What is Sales Forecast? How does it help an organization?

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sales forecast

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What is a Sales Forecast?

Sales Forecast is the estimation of a company’s future sales or revenue based on various factors such as historical sales data, market sentiments, the performance of other products, etc.

An accurate sales forecast helps a company allocate the right amount of funds for a product, organizing the workforce, managing resources, territory and quota planning, and so on. 

Sales forecasting might be easier for longer-running businesses than for startups due to the availability of more and accurate data whereas the startups generally rely on generic data available in the public domain. 

How to create a Sales Forecast

Define Revenue Streams

Companies have to mark the revenue streams they have and break them based on various key factors such as demographics for instance. The revenue streams must be defined so they are aligned with your accounting setup. This would make it easier to determine the difference between the predicted sales and the actual sales.

Analyze past data

An important part of any Sales Forecast is to analyze the available past data accurately. This is probably the most invaluable resource for sales forecasting. 

Taking relevant data, economic trends, and conditions into account while forecasting will help any company create an accurate sales forecast preventing any wastage of available resources.

Compete your product against others

For any brand-new product, sales forecasting can be a relatively tougher job. However, reading into the performances of similar products available in the market can make this forecasting process much easier. 


Q: What is the purpose of Sales Forecasting?

A: Accurate forecasting helps companies to make informed decisions, allocate resources judicially as well as predict short-term and long-term goals. This forecast can be based on past sales or current market trends and sentiments.

Q: What is the sales forecast growth rate?

A: A sales forecast growth rate is the level of increase that a company expects to see in its sales figures over a given time period.

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