Estimating Sales

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Sales forecasting is used…

- To inspire investor confidence

- To test viability- To judge on-going business

performance- To manage special projects…plus many other uses

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Step 1:Find performance figures for the same trading period last year and use them as a benchmarkApply forthcoming internal and external influences to them to estimate future performance

Estimating sales based on a sales history

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Internal influences can be…

- Staff shortages- Product promotions- Limits to manufacturing

capacity- Changes to processes

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- Economic conditions- Regulation changes- A new competitor joining

the market- Another going under

External influences can be…

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Estimating sales based on a sales history

Step 2:Multiply the units sold estimate by the individual unit price

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Estimating without a sales history

Many entrepreneurs find an external benchmark to act as their “sales history” when forecasting sales for a new business

They use a competitor’s published figures, benchmarking surveys or seek advice from experts, accountants or even consumers

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Estimating without a sales history

Others, requiring more specific analysis, carry out their own, in-depth research.

Canvassing target consumers on spending habits and frequency is often vital to this process

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Estimate scenarios

Many businesses use best-case and worst-case scenarios to find more accurate middle-ground figures for their final estimateOverly-optimistic forecasts can encourage financial risk, while excessively-conservative ones exaggerate performance

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