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3 Popular Sales Forecast Examples For Small Businesses

• October 9, 2022
• Small Businesses

When creating financial forecasts for their business, entrepreneurs often face difficulties. Yet, there are 3 popular sales forecast examples you can use when creating yours. They work for the most popular revenue models , from restaurants, to retail shops, to software companies and other online businesses.

If you aren’t sure what are sales forecasts, read our article and follow these 5 simple steps to create accurate sales forecasts for your business. Looking for examples instead? In this article we explain what are the most popular 3 sales forecast examples for (almost) any type of business. Let’s dive in.

What is a sales forecast?

A sales forecast is the financial projection of a business’ sales (or revenues, turnover) over a given period. Therefore, sales forecasts are a must have of any financial forecast: by projecting sales and expenses we can then prepare the  4 financial statements  which constitute a financial forecast.

Often, sales forecasts are included within a business plan as part of your projected financial statements. Indeed, investors will want to see your business’ financial projections over a given period. Sales forecasts often are  3 or 5-years projections .

For more information on sales forecasts for small businesses and why they are important, read our article here .

Let’s now dive into the 3 most popular sales forecast examples which work for any type of business, from restaurants, to retail shops, to software companies and other online businesses.

Why are sales forecasts important?

Because sales forecasts are part of your financial forecasts, and ultimately your business plan, it is very important to get it right.

Sales forecasts help you set goals for your business

Sales forecasts aren’t simply a requirement for your business plan. Instead, they also help you set goals for your business. The sales you expect to generate as per your sales forecast should be used as a guidance for your budget and your business decisions later on.

You show you understand your business

Showing investors you’re not only a great entrepreneur but also a well-rounded and omniscient founder is very important to get the best deal. A great sales forecast will help understand how your business generates revenues, what are the different drivers affecting revenue and the potential risks involved.

Investors will give more credit to financial plans based on verified assumptions and reasonable targets. Calculate expected revenue using market size , market share and/or user adoption rates for instance. The more you justify your plan with verified assumptions, the more credible it will be.

You know how much you need to raise

Many entrepreneurs and founders do not really know exactly how much they need to raise.

Sales also drive expenses, so forecasting sales plays a pretty important role when assessing things such as your breakeven or the amount of money you need to raise . Miss the mark and you may be in trouble.

How much cash do you need to cover your losses over the next 12-18 months? The amount of money you need to raise is the result of your financial projections. This is very important to accurately estimate your revenues and expenses.

How to do a sales forecast?

Before we dive into the specifics of creating a rock-solid sales forecast for your small business, let’s first explain which approach you should follow.

Many entrepreneurs make the same mistake when forecasting their sales: they use a top-down approach. So what is bottom-up and top-down sales forecasting? Let’s use an example below.

• Top-down sales forecasting : we forecast sales using from the top down. For example, you make $500k in revenue per year and you forecast the next 3 years revenue by assuming you will capture 3% of your market size (assuming it is $100 million). By following this approach, your annual revenue is 3 years time is $3 million, a 6x increase from today.
• Bottom-up sales forecasting : we forecast sales using operational drivers (from the bottom up). For example, if your $500k sales are a function of your website traffic, we will forecast revenues based on this metric instead. Assuming website traffic increase by 50% each year (as you invest in paid and content), your revenue in 3 years time is $1.7 million, a 3x increase from today.

Bottom-up sales forecasting is the best approach for 2 main reasons:

• It allows us to relate revenues to another metric, helping us making sense of the projection. Does $3 million really make sense given this would mean multiplying website traffic by 6x over the next 3 years?
• Top-down approach requires us to make assumptions on the market size, which is often inaccurate for lack of publicly available data. Instead, bottom-up uses your own business’ historical data

Sales forecasts: 3 popular examples

1. location-based businesses.

If you are running a businesses with a physical location, such as a hotel, a restaurant, a repair shop or a retail store for example, forecasting sales boils down to forecasting street traffic.

Indeed, sales (revenues) are a function of the sales volume you generate (the number of “units” or products you sell). The sales volume itself is a function of the number of people who enter your store, and, by extrapolation, the number of people who pass by your store.

When forecasting sales for a new business, you should look at the location where your business will be based first. Assess the approximate number of people who are passing by.

Note: when assessing traffic, be careful to exclude any external factors (e.g. Christmas day), cyclicality and seasonality. Ideally, your assessment should look at a full week and all work hours in the day.

