The mechanics of sales forecasting are relatively simple. Break your sales down into manageable parts, and then forecast the parts. Guess your sales by line of sales, month by month, then add up the sales lines and add up the months.
The content takes work, but not the design of the table. It’s built on common sense and reasonable guesses, without statistical analysis, mathematical techniques, or any past data. Forecasting depends on how well you know your business and your market. Sales forecasting starts when the research is done. Ultimately a forecast is a guess, but we want it to be an educated guess. Build on Past Data When you can. When you have past data to call on, use it, and always compare your forecast to past results. Look to the past as a reality check. Understand what’s changing and why, and what may remain the same.
While mathematical and statistical analyses are great, a simple forecast-to-past data comparison is quick, practical, and very powerful. Every professional analyst knows to look first to real past results before projecting into the future. Sales forecast is still relatively simple. Guess your sales by units, and your price per unit, and cost per unit. The math to produce sales and cost of sales is not complex. Units-based sales forecasting has the advantage of breaking your assumptions down into meaningful parts. Depending on your type of business, most people find it easier to guess units and price per unit than to guess total sales values. Also, you can adjust either unit sales or price per unit, and then consider the impact of changes either way. The quality of the forecast depends on how well you know your business and your market.