How to Calculate Sales Forecasting

Most of the time when you calculate a sales forecast, the results will differ from your actual sales.

Sales forecasting depends heavily on estimates. Using evidence, such as past results, expectations and other sales, you can form a basis for your evidence. When doing a sales forecast, it is usually best to err on the side of caution. Forecasting higher than you are capable of throws off your forecast and can be discouraging when you do not meet your expectations. Sales forecasting can be very liquid, so you can change forecasts if results start to differ from your initial expectations.

Instructions

1. Analyze your past sales results. Look for different trends in sales; for example, sales are higher in January than June. Compile as much data as possible from your business and any outside businesses as possible. The more information you gather, the better you can make an estimate.

2. Estimate how sales will change from this period compared to another period. For example, a small business analyzes their sales trends and then estimates that next year sales will increase 10 percent.

3. Apply you estimate to your previous data in order to complete the forecast. In the example, the previous year, the company had $500,000, so $500,000 times 1.10 equals $550,000. To account for the overall value you need to add 100 percent the value and the 0.10 addition is 10 percent in decimal form. Therefore, based on the sales trends the company forecasts $550,000 in sales next year. The company then uses this number throughout the year to see how accurate the number is. If the company is below or above their pace, then they can adjust their forecast accordingly.

References

• Entrepreneur: Creating a Sales Forecast
• Investopedia: Forecasting