Sales Forecast Spreadsheet Template - Free Download
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Forecasting"Sales"
Forecasting"future"events"is"almost"always"challenging."Trying"to"predict"customer"behavior"for"a"specific"
time"in"the"future"in"a n"alw ay s"cha ng ing,"dyn amic"environme nt"like"the "m arke tplac e"is"even "m ore "
difficult."Nonetheless"having"the"insight"and"advantage"to"be"able"to"anticipate"possible"actions"which"
forecasting"cu sto m er"b eh avio r"pro vide s"is"m o re"tha n"o ffset"b y"the "difficu lties"an d"p ote ntia l"inacc ura cies "
inheren t"in "sa le s"f or ec as tin g ."
In"orde r"to "obtain"th e"most"accurate"forecast"of"future"sales"a"projection"process"or"model"is"used."The"
advantage"of"using"a"model"is"both"the"increased"accuracy"which"is"built"into"the"model’s"methodology"
(the"approac h"a nd "the"co m p o ne nts"w h ich"a re"co ns idere d"in "the"m o d el)"as"w ell"as"its"du p lica b ility :"b y"
using"the"same"model"with"frequently"updated"information"trends"can"be"identified"which"provide"a"rich"
source"of"learning,"enabling"us"to"be"better"forecasters"based"on"the"analysis"of"past"results."
Complex"sales"predictor"models"that"employ"many"fa ctors "kno w n"to"im p act"cu stomer"behavior"an d"
therefore"sales"resp o nse "use "com p ute r"origina ted "calcu lation s"to"w eigh "the"re lative"importance"of"each"
input"fac to r"t og e th e r"w it h "its"in f lue n c e"o n "cu s to mer"beha vio r."A mong"m an y "o f"th o se "fa c to rs,"m arket"
stimulants"like"advertising"and"promotion"or"comp etitive"factors"such"as"the"degree"of"competitive"
rivalry"and"relative"sh are"o f"m arke t"or"ou r"ow n "pro du ct’s"con ce ptu al"stren gth ,"differe ntiatio n,"be ne fit"
performance"and"relative"pricing"will"also"govern"the"model’s"sales"prediction"outcomes."
For"this"business"plan"sales"forecasting"exercise,"we’ll"use"two"relatively"simple"models,"employing"
bottom-up"and"top-down"approaches"which"are"so"named"to"reflect"preparation"orientation."By"using"
two"divergent"approaches"the"accuracy"of"the"forecast"is"enhanced."The"bottom-up"approach"is"used"to"
forecast"the"first"yea r’s"sales "(Yea r"1);"the"top-down"approach"is"used"to"first"forecast"third"year’s"sales"
(Year"3)."For"the"missing"yea rs"in"eithe r"ap pro ach "we’ll"apply"a"methodology"which"is"referenced"later"in"
this"note."
Bottom-Up"Approach"to"Forecasting"Year"1"Sales""
The"bottom-up"approach"leverages"the"fact"that"we’re"more"likely"to"be"able"to"forecast"the"company’s"
expenses"more"accurately"than"forecasting"sales."This"is"because"virtually"all"of"the"company’s"expenses"
are"either"known"or"easily"researchable."Below"is"a"list"of"prospective"expenses"with"average"expense"
amounts."More"accurate"estimates"of"individual"business"expense"amounts"can"be"researched"online,"or"
by"telephoning"expert"providers"for"each"of"the"expenses"areas"or"by"visiting"the"free"business"expen se"
estimator"website,"http://www.bizstats.com/"and"inputting"specifics"for"your"industry/business."
Once"total"expenses"are "d e te rmined,"sim p ly"s e t"yo u r"s a les "fo re ca st "e qu a l"to "t he "to t al"a mount"of"y o u r"
expenses"to"arrive"at"a"profit"neutral,"or"break"even,"forecast."This"is"an"important"calculation"so"that"
you"know"and"can"evaluate"the"likelihood"of"reaching"this"break"even"(no"profit,"no"loss)"financial"
position"because"you"will"not"want"to"operate"at"anything"less"than"this"financial"performance"level"for"
very"long."However,"it"is"likely"that"your"company’s"first"year"will"be"at"or"below"this"break-even"level."
source: entr.ku.edu
