they're going to put taxes up."

Labour has said it won't raise VAT, national insurance or income tax - but has been non-committal on other taxes.

It says it would abolish the VAT break on private schools, introduce windfall taxes on oil and gas companies and close loopholes in the non-dom rules.

Later in the conversation with Sky News, the home secretary dismisses Reform UK as a threat to the Conservatives.

He says there are only two people who could credibly be in Number 10 on Friday: Rishi Sunak and Sir Keir Starmer.

"The best case scenario is predicted that Reform UK might get a small number of seats, but in doing so give Labour a huge majority."

They came in their droves: thousands of Reform supporters poured into a vast hall in a Birmingham conference centre on Sunday to hear Nigel Farage.

His backers brought with them Union Jacks, and brandished Reform placards. There were even one or two red baseball caps emblazoned with the slogan "Make Britain Great Again", which seemed fitting for an event that felt quite Trumpian in style and tone.

Mr Farage came onto the stage to pounding music, smoke machines, fireworks, and a sea of "it's time for Reform" placards to a 5,000-strong crowd with a speech that spoke about how Britain was broken and it was time for Reform.

He said his party would be the "leading voice of opposition" as he attacked "the establishment" in all its guises, from the Conservative Party to Labour, the BBC, and Channel 4 to the Governor of the Bank of England.

Pledges and promises are coming thick and fast from every party as the general election approaches. 

Struggling to keep up with who is saying what?

Here is a summary of where the main parties stand on major issues.

For a more in-depth look at what each party has pledged, scour our  manifesto checker ...

Our live poll tracker collates the results of opinion surveys carried out by all the main polling organisations - and allows you to see how the political parties are performing in the run-up to the general election.

With under a week to go, the Tories and Labour have taken a drop, while support for Reform UK and the Liberal Democrats is on the rise.

Read more about the tracker  here .

The Conservative Party has claimed that Labour's immigration plans could lead to a "deluge" of asylum seekers, and tax hikes of £635 per family.

Analysis published by the party days before the general election claims that this rise in taxation would be necessary to cover a "blackhole" in Labour's budget.

Home Secretary James Cleverly claimed that Labour has no credible plan to deter Channel crossings, which have skyrocketed under the Conservatives.

He said: "Right now, all we know is that Keir Starmer would stand on the cliffs of Dover to do a rain dance and hope that stops the boats.  

"There would be no deterrent under Labour and that means the business model for people smugglers would still be viable – boats would cross the channel in droves."

But Labour said allegations of tax rises are a "ludicrous lie from an increasingly desperate Tory party".

A spokesperson added: "This so-called Tory analysis is actually a costing of their own failing policies, not Labour's plans which will save the taxpayer billions.

"The Tories have already overspent the Home Office budget by £5bn because they let the asylum backlog soar and failed to stop the criminal gangs. 

"If they carry on like this for the next five years they will more than treble those costs."

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  1. How To Create A Sales Forecast With A Free Template

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  2. The 9 Best Sales Forecast Templates for Growing Your Local Business

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  3. 17 Sales Forecast Templates 2020

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  4. Free Sales Forecast Template (Word, Excel, PDF)

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  5. How to Do a Sales Forecast for Your Business the Right Way—2021 Guide

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  6. 15+ Free Sales Forecasting Templates

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  6. How to Do a Sales Forecast for a Startup Business

COMMENTS

  1. How To Write A Sales Forecast For A Business Plan

    To calculate your predicted revenue: Make a list of your available goods and services. Note the price of each of your goods and services. Estimate the expected sales of each good or service. Multiply the price by the estimated sales to get your estimated revenue. Add them all together to get your total revenue.

  2. Sales Forecast: Complete Guide to Sales Forecasting in [2024] • Asana

    An effective sales forecasting plan: Predicts demand: When you have an idea of how many units you may sell, you can get a head start on production. Helps you make smart investments: If you have future goals of expanding your business with new locations or products, knowing when you'll have the income to do so is important. Contributes to goal setting: Your sales forecast can help you set ...

