Plan and forecast sales

Sales forecast assumptions

Guide

Every year is different, so you need to consider any changing circumstances that could significantly affect your sales. These factors - known as the sales forecast assumptions - form the basis of your forecast.

Wherever possible, put a figure against the change - as shown in the examples below. You can then get a feel for the impact it will have on your business. Also, give the reasoning behind each figure, so that other people can comment on whether it's realistic.

Here are some typical examples of assumptions:

The market:

  • The market you sell into will grow by 2 per cent.
  • Your market share will shrink by 2 per cent, due to the success of a competitor.

Your resources:

  • You will double your sales force from three people to six people, halfway through the year.
  • You will spend 50 per cent less on advertising, which will reduce the number of enquiries from potential customers.

Overcoming barriers to sale:

  • You are moving to a better location, which will lead to 30 per cent more customers buying next year.
  • You are raising prices by 10 per cent, which will reduce the volume of products sold by 5 per cent but result in a 4.5 per cent increase in overall revenue.

Your products:

  • You are launching a range of new products. Sales will be small this year and costs will outweigh profits, but in future years you will reap the benefits.
  • You have new products that have the potential to increase sales rapidly.
  • You have established products that enjoy steady sales but have little growth potential.
  • You have products that face declining sales, perhaps because of a competitor's superior product.

For new businesses, the assumptions need to be based on market research and good judgement.