Once we have established the approximate number of people who pass by the street in a day, we will need to apply conversion rates, in order:

• How many people enter the store?
• Out of the people who enter the store, how many make a purchase?

Of course, if you already have some historical data (if you already run a store and are opening a new one), use your existing conversion rates. Else, make assumptions.

When making assumptions, you should use the data you have collected when making your own observations earlier. Use similar stores to yours, in a different street for example.

For example:

• 5% of people passing by your store enter
• 10% of people entering the store make a purchase

We can now create a simple sales forecast over a week, adding up the average traffic over a typical week:

2. Online businesses

Online businesses often acquire their customers via their website, or any type of online presence.

As such, unlike location-based businesses, sales (revenues) are a function of visitors (and not street traffic). The visitors can be visitors on a website, on a Appstore page (mobile apps) or any type of online lead acquisition page.

We often refer this type of acquisition as inbound acquisition . The traffic is two fold: paid and organic:

• Paid traffic : all visitors coming from paid marketing channels (Google Search, Facebook Ads, etc.). You are either paying for clicks, or impressions. 
• Organic traffic : all visitors landing on your landing page(s) organically (either via a referral link, direct search, social media post, blog article, etc.)

Paid marketing is the easiest way to generate traffic. Yet, because you are paying for each paid visitor, you will need to monitor your  Return on Ad Spend (ROAS)  to make sure your paid marketing campaigns are profitable.

In comparison, whilst you do not directly pay for each organic visitor, organic traffic is not free. Organic traffic is earned from investment into  SEO  and content. Whilst investing into your SEO for instance does not pay immediately, the returns can far outweigh those of your paid marketing in the long run.

So, when forecasting sales for online businesses, we should make assumptions on traffic. For example assuming:

• 30,000 visitors last month: 20,000 paid and 10,000 organic
• 3% monthly increase
• 2% conversion rate
• $50 average purchase price

This is how could look like a simplified sales forecast example for an online business:

3. Lead-acquisition businesses

Lead-acquisition businesses are companies that make sales through their sales teams efforts. This is also known as outbound acquisition (vs. inbound discussed above).

With outbound acquisition, a business acquires customers through its sales team. Whether it is via phone, email, Linkedin or even in-person, the number of acquired customers is a function of the number of sales people.

Outbound acquisition is very common for business-to-business (B2B) companies. For example, Enterprise SaaS and B2B marketplaces use outbound acquisition to acquire their customers.

Outbound customer acquisition is therefore easier to forecast vs. inbound. The simple formula to estimate new customers over time is:

The number of closings per sales person is also referred to as the efficiency of your sales team = the number of customer one sales person acquire (or “close”) each month, in average.

For example, lets’ assume you have 20 sales people. Historically, your sales team has closed (“acquired”) in average 2 B2B clients per month per sales person. Assuming you have the same number of sales persons and the same sales efficiency in the future, we can reasonably expect 40 new customers per month.

Now, assuming 1 new hire every 2 months, a sales forecast example for a lead-acquisition business could look like this:

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Sales forecasting: How to create a sales forecast template (with examples)

A strong sales team is the key to success for most companies. They say a good salesperson can sell sand at the beach, but whether you’re selling products in the Caribbean or Antarctica, it all comes down to strategy. When you’re unsure if your current strategy is working, a sales forecast can help.

What is a sales forecast?

A sales forecast predicts future sales revenue using past business data. Your sales forecast can predict a number of different things, including the number of new sales for an existing product, the new customers you’ll gain, or the memberships you’ll sell in a given time period. These forecasts are then used during project planning to determine how much you should allocate towards new products and services. 

Why is sales forecasting important?

Sales forecasting helps you keep a finger on your business’s pulse. It sets the ground rules for a variety of business operations, including your sales strategy and project planning. Once you calculate your sales projections, you can use the results to assess your business health, predict cash flow, and adjust your plans accordingly.

An effective sales forecasting plan:

Predicts demand: When you have an idea of how many units you may sell, you can get a head start on production.

Helps you make smart investments: If you have future goals of expanding your business with new locations or products, knowing when you’ll have the income to do so is important. 

Contributes to goal setting: Your sales forecast can help you set goals outside of investments as well, like outshining competitors or hiring new team members.

Guides spending: Your sales forecast may be the wake-up call you need to set a budget and use cost control to reduce expenses.

Improves the sales process: You can change your current sales process based on the sales projections you’re unhappy with.

Highlights financial problems: Your sales forecast template will open your eyes to problem areas you may not have noticed otherwise. 

