The success of your business depends on the execution of a viable strategy and knowing the direction you are headed in as you grow. There are multiple aspects of a growing business that need attention and focus—but in order for you to boost your revenue, reduce expenditures, and thrive in the long term—it is crucial to be able to forecast your sales. As its name implies, sales forecasting is a powerful tactic that allows you to comprehend your business outlook in the future for sales and revenue.
But what exactly does that look like for your business? In this post, we're going to:
- Clarify the definition and benefits of sales forecasting.
- Discuss guidelines and best practices for creating a sales forecast for your business.
- Provide nine different sales forecast templates you can model after to help you ensure sustained growth.
So let's dive into all things sales forecasting and see how you can leverage it for the long-term success of your business.
What is a sales forecast?
A sales forecast is a key component in your management framework that allows you to determine your estimated sales value (new customers, revenue, etc.) for a given period. It is generated by analyzing your previous sales data, similar products sold by your competitors, and the market reaction to your products or services.
As you refine your ability to forecast your sales, you'll find that while your competition may be guessing where they see themselves in the next 6-12 months, you'll know for a fact that your revenue and profitability will be in good standing. This means that you can forecast spending on recruiting, advertising, and more. The next section covers more benefits of sales forecasting.
The benefits of sales forecasting
Essentially, a sales forecast is an anticipated measure of a market's response to a business' efforts. It lets you gauge and enhances your vital business initiatives in the following ways:
- Get more accurate cash flow projections and estimations of the expenses.
- Find the best venues to invest your marketing dollars.
- Turn prospective customers into recurring customers
- Facilitate product enhancement to better live up to the expectations of your customers
- Carry out better inventory management control
It isn't easy to overstate the importance of an accurate sales forecast for a company as it can add great value to the departments across an organization.
For example, finance relies on sales forecasts to allocate budgets for hiring and capacity plans. Production exploits sales forecasts to plan the product life cycle. These are just some of the examples of how sales forecasting can help companies with different operations.
As a business owner, it is imperative for you to understand the value of a sales forecast and how it impacts various aspects of your business operations.
Guidelines for creating a sales forecast
Suppose you're a small business owner or manager. In that case, you probably know that cash flows are critical to creating a sales forecast. By creating and using a sales forecast consistently, you can be capital-efficient. It can also help you drive the best ROI for your marketing and sales budget.
Furthermore, you can also leverage marketing tools and channels that can help you generate a predictable ROI, such as email marketing.
Email in particular remains one of the most impressive marketing tools at your disposal, and many studies have shown that utilizing email services such as Active or MailChimp can be significantly more effective than using major social media outlets like Facebook, Twitter, and LinkedIn together.
Sales forecasting also prepares you to recruit new hires and expand the team further. But before you head on to create one, here are some of the prerequisites you need to take care of first:
1. Solidify your sales process
First and foremost, it is imperative to have a proper projection process ready to find growing and converting sales from customers. That way, you can be on the path to accurately predict future revenue and sales. Incorporate an inbound marketing approach to create a more scalable and predictable process.
2. Leverage the right tools
One of the other factors to consider is to use the right tools. Invest in a CRM solution. It immensely helps you with acquiring the sales and marketing data you need, easily and quickly. By deploying the right CRM tools, you have the ability to monitor new sales historically, classify the lost sales with a reason, and better evaluate your leads per month.
With a holistic view of your marketing and sales funnel, you can better predict your success and decide optimal resource allocation.
3. Align with your sales team
In order to create a sales forecast, it is crucial to keep your sales team updated and accountable throughout the process since they are liable for achieving the upcoming sales numbers.
Let your team take ownership and gather feedback on a regular basis to remain informed about the progress of the sales forecast. Hold them accountable, if needed. After all, they are most familiar and closest to your prospects and your company's sales performance.
4. Measure and adjust
Once you have successfully created your sales forecast, don't just leave it as is. Access and evaluate your monthly sales reports against the actual performance of your sales forecasts.
Determine the approaches that worked well for the business. Understand if any adjustments are needed to manage the operations better to accelerate sales growth and drive higher ROI.
Serial entrepreneur Neal Taparia, who now runs classic games and brain training platform Solitaired, recommends looking at your forecast regularly.
He explains, “We break down our sales forecast into a daily model. Every day we understand if we’re meeting our plan or not, and then we drill into why by looking at the drivers of the forecast. Doing this not only holds us accountable to meeting our goals, but it helps unearths insights that have doubled our revenue, or it can help you get back on track to meet your goals.”
The 9 best sales forecast templates for local businesses
Sales forecasting is a crucial component in the sales management process. It is a key indicator of your business performance and expected revenue over a particular time frame. Projecting sales also allows you to strategize your approach accordingly for lead generation and sales acceleration.
The gathered insights can help you make informed and data-driven decisions, propelling business growth.
A sales forecast template can help you project your sales. It is a customizable outline that lets you anticipate potential sales for your business. To help you expedite your sales forecasting process, we've compiled this list of some of the best templates that can help you forecast your sales easily.
1. Three-year sales forecast from Vertex42
This three-year sales forecast template by Vertex42 is great for projecting long term sales figures. It's a useful option for local businesses or startups seeking financial support as banks and investors want to know about your sales plan that will help your business generate revenue in the long term. You can easily plug in your sales-related information. The formulas can compute your sales forecast and make corresponding graphs.
