Having a strong sense of sales forecasting methods is an essential aspect of business management.  So what is sales forecasting? Quite simply, it’s the process of estimating your business’ future sales.   And it’s the heart of making intelligent business decisions.  Email us now if you’d like to learn how we can help with your own sales forecasting. You’ll find sound advice based on deep experience—without having to pay the high overhead of a traditional consulting firm. 

How does sales forecasting work?

Sales forecasting predicts future performance by studying past results. A careful analysis of past trends is the best way to plan for the future, especially future sales of products and services.

Without sales forecasting you wouldn’t know that summer is consistently the slowest season, so you might overspend on inventory that will sit on the shelves.  Or you might lose business during the holidays, because you didn’t see the historical trends that revealed you need to increase your sales force during that busiest of times.

Sales forecasting is more difficult for a new company than an existing one, because there’s no track record.  With a new business, you can’t look at sales records for a particular month in past years to predict how current economic considerations will affect your business.   So what can a new business owner do to forecast sales?

Forecasting sales for a new business.

Some effective strategies might include:

  • Calculate the average sales volume per square foot of similar stores in comparable locations.
  • Determine how many households within a one-mile area need the goods or services your business offers.  Establish how much they spend on these types of products annually, and taking your competition into account, estimate the percentage of their spending you might attract.  Do the same for a five-mile area.
  • Calculate daily gross sales, and multiply that number by 30 to arrive at a monthly amount. Then, multiply that by 12 for an approximation of gross annual sales.

Although critical to sales forecasting, routine examination of numbers is not enough. Dependable sales forecasting also includes:

  • A good sales strategy. It includes an understanding of the principles customers use to make decisions and how your company meets those needs. More importantly, a good sales strategy helps you determine the tactics you should use going forward.
  • Understand your clients’ behavior.   Why does your customer buy? Consider what the phases of the decision-making process are and what you should do differently at each point to make you the clear choice.
  • Constant improvement.  Changes in your business or marketplace may occur, indicating a need to reassess the milestones within your sales process.  You may need to add milestones, or re-evaluate the importance you have placed on particular milestones because you have new data about changes in customer behavior.


Sales forecasting can help you manage and lead your business, establish strategic decisions and decide how to allocate resources. And we’re here to help you develop right business forecasting methods for your business. Just email us now to get the conversation going.