Helps with resource management: Do you have the resources you need to fill orders if it’s an accurate sales forecast? Your sales forecast can guide how you allocate and manage resources to hit targets.

When you have an accurate prediction of your future sales, you can use your projections to adjust your current sales process.

Sales forecasting methods

Sales forecasting is an important part of strategic business planning because it enables sales managers and teams to predict future sales and make informed decisions. But why are there multiple sales forecasting methods? Simply put, businesses vary in size, industry, and market dynamics, so no single methodology suits all.

Choosing the right sales forecasting method is more of an art than a science. It involves:

Analyzing your business size and industry

Assessing the available data and tools

Understanding your sales cycle's complexity

A few telltale signs that you've picked the correct approach include:

Improved accuracy in sales target predictions

Enhanced understanding of market trends

Better alignment with your business goals

Opportunity stage forecasting

Opportunity stage forecasting is a dynamic approach ideal for businesses using CRM systems like Salesforce. It assesses the likelihood of sales closing based on the stages of the sales pipeline. This method is particularly beneficial for sales organizations with a clearly defined sales process.

For example, a software company might use this method to forecast sales by examining the number of prospects in each stage of their funnel, from initial contact to final negotiation.

Pipeline forecasting method

The pipeline forecasting method is similar to opportunity stage forecasting but focuses more on the volume and quality of leads at each pipeline stage. It's particularly useful for businesses that rely heavily on sales forecasting tools and dashboards for decision-making.

A real estate agency could use it by examining the number of properties listed, the stage of negotiations, and the number of closings forecasted in the pipeline.

Length of sales cycle forecasting

Small businesses often prefer the length of sales cycle forecasting. It's straightforward and involves analyzing the duration of past sales cycles to predict future ones. This method is effective for businesses with consistent sales cycle lengths.

A furniture manufacturer, for instance, might use this method by analyzing the average time taken from initial customer contact to closing a sale in the past year.

Intuitive forecasting

Intuitive forecasting relies on the expertise and intuition of sales managers and their teams. It's less about spreadsheets and more about market research and understanding customer behavior. This method is often used with other, more data-driven approaches.

A boutique fashion store, for example, might use this method, relying on the owner's deep understanding of fashion trends and customer preferences.

Historical forecasting

Historical forecasting uses past performance data to predict future sales. This method is advantageous for businesses with ample historical sales data. It's less effective for new markets or rapidly changing industries.

An established book retailer could use historical data from previous years, considering seasonal trends and past marketing campaigns, to forecast next quarter's sales.

Multivariable analysis forecasting

Multivariable analysis forecasting is a more sophisticated method that's ideal for larger sales organizations. It analyzes factors like market trends, economic conditions, and marketing efforts to provide a holistic view of potential sales outcomes.

An automotive company, for example, could analyze factors like economic conditions, competitor activity, and past sales data to forecast future car sales.

How to calculate sales forecast

Sales forecasts determine how much you expect to do in sales for a given time frame. For example, let’s say you expect to sell 100 units in Q1 of fiscal year 2024. To calculate sales forecasts, you’ll use past data to predict future trends. 

When you’re first creating a forecast, it’s important to establish benchmarks that determine how much you normally sell of any given product to how many people. Compare historical sales data against sales quotas—i.e., how much you sold vs. how much you expected to sell. This type of analysis can help you set a baseline for what you expect to achieve every week, month, quarter, and so on.

For many companies, this means establishing a formula. The exact inputs will vary based on your products or services, but generally, you can use the following:

Sales forecast = Number of products you expect to sell x The value of each product

For example, if you sell SaaS products, your sales forecast might look something like this: 

SaaS FY24 Sales forecast = Number of expected subscribers x Subscription price

Ultimately, the sales forecasting process is a guess—but it’s an educated one. You’ll use the information you already have to create a data-driven forecasting model. How accurate your forecast is depends on your sales team. The sales team uses facts such as their prospects, current market conditions, and their sales pipeline. But they will also use their experience in the field to decide on final numbers for what they think will sell. Because of this, sales leaders are more likely to have better forecasting accuracy than new members of the sales team.

Sales forecast vs. sales goal

Your sales forecast is based on historical data and current market conditions. While you always hope your sales goals are attainable—and you can use data to estimate what your team is capable of—your goals might not line up directly with your forecast. This can be for a number of reasons, including wanting to create stretch goals that push your sales team beyond what they’ve done in the past or big, pie-in-the-sky goals that boost investor confidence.

