The Factors Affecting Sales Forecasts

Sales forecast

Estimated reading time: 3 minutes

It is only normal that the amount of sales that a company makes varies from year to year. Some years it will be so minor that you will barely even notice the change, whereas other years it can be significantly more or less, impacting on a company’s operations or production. Along with fluctuations in sales, come changes to the amount of revenue that a company is bringing in.

While right now, given the worldwide coronavirus pandemic and the many restrictions that still remain in place in various different countries throughout the globe, it may not seem like the easiest thing to do a sales forecast, it is still possible to do one. The reason why any company would still want to do one given the current climate is that doing so provides benefits that impact all areas of a company.

A sales forecast is not merely a random shot into the dark that does not incorporate very many if any, facts or documented growth/sales activity; it is something of a science and is important that each and every company should be doing.

The Importance

By producing a sales forecast, it allows a company to prepare for the future. In addition to this, it also allows them to be able to spot and identify sales trends, thus showing any deficits that may appear. For those companies that are young or have just started up, a sales forecast is an important tool. However, because they do not have a substantial amount of historical data, they are very difficult to put together for companies that have just started out. The longer a company has been operating, the more data they have to use for the purpose of doing a sales forecast.

Contributory Factors

Some of the main things that impact upon a company’s sales forecast and so wider production and operations include the following:

  • Levels of customer satisfaction
  • Wider economic conditions
  • Marketing budget
  • Wider political conditions
  • Global weather conditions
  • Budget allocation

Each and every one of these different factors must be taken into consideration during the sales forecasting process in order to ensure that it is accurate. Understanding these factors is also important for noticing how and why shortcomings of a forecast occur.

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There is a wide range of external factors that have the potential to impact the accuracy of a sales forecast. These may include but are not limited to business growth, new competitors, changes to regulations, accounting changes, and seasonal fluctuations.

If all of the above factors are taken into account, then when a company is putting together a sales forecast, it will be as accurate as possible and have some real benefit. For those companies that are just starting out on their journey and have never done one before, they can find out more information about how to do a sales forecast here. Although it can take some time to do one, it is clear that an accurate sales forecast is something that is vitally important.