Many startups and companies work blindly, since the only way to make the right decisions is through a sales forecast: it is impossible to decide without first having studied the situation of a company.
So, if you are thinking of starting a business, or you already have a business but you have doubts about how much you should sell to pay your collaborators, the rent of the premises or even your own remuneration, this article is for you.
You must be clear that making a sales projection is as important as deciding to start a new business: the data will be your best allies to make accurate decisions at all levels, from establishing a buy supplies and even hire new people, among others.
In other words, the sales projection will allow you to consciously implement all those actions that prevent you from improvising and leaving things to chance.
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But, let us start at the beginning:
What is a sales forecast?
Nothing more and nothing less than the perfect method to map sales taking into account the current situation. An example: you have to take into account that an ice cream parlor is not going to sell the same in summer, and it is necessary to make an estimate of sales to guarantee that the business is profitable.
With a sales projection you get it. You can even define the minimum billing to reach each month, each quarter or even a 5-year prospection. Incredible true?
To make a sales projection in a simple way, you can start doing it in a notebook, or using calculation programs, and as you go deeper and know more about the subject, migrate to more complex methods.
Think that it will be of great help to you to explain the real situation of your project. The more worked out the numbers are, the more chances of success you will have.
What is a sales forecast or projection for?
To establish those decisions that you will make in the future and provide them with tangible support.
Note that a well-developed sales forecast will give you invaluable information about how much you can invest, when and where. For sales projections, time is essential, since you must plan your actions in a certain period.
Thanks to an effective sales forecast, you will be able to provide your team or sales force with a pattern of behavior, since sales projections even allow you to outline the way in which customers spend their money. Useful, don’t you think?
To have a correct sales forecast it is essential that you know your operations well, your , your purchasing processes and even current market trends.
You must bear in mind that a sales projection carried out effectively and with realistic data can help you improve your business organization, and one that is planned in the wrong way can lead you to make mistakes that cause you to lose a lot of money.
It is also important to identify the needs of your customers: a will allow you to define the purchasing profile of your leads based on a .
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Sales projection methods
There are different methods to make a forecast or projection of sales effects, we are going to review some of the best known:
1. Projection with analysis of a result already occurred
This method basically consists of analyzing past income and sales amounts to replicate the result in the present.
If you maintain the same investments, structure and conditions in general, you will achieve a turnover similar to that of your initial example.
Despite being a simple formula, you should not forget factors such as new competitors in the market or that the business may be affected by any eventuality or external changes.
2. Projection based on the company’s actions in the future
This method is based on stipulating the actions that a company could take to take advantage of sales in a satisfactory manner.
Read on to learn about its features:
- It is the appropriate method to promote both products and services of a company.
- Calculate the number of customers the company is targeting, according to a given strategy.
- It is very useful to replicate strategies that have been successful.
3. Market-based projection
To implement a sales projection based on the market, you have to study well how consumers react and how saturated or not the market is for said service or product.
This estimate allows you to map those ventures that offer the same service among their potential consumers, so that you will know if a positive return is possible.
4. Projection by the balance point
It is that moment in which a company neither wins nor loses. Thanks to this tool it is possible to plan profits in relation to the equity between investment and sale.
The sales forecast based on the break-even point allows us to establish a starting point from which our business becomes profitable.
Step by step to make a sales forecast
As has already been observed, there are different methods to make an effective sales forecast, but each of them needs a step-by-step to be successful, below, we will present a simple step-by-step so that you can make a sales forecast .
1. How to make a sales forecast with analysis of a result that has already occurred
- Identify a past sales result that you want to duplicate.
- Analyze the tools that were used.
- Make sure you are in a similar time of consumption.
- Rebuild a strategy based on this data and implement it.
2. Step by step to make a sales forecast based on company actions
- Determine the number of customers you intend to reach.
- Keep a detailed record of all products and services offered.
- Make a feedback of the most productive strategies used previously.
- Select the strategy that best suits the products and the current state of the market.
3. Step by step to make a sales forecast based on the market
- Perform a market analysis.
- Map potential competitors.
- Analyze in depth all the corresponding costs.
- Evaluate if it is feasible to open that type of business.
4. Step by step to make a sales forecast based on the Break-Even Point
- Make a list of products or services
- Approximate the selling price of the product
- Make the sales projection
- List fixed or direct costs
- This is how the equilibrium point is reached.
- A strategic sales projection is obtained.
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What mistakes should you not make in a sales projection?
Set unrealistic goals
It is true that to start a business you have to be a dreamer, but unfortunately that is not always the best quality in the business world. You It should be as realistic as possible.
An unrealistic sales forecast can make you make mistakes that can jeopardize your company, making wrong decisions like investing in a time of recession or opening another business when the current one is not working well.
Choosing hard-to-use tools
A sales forecast that no one can access due to its difficulty is of no use: you must use easy to understand, or at least one that your sales force is minimally trained on.
use incorrect references
If your company is recent and you still don’t have all your processes clear, you can use the guide of a company with a certain age, but don’t make the mistake of using an example totally different from yours, look for a similar to your focus of action.
Your references have to be similar so that you can assimilate useful data.
Use simple processes
Let’s listen to popular wisdom and rescue the phrase “less is more”: using too many processes could be counterproductive for your business.
A sales projection with many variables would only cause confusion, since a simple sales forecast allows those who have access to it to understand it and make decisions quickly and effectively.
Sales forecasts will guide your business strategy
Calculating a sales forecast is an essential activity to be able to make decisions, since it will allow them to have a basis and be successful. Each action within an enterprise needs an exhaustive investigation.
The sales projections will allow you to even decide if you can treat yourself or if in a few months you will find yourself in a recession and you will have to reduce your expenses.
A sales projection will help you repeat a successful formula, exceed your expectations, and even expand your business.
And if you want to improve the effectiveness of your project management, at we invite you to read the following article, where you will find valuable advice on .
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