How to create a sales forecast

There are different sales forecasting methods, and some are simpler than others. With the steps below, you’ll have a basic understanding of how to create a sales forecast template that you can customize to the method of your choice. 

1. Track your business data

Without details from your past sales, you won’t have anything to base your predictions on. If you don’t have past sales data, you can begin tracking sales now to create a sales forecast in the future. The data you’ll need to track includes:

Number of units sold per month

Revenue of each product by month

Number of units returned or canceled (so you can get an accurate sales calculation)

Other items you can track to make your predictions more accurate include:

Growth percentage

Number of sales representatives

Average sales cycle length

There are different ways to use these data points when forecasting sales. If you want to calculate your sales run rate, which is your projected revenue for the next year, use your revenue from the past month and multiply it by 12. Then, adjust this number based on other relevant data points, like seasonality.

Tip: The best way to track historical data is to use customer relationship management (CRM) software. When you have a CRM strategy in place, you can easily pull data into your sales forecast template and make quick projections.

2. Set your metrics

Before you perform the calculations in your sales forecast template, you need to decide what you’re measuring. The basic questions you should ask are:

What is the product or service you’re selling and forecasting for? Answering this question helps you decide what exactly you’re evaluating. For example, you can investigate future trends for a long-standing product to decide whether it’s worth continuing, or you can predict future sales for a new product. 

How far in the future do you want to make projections? You can decide to make projections for as little as six months or as much as five years in the future. The complexity of your sales forecast is up to you.

How much will you sell each product for, and how do you measure your products? Set your product’s metrics, whether they be units, hours, memberships, or something else. That way, you can calculate revenue on a price-per-unit basis.

How long is your sales cycle? Your sales cycle—also called a sales funnel—is how long it takes for you to make the average sale from beginning to end. Sales cycles are often monthly, quarterly, or yearly. Depending on the product you’re selling, your sales cycle may be unique. Steps in the sales cycle typically include:

Lead generation

Lead qualification

Initial contact

Making an offer

Negotiation

Closing the deal

Tip: You can still project customer growth versus revenue even if your company is in its early phases. If you don’t have enough historical data to use for your sales forecast template, you can use data from a company similar to yours in the market. 

3. Choose a forecasting method

While there are many forecasting methods to choose from, we’ll concentrate on two straightforward approaches to provide a clear understanding of how sales forecasting can be implemented efficiently. The top-down method starts with the total size of the market and works down, while the bottom-up method starts with your business and expands out.

Top-down method: To use the top-down method, start with the total size of the market—or total addressable market (TAM). Then, estimate how much of the market you think your business can capture. For example, if you’re in a large, oversaturated market, you may only capture 3% of the TAM. If the total addressable market is $1 billion, your projected annual sales would be $30 million. 

Bottom-up method: With the bottom-up method, you’ll estimate the total units your company will sell in a sales cycle, then multiply that number by your average cost per unit. You can expand out by adding other variables, like the number of sales reps, department expenses, or website views. The bottom-up forecasting method uses company data to project more specific results. 

You’ll need to choose one method to fill in your sales forecast template, but you can also try both methods to compare results.

Tip: The best forecasting method for you may depend on what type of business you’re running. If your company experiences little fluctuation in revenue, then the top-down forecasting method should work well. The top-down model can also work for new businesses that have little business data to work with. Bottom-up forecasting may be better for seasonal businesses or startups looking to make future budget and staffing decisions.

4. Calculate your sales forecast

You’ve already learned a basic way to calculate revenue using the top-down method. Below, you’ll see another way to estimate your projected sales revenue on an annual scale.

Divide your sales revenue for the year so far by the number of months so far to calculate your average monthly sales rate.

Multiply your average monthly sales rate by the number of months left in the year to calculate your projected sales revenue for the rest of the year.

Add your total sales revenue so far to your projected sales revenue for the rest of the year to calculate your annual sales forecast.

A more generalized way to estimate your future sales revenue for the year is to multiply your total sales revenue from the previous year.

Example: Let’s say your company sells a software application for $300 per unit and you sold 500 units from January to March. Your sales revenue so far is $150,000 ($300 per unit x 500 units sold). You’re three months into the calendar year, so your average monthly sales rate is $50,000 ($150,000 / 3 months). That means your projected sales revenue for the rest of the year is $450,000 ($50,000 x 9 months).

5. Adjust for external factors

A sales forecast predicts future revenue by making assumptions about your growth rate based on past success. But your past success is only one component of your growth rate. There are external factors outside of your control that can affect sales growth—and you should consider them if you want to make accurate projections. 

