Steps to Developing an Accurate Sales Forecast

  1. IDENTIFY YOUR SALES UNIT:
    • This could be hours, rides or meals
  2. CALCULATE YOUR BASELINE VOLUME SALES:
    • This is your estimated monthly sales volume assuming no significant promotional programs or external market events that could affect sales.
    • Use your most recent records of past sales to project the baseline.
    • With at least two years of records, you might start seeing sales patterns that are consistent from year to year, reflecting the normal demand and seasonality of sales. There might be exceptions due to:
      1. Market events
      2. Competition
      3. Marketing and sales campaign
    • Remove these exceptions from most recent sales figures to get the baseline
  1. ESTIMATE LOSS/GAIN FROM MARKET TRENDS AND COMPETITOR ACTIVITIES:
    • Make assumptions about:
      1. Market trends and events
    • Use your knowledge of the market and competitors to project:
      1. Economic growth
      2. Lifestyle changes
    • Estimate an average market growth rate
    • Anticipate any big market events and the resulting impact on sales
    • Forecast competitor’s activities and its impact on sales
  2. ESTIMATE INCREMENTAL SALES FROM MARKETING/SALES ACTIVITIES:
      • Forecast marketing campaign and its impact on sales (possibly over many months):
        1. New prospects
        2. New leads
        3. New customers
        4. Order size
        5. Repeat purchases
      • Anticipate cannibalization or impact of bulk customer purchases
  1. CALCULATE REVENUE SALES FORECAST
    • Based on volume forecast, calculate your monthly revenue forecast by multiplying your unit price by the volume sales per month