2. Budget sales forecast template from Template Archive
This is Template Archive's quarterly budget template that is an excellent choice for local businesses who want to overview their estimated sales and budget. It allows you to visualize the data from quarter to quarter, particularly about how your sales revenue will cover your expenses.
3. 12-month sales forecast template from Smartsheet
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The above template for sales forecasting is a 12-month template. It is a decent choice for businesses to project their future sales as it shows a monthly analysis of forecasted sales. This sales forecast template works best for product-oriented local businesses, letting them do a monthly sales breakdown by product. What you need to do is punch in your monthly sales and product data.
4. Deal-based sales forecast template from HubSpot
The above template is for a deal-based sales forecast that is for every quarter. This template by HubSpot focuses on sales transactions. The sales are divided by opportunity, company, sales rep, dollar amount, and the possibility to close.
This template is ideal for sales executives looking to do forecasting constructed on how the sales deals progress within their sales pipeline and enable you to master sales operations. It also serves as an effective coaching tool for local businesses that helps you manage your team and sales opportunity wise.
5. Multiproduct sales forecast template from Close
This is a 12-month multiproduct sales template that is great for local businesses with different product lines as it breaks down the sales forecast by product. For instance, if you have multiple other laptop models that your company deals in, you can make projections for each of those models via this template.
The only thing you need to input is the estimated sales data in the respective product area. It's a go-to template for businesses having a diversified product line. It also helps you make good decisions for each product, ultimately leading to improved customer relationships.
This, in turn, helps you maintain a full pipeline, allowing you to foster customer relationships with integrity.
6. B2B lead-driven sales forecast template from Close
This B2B lead-driven template for sales forecasting is on a quarterly time frame. It focuses on your leads, their sales stage, and the probability of closing. It is a useful template if you want to forecast your sales quarterly and let your prospect's sales cycle drive your forecasts.
It is also a good means for gauging your B2B sales. All you need to do is plug in your prospect data and their respective stage in the lead process.
7. Retail sales forecast template from Plan Projections
This template is best for retail businesses. It is an annual template for sales forecasting that uses retail-centered metrics such as daily sales in addition to foot traffic. It's excellent for brick-and-mortar businesses on the retail side, but it can be tailored to assist online retailers using ecommerce platforms. To use it, input key data such as the percentage of visitors who make purchases, foot traffic, and their spending on your store.
8. Monthly sales forecast template with Graph from Office Templates
The above template lets you build a monthly sales forecast. It is a good one for small businesses who want to stay focused on their month-to-month sales forecast without data interruptions from different time frames. You have to fill in the monthly estimates and starting date. Ideal for business focused on monthly sales forecasts facilitated with graphical illustrations.
9. New product sales forecast template from Office Templates
This sales template is for businesses, particularly launching a new product to show the annual projected sales for five years. It is an effective template if you want to introduce new products with yearly projections of income and revenue. Add your company-specific sales projections for a new product.
Best practices when creating a sales forecast
One of the most crucial points to remember when creating sales forecasts: it doesn't have to be an ideal one to be useful. Your sales forecast can vary slightly from your outcomes.
Of course, inaccurate results can be alarming. But if you are using clean data and have the right approach, your sales forecast can help you plan and drive the growth.
But for that, you need to implement some of the best practices that can help you get accurate results when creating a sales forecast.
Map your sales pipeline and process
A well-defined sales method, coupled with effective management, goes a long way. Plan your sales process and define the sales pipeline stages concerning your prospect's behavior with specific benchmarks. A well-crafted sales process ensures consistency, clarifies opportunities, reinforces accountability, and ultimately, helps you create a sales forecast with precision.
Separate different lines of sale
Divide the services or products you sell into discrete groups, such as “bicycle accessories and parts” and “bicycles.” Do the same with the services you offer, which can be split up into subscriptions, hours, and so on. For the sake of clarity, use similar units while creating your sales forecast.
Leverage the historical data
One of the easiest ways to forecast sales is to draw on past data and patterns. You can better project the deals if you make use of your past performance. With it, you can set a baseline that allows you to analyze the data effectively as you can account for non-cyclical and seasonal fluctuations.
Do your math and crunch the numbers!
It is vital to do your math and get the projected prices, average unit costs, and the unit sale estimates. The unit sale projections multiplied by the projected expenditures are equal to your sales. Repeat the same calculation for the average unit cost and unit sale projections. That is your sales cost. Subtract the expenses from your sales. The results will give you an overview of your income and loss statement.
Leverage the power of the sales forecast for sustained success
The bottom line is the sales forecast is one of the powerful tools for businesses, be it local or any other type. And they are relatively easier to create when you can start with an appropriate sales forecast template.
Sales and marketing are closely intertwined, and projecting future sales can help you map the complete sales funnel roadmap in an impactful way.
Sales forecasting and budgeting don't have to be a daunting task for you. Solidify your sales and marketing process, deploying the right tools, and take on a proactive approach to model your sales projections. With a well-crafted sales forecasting tactic, you can carve your path for a better future.
However, it is imperative to consider and review the possibilities to find the best one that fits your business requirements to create sales forecasts with precision.
About the author
Will Cannon is the founder of UpLead and Signaturely and a successful entrepreneur. He highlights the importance of sales forecasting, lead generation, customer profiling, and email marketing to maximize ROI for businesses of all sizes. As a sales expert, he believes that these areas are fundamental for generating positive business revenue with consistency.
