Monday, 13 June 2016 10:41

Taking the time to develop a sales plan and forecast sales targets for your business is a great way to set goals for you and your staff.

But estimating the sales your business will generate over the forecast period can be difficult. If you’re starting a new business, base your estimates on market research and industry benchmarks. For an established business, take into account previous sales data over a similar time period. You’ll also need to consider the current market and any other economic conditions that may impact your business.

Regularly review actual sales figures against your forecast, revising your forecast accordingly if the results differ from what you expected. Being able to identify the reason for the difference may help you address a problem before it becomes a major issue.

There are two methods of forecasting sales; unit sales and margin sales.

Unit sales forecast = number of units sold x price per unit.

If your business has many products or services it may be useful to group them into categories and forecast sales for each group.

Margin sales forecast = (total cost of stock x mark up) + total cost of stock/100

This method is only suitable for businesses that use the same mark-up percentage on every product or service. If you apply different mark-ups then consider arranging them in groups according to the mark-up applied.

Download the Small Business Development Corporation's handy Sales Forecast caculator here.

Source: www.smallbusiness.wa.gov.au, June 2016

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