Forecasting involves making predictions of the future. In a business sense, forecasting usually involves estimating the expected sales of your product. Combining the sales quantity with selling price provides you with an estimate of future revenue. The revenue forecast is the critical element for making budget projections like cash flow budgets and pro forma financial statements of profitability. So the accuracy of your sales forecast is important for the financial management of your business.
Due to the uncertainty involved in sales forecasting, you may want to create several forecasts based on best-case, worst-case and expected-case scenarios. This type of analysis can also provide you with a glimpse of the risk exposure of your business.
For more information on this topic, see the links listed below of articles posted on related Web sites.
- Estimating Retail Market Potential – University of Maine Extension -- When projecting a market’s potential for your product, there is no single method for success.
- Making a Market Forecast Estimate – Mplans.com -- Get comfortable with the idea of making good educated guesses—forecasts are based on past results.
- Forecasting: Why Bad Things Happen to Good People – SalesVantage.com -- Design a sales process that mirrors your prospect’s buying cycle.
- Sharpen Your Competitive Advantage using Techniques that Makes you a Forecasting Savant – SalesVantage.com -- When it comes to sales, who is really responsible for the accuracy of the forecast?
- The Key to Accurate Sales Forecasting – SalesVantage.com -- Moving from opinion-based forecasting to fact-based forecasting.
- What Makes Markets Difficult to Forecast? – SalesVantage.com -- Virtually every manufacturing or service company needs to generate forecasts of their short to medium term sales. Yet within real world markets, many factors conspire to make accurate forecasting difficult to achieve.
- Choosing the Right System – SalesVantage.com -- You need a good system, forecasters who really understand their markets, and above all, the strongly held determination to put it into practice.
- Choosing the Right Forecasting Methodology – SalesVantage.com -- Although there is never the same thing twice, developing and using an understanding of how sales respond to different types and combinations of events is the most effective way of generating a forecast.
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