There are many different types of sales projection methods. Some sales projection methods are more effective than others; however, they all have the same goal. Accurately projecting sales and revenue is a very important goal for any business, and it can help a business to determine their overall growth in the short term and in the long term. By utilizing the most effective sales projection methods, a business can generate the most accurate projections.
Annual Sales Forecasting
An exceptionally effective strategy is an annual sales projection. An annual sales projection allows a business to forecast sales and revenue for the entire year, as the business simultaneously forecasts sales and revenue for each individual month in that 12 month period. By utilizing the data of the previous 12 months, a business can determine a number of factors. These factors include overall revenue, annual return rates, annual sales numbers for each product or service that the business offers and external factors that could have an effect on sales. While having a general idea of the projected sales for the next 12 months is important, it is imperative to note that a business can use these projections as a goal to exceed throughout the year.
Calculating Returns And Cancellations
An important factor to consider when forecasting sales is the percent of returns and cancellations that a business receives. Measuring the percentage of lost sales due to returns and cancellations from the previous year is usually an effective method of accurately forecasting this variable for the next 12 months. A company should factor that information into their sales forecast in order to get an accurate idea of the number of sales that will be returned or cancelled.
Forecasting New Products Or Services
When forecasting sales for the next year, one important factor to consider is the amount of new products and services that a business is offering. By accurately gauging the demand for these products and services, as well as how effective the marketing techniques to promote them may be, a company can predict the amount of new revenue they will generate from the new products and services.
Considering the Macro-Environment
There are several factors that a business should always include in its sales projections. The economy, price changes and inflation will have an effect on the sales and revenue of any business and, the larger the business is, the more of an effect these types of factors will have.
A business can utilize economic forecasters and inflation experts to estimate the state of the economy over the next 12 months. An inflation expert can help to determine the amount of inflation that may occur during the next year, and an inflation expert will also help to determine how it may affect the sales of a certain business.
There are many steps to take in order to accurately and effectively project future sales. Some of these include putting together a full annual sales forecast, factoring in the percentage of returns and cancellations, considering new products and services and considering economic factors, such as the overall state of the economy, price changes and inflation.