How to Forecast and Plan Your Sales

Avoiding Sales Forecasting Pitfalls

Some common forecasting pitfalls are:

Wishful thinking

Being positive is fine, but being over optimistic with your sales forecasting will not help your business. 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.

Not making your forecast achievable

You 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 article 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.

Not consulting your sales people

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 they will be set – rather than just imposing a target on them, especially if they know that it’s unrealistic or unachievable

Not obtaining feedback

Having drawn up 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.

How to Forecast and Plan Your Sales – Crown Copyright © 2012
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