The sales forecast forms the basis for a number of business decisions and is a key driver for growth. So it’s important to invest time, energy, and money into making sure you’re regularly producing accurate sales forecasts. But while many companies understand the value in sales forecasting, few know how to arrive at accurate numbers and do so efficiently.
Rest assured, though, that it is possible. Whether you’re using Excel or a more advanced sales forecasting software solution (which is what we recommend), there are 3 key things that every sales forecast template should have. These are:
1. Accurate and complete sales data
While this may seem obvious, many companies find this easier said than done. Most of the time, you’re exporting this information from a CRM system, which serves as a repository for all the data accumulated throughout the sales process.
But it is usually the responsibility of each of your sales representatives to populate that system with customer and sales data, so human error can play a large role in whether you have all the information you should when it comes time to forecast future sales. Make sure everyone on your sales team is trained on how to properly use the CRM and make verifying data a part of their everyday routine.
2. A specific timeframe (and defined goals)
To derive value from a sales forecast, you need to clearly define your timeframe — and, therefore, your business goals. Why do you want to produce a sales forecast?
Perhaps you want to explore the possibility of launching your product in a new market. In that case, you’ll probably want to produce a longer-term sales forecast (annually, over 3 years, etc.). Or perhaps your marketing team is running a promotion that will affect demand in an existing market in the short term.
Gather the data you want to focus on. That is, a yearly time frame means focusing on annual sales figures, a monthly time frame means using monthly sales figures, and so on.
3. A margin of error
Since all sales forecasts are predictions, the likelihood of predicting the future with 100% accuracy is slim to none. Therefore, it’s important that all sales forecasting templates produce a range of values: the actual forecast (your prediction for what will likely happen) as well as a margin of error.
This margin is crucial. It will make sure you’re prepared for anything. If you sell less than you predicted, you’ll be in a better position to handle excess inventory. And if you sell more (a good problem to have), you’ll be more likely to meet the higher-than-expected demand for your product with no hiccups.
Regardless of whether you use Excel or another software program to create your sales forecasting template, all forecasts should include these three key things. However, also keep in mind that there are limitations to forecasting with historical data.
Our Atlas Planning Suite can perform sophisticated calculations with historical data, but also offers advanced, predictive features that help businesses incorporate real-time data into their sales forecasts.