  3. How to Create a Sales Forecast the Right Way

    A normal sales forecast includes units, price per unit, sales, direct cost per unit, and direct costs. The math is simple, with the direct costs per unit related to total direct costs the same way price per unit relates to total sales. Multiply the units projected for any time period by the unit direct costs, and that gives you total direct ...

  4. The Complete Guide to Building a Sales Forecast

    Sales forecasts help the entire business plan resources to ship products, pay for marketing, hire employees, and beyond. Accurate sales forecasting yields a well-oiled machine that meets customer demand, both today and in the future. And internally on sales teams, sales revenue that delivers in its estimated time period keeps leaders and ...

  5. How to Do a Sales Forecast for Your Business the Right Way

    But to start, here are the general steps you'll need to take to create a sales forecast: List out the goods and services you sell. Estimate how much of each you expect to sell. Define the unit price or dollar value of each good or service sold. Multiply the number sold by the price.

  6. How to Create a Sales Forecast (Examples & Templates)

    Proposal sent: 40% probability of closing. Negotiating: 60% probability of closing. Contract sent: 90% probability of closing. Using these probabilities, you can extrapolate an opportunity stage sales forecast. You'll want to take the deal's potential value and multiply that by the win likelihood.

  7. The Ultimate Guide to Sales Forecasting

    When you produce a sales forecast, you are predicting what your sales or revenue will be in the future. An accurate sales forecast helps your firm make better decisions and is arguably the most important piece of your business plan. A sales forecast contrasts with a sales goal. The former is the realistic representation of what you believe will ...

  8. How to create a sales forecast for your business

    Make sure you cover at least one weekday and a full weekend. Once you have estimated the traffic, all you need to do is to apply a conversion rate to deduct the number of sales. In the end, your sales forecast should look like this: 600 people come to the street every day. 1 out of 10 will enter the shop: 60 people/day.

  9. How to Create a Sales Forecast that Scales

    More reliability and efficiency in every area of your business. Set Sales Forecasting Goals. Before you start your sales forecast, you need to define the goals, which can include (but are not limited to): ARR, new logos, number of products sold and renewals. Your sales forecast goals typically depend on the stage of your organization.

  10. How to Create a Sales Forecast That Boosts Your Business

    Choose your sales forecast interval. The first thing to consider is the time interval you want to use in your sales forecast. For example, you can forecast your sales on a weekly, monthly or quarterly basis, and check in at each interval to see how you performed against your forecast. For many businesses, a monthly schedule is perfect.

  11. How to create a sales forecast for your small business

    Top-down sales forecasts. Start with the total size of the market and estimate what percentage of the market the business can capture. If the size of a market is $20 million, for example, a company may estimate it can win 10% of that market, making its sales forecast $2 million for the year. If you're a natural optimist, it's a good idea to ...

  12. How to Create a Sales Forecast Business Plan

    Step 4: Align Sales Predictions with Your Business Strategy. Many businesses have a five-year plan, a strategy that looks to drive business growth and profitability. But remember, such a plan will impact sales in one way or another, so it's important that you align your sales forecasts with your short and long-term business objectives.

  13. How to Create a Financial Forecast for a Startup Business Plan

    Develop a cash flow projection. A cash flow statement (or projection, for a new business) shows the flow of dollars moving in and out of the business. This is based on the sales forecast, your balance sheet and other assumptions you've used to create your expenses projection. "If you are starting a new business and do not have these ...

  14. How to calculate a sales forecast for a new business

    Calculate a sales forecast using the accounts of your competition. It's always a good idea to research the competition when you're setting up a new business. This is also true when calculating a sales forecast, but it depends on the type of businesses that make up your competition. If any of your competitors are registered with the ...

  15. How to Do a Sales Forecast

    Estimating of the number of each to be sold. Multiplying the unit price by the estimated number of goods or services to be sold. Determining the cost of each good or service. Multiplying the cost of each good or service by the estimated number to be sold. Subtracting total cost from the total sales. If your business has a huge number of items ...

  16. Forecast and plan your sales

    Forecast and plan your sales. Accurately forecasting your sales and building a sales plan can help you to avoid unforeseen cash flow problems and manage your production, staff and financing needs more effectively. A sales forecast is an essential tool for managing a business of any size. It is a month-by-month forecast of the level of sales you ...

  17. 9 Free Sales Forecast Templates to Super-Charge Sales Growth in 2024

    You can pick this one up right here. 5. Best for Long-Term Future Sales Analysis (36 Months of Historical Data) This is one of the most colorful templates on the list, but that's not why we included it. This template is ideal for companies that want to monitor long-term data closely.

  18. Financial forecast example for new businesses and startups

    Balance sheet. The forecasted balance sheet, the last link in the chain, provides an overview of the company's net worth at a given moment in time and is part of our financial forecast example. It enables you to evaluate: the book value of shareholders' equity. The forecasted balance sheet complements the other two tables.

  19. How to Create a Business Plan I Part 3 I Sales Forecast

    Welcome to another video in my business planning series!In this series, you will learn about the sales forecast and how to create a sales forecast using Micr...

  20. What is Sales Planning? How to Create a Sales Plan

    Step 5: Start sales forecasting. Sales forecasting is an in-depth report that predicts what a salesperson, team, or company will sell weekly, monthly, quarterly, or annually. While it is finicky, it can help your company make better decisions when hiring, budgeting, prospecting, and setting goals.

  21. How to Create a Sales Plan: Strategy, Examples and Templates

    A sales plan is a strategic document that outlines how a business plans to convert leads into sales. It typically details the target market, customer profile, and actionable steps that must be taken to achieve revenue targets. Here's a great example of a sales plan that includes all these elements neatly packed into one document.

  22. How to Create a Business Plan

    How to create a sales forecast using Microsoft excelCreate a bookkeeping spreadsheet using Microsoft Excelhttp://youtu.be/LlWADbkGdacLearn more at www.bpfs-o...

  23. The Complete Guide to Building a Sales Forecast

    Sales forecasts help the entire business plan resources to ship products, pay for marketing, hire employees, and beyond. Accurate sales forecasting yields a well-oiled machine that meets customer demand, both today and in the future. And internally on sales teams, sales revenue that delivers in its estimated time period keeps leaders and ...

  24. How Do I Create A Financial Forecast In Excel?

    Example Usage in a Simple Forecast Scenario. Let's consider a basic example. Imagine you have monthly sales data for the past two years and want to forecast sales for the next six months. First, ensure your data is organized in two columns: one for the timeline (e.g., dates) and one for the values (e.g., sales figures). Using the FORECAST.ETS ...

  25. Money blog: Energy bills 'to rise 10% in October' as wholesale costs

    Like-for-like sales for Currys UK and Ireland declined by 2% to £4.97bn in the 12 months to 27 April, with consumer confidence knocked by high inflation levels and rising interest rates.

  26. State Rundown 6/26: Summer Special Sessions Are In, Anti-tax Ballot

    The court unanimously ruled that the measure "would substantially alter our basic plan of government" and therefore would require two-thirds approval by the legislature and a revision to the constitution. - ELI BYERLY-DUKE; KANSAS Gov. Laura Kelly and the state legislature came to a tax cut compromise during their special session. The ...

  27. Nike posts surprise drop in sales, sending shares tanking

    Nike on Thursday forecast a surprise drop in fiscal 2025 sales, after disappointing fourth-quarter sales laid bare the company's weakening market share and its faltering direct-to-consumer strategy.

  28. Election latest: 'Days left to save Britain from Labour', Sunak warns

    Sir Keir Starmer and Rishi Sunak are set to begin a frantic final few days of campaigning as polling day rapidly approaches. Both men will today reiterate their core messages as they try to ...