A key part of planning for your business’s future is creating a sales forecast, which is a projection of future sales. By having an estimate of your business’s future revenue, you can put together a more accurate budget, helping you make informed financial decisions. While creating a sales forecast takes some work, you can get the most out of it by following a few tips.
Using the Right Tools
The best way to make an accurate sales forecast is by using your previous sales data. With a cloud-based point-of-sale (POS) system, you can easily pull up sales data from months and years past, so you may want to switch to that type of system if you haven’t already. Pull up your year-to-date sales data and compare it to your sales data from the same time frame the previous year to see whether sales are trending up or down. Make sure to consider if there are any outside factors that could be causing a difference in sales, as you don’t want to make an inaccurate forecast based on a random event.
Forecasting with Historical Sales Data
Once you’ve figured out how your sales are trending for the year, you can apply that to the rest of the previous year’s data to create your sales forecast. If you find that your year-to-date sales are 10% higher than they were at the same time last year, you can forecast future sales at 10% more than last year’s numbers. Keep in mind that the more you check and adjust your sales forecast, the more accurate it’s going to be. Look at your sales forecast monthly or quarterly to see how accurate it is and make changes as needed.
Checking Out Individual Item Sales
After you’ve made your sales forecast, take a look at what items sold the most last year and see if the same is holding true for this year. Do the same with items that didn’t sell last year. This information helps you determine how much inventory you need for specific items. You can save money on inventory costs by lowering order quantities for items that are under performing and ordering more of your top sellers to take advantage of any supplier discounts for buying in bulk. Having enough of your top sellers available ensures that you don’t run out of a popular item and miss out on sale opportunities.
Setting Sales Goals
Now it’s time to put your forecasting information to use to improve your business. Think about realistic sales goals that you can work towards and how you can reach them. Maybe you need to offer more upsells, downsells, and cross sells to introduce customers to more of your products. You could incorporate new marketing tactics to reach different audiences and increase traffic. Even if business is booming, keep looking for ways to improve. Your sales forecast is a useful tool for your retail business, and every time you make one, it gets a bit easier. Use the information from your forecast to make your budget, estimate how much inventory you need, and set goals for the future.