Some external factors you can adjust your calculations around include:

Inflation rate: Inflation is how much prices increase over a specific time period, and it usually fluctuates based on a country’s overall economic state. You can take your annual sales forecast and factor in inflation rate to ensure you’re not projecting a higher or lower number of sales than the economy will permit.

The competition: Is your market becoming more competitive as time goes on? For example, are you selling software during a tech boom? If so, assess whether your market share will shrink because of rising competition in the coming year(s).

Market changes: The market can shift as people change their behavior. Your audience may spend an average of six hours per day on their phones in one year. In the next year, mental health awareness may cause phone usage to drop. These changes are hard to predict, so you must stay on top of market news.

Industry changes: Industry changes happen when new products and technologies come on the market and make other products obsolete. One instance of this is the invention of AI technology.

Legislation: Although not as common, changes in legislation can affect the way companies sell their products. For example, vaping was a multi-million dollar industry until laws banned the sale of vape products to people under the age of 21. 

Seasonality: Many industries experience seasonality based on how human behavior and human needs change with the seasons. For example, people spend more time inside during the winter, so they may be on their computers more. Retail stores may also experience a jump in sales around Christmas time.

Tip: You can create a comprehensive sales plan to set goals for team members. Aside from revenue targets and training milestones, consider assigning each of these external factors to your team members so they can keep track of essential information. That way, you’ll have your bases covered on anything that may affect future sales growth. 

Sales forecast template

Below you’ll see an example of a software company’s six-month sales forecast template for two products. Product one is a software application, and product two is a software accessory. 

In this sales forecast template, the company used past sales data to fill in each month. They projected their sales would increase by 10% each month because of a 5% increase in inflation and because they gained 5% more of the market. They kept their price per unit the same as the previous year.

Putting both products in the same chart can help the company see that their lower-cost product—the software accessory—brings in more revenue than their higher-cost product. The company can then use this insight to create more low-cost products in the future.

Sales forecast examples

Sales forecasting is not a one-size-fits-all process. It varies significantly across industries and business sizes. Understanding this through practical examples can help businesses identify the most suitable forecasting method for their unique needs.

Sales forecasting example 1: E-commerce

In the e-commerce sector, where trends can shift rapidly, intuitive forecasting is often useful for making quick, informed decisions.

Scenario: An e-commerce retailer specializing in fashion accessories is planning for the upcoming festive season.

Trend analysis phase: The team spends the first week analyzing customer feedback and current fashion trends on social media, using intuitive forecasting to predict which products will be popular.

Inventory planning phase: Based on these insights, the next three weeks are dedicated to selecting and ordering inventory, focusing on products predicted to be in high demand.

Sales monitoring and adjustment: As the holiday season approaches, the team closely monitors early sales data, ready to adjust their inventory and marketing strategies based on real-time sales performance.

This approach allows the e-commerce retailer to stay agile , adapting quickly to market trends and customer preferences.

Sales forecasting example 2: Software development

For a software development company, especially one working with B2B clients, opportunity stage forecasting can help predict sales and manage the sales pipeline effectively.

Scenario: A software development company is launching a new project management tool.

Lead generation and qualification phase: In the initial month, the sales team focuses on generating leads, qualifying them, and categorizing potential clients based on their progress through the sales pipeline.

Proposal and negotiation phase: For the next two months, the team works on creating tailored proposals for high-potential leads and enters negotiation stages, using opportunity stage forecasting to predict the likelihood of deal closures.

Closure and review: In the final phase, the team aims to close deals, review the accuracy of their initial forecasts, and refine their approach based on the outcomes.

Opportunity stage forecasting enables the software company to efficiently manage its sales pipeline , focusing resources on the most promising leads and improving their chances of successful deal closures.

Pair your sales forecast with a strong sales process

A sales forecast is only one part of the larger sales picture. As your team members acquire leads and close deals, you can track them through the sales pipeline. A solid sales plan is the foundation of future success.  

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The Complete Guide to Building a Sales Forecast

Set your company up for predictable revenue growth with the right forecasting processes and tools.

Paul Bookstaber

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Building a sales forecast is both an art and a science. Accurate sales forecasts keep your leaders happy and your business healthy. In this guide, we’ll explain everything you need to know about sales forecasting — so you can get a clear picture of your company’s projected sales and keep everyone’s expectations on track.

We’ve organized this reference guide by the top questions sales teams have about the sales forecasting process, based on our internal conversations and more than 20 years of experience developing  sales solutions .

Build sales forecasts with accuracy

Use the real-time data updates and insights of Sales Cloud to keep your forecasts accurate and your teams on track to hit targets.

What you’ll learn:

What is a sales forecast, why is sales forecasting important, who is responsible for sales forecasts, who uses sales forecasts, what are the objectives of sales forecasting, how do i design a sales forecasting plan.

• What happens to sales forecasting in unpredictable times?

How accurate are sales forecasts?

What tools do you use to forecast sales revenue and how do crm systems forecast revenue, how is forecasting better with crm vs. other methods.

If you’re a sales leader who’s already well-versed in the who and what of sales forecasts, skip to the sections on  designing a sales forecasting plan  and  tools to improve sales forecasts  for more relevant knowledge. Sales forecasting can become especially tough when we face an unexpected turn of events, so head to the section on  what happens to sales forecasts in unpredictable times  for more on that.

A sales forecast is an expression of expected sales revenue. A sales forecast estimates how much your company plans to sell within a certain time period (like quarter or year). The best sales forecasts do this with a high degree of accuracy, and they’re only as accurate as the data that fuels them.

A strong data culture is at the heart of an accurate sales forecast. This means all sales data is available to everyone at the company, and all teams do their part in keeping it updated, leaning on AI and automation to help. More on that in the section on  tools used to forecast sales revenue .

All sales forecasts answer two key questions:

• How much:  Each sales opportunity has its own projected amount it’ll bring into the business. Whether that’s $500 or $5 million, sales teams have to come up with one number representing that new business. To create the number, they take everything they know about the prospect into account.
• When:  Sales forecasts pinpoint a month, quarter, or year when the sales team expects the revenue to hit.

Coming up with those two sales projections is no easy feat. So sales teams factor in the important ingredients of who, what, where, why, and how to make their forecasts:

• Who:  Sales teams are responsible for sales forecasting.
• What:  Forecasts should be based on the exact solutions you plan to sell. In turn, that should be based on problems your prospects have voiced, which  your company can uniquely solve .
• Where:  Where is the buying decision made, and where will the actual products be used? Sales teams see better accuracy when they get closer (at least for a visit) to the center of the action.
• Why:  Why is the prospect or existing customer considering new services from your company in the first place? Is there a compelling event making them consider it now? Without a forcing function and a clear why, the deal may stall inevitably.
• How:  How does this prospect tend to make purchasing decisions? If you’re not accounting for how they do it now and how they’ve done it in the past in your forecast, it may be fuzzy math.

Forecasting lets leaders set realistic sales targets, create attainable and motivating quotas for sales reps, and gauge expected revenue, aiding in budgeting and spending decisions for the whole company. If forecasts are inaccurate, businesses may overspend (putting themselves in a risky spot), and set unreachable quotas (which is demoralizing for reps).

To understand why sales forecasting is so important to business health, think about two example scenarios: one with a car manufacturer and another with an e-commerce shop.

In the case of a car manufacturer, cars take a long time to build. The manufacturer has a complex supply chain to ensure every car part is available exactly when they need to build cars, so the number of cars available to purchase will meet demand.

When you buy something online, whether that’s from a large marketplace or a small boutique, you get a delivery estimate. If your delivery comes a day or a week after it’s promised, that’ll affect your satisfaction with the company — and decrease your willingness to want to do business with them again.

Sales forecasting is similar in both cases. Sales forecasts help the entire business plan resources to ship products, pay for marketing, hire employees, and beyond. Accurate sales forecasting yields a well-oiled machine that meets customer demand, both today and in the future. And internally on sales teams, sales revenue that delivers in its estimated time period keeps leaders and collaborators happy, just like a shipment that arrives on time.

If forecasts are off, the company faces challenges that affect everything from pricing to product delivery to the end user. Meanwhile, if forecasts are on point and  sales quotas  are met, the company can make better investments, perhaps hiring 20 new developers instead of 10, or building a much-needed new sales office in a prime new territory.

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Each organization has its own sales forecast owners. These are some of the teams who are usually responsible:

• Product leaders:  They put a stake in the ground for what products will be available to sell when.
• Sales leaders:  They promise the numbers that their teams will deliver. Depending on the seniority of the leader, how they forecast varies. For example, first-line managers forecast collections of opportunities, where third-line managers consider a wide set of numbers and traditional close rates to come up with an overall forecast.
• Sales reps:  They report their own numbers to their managers.

No matter how a company calculates its sales forecasts, the process should be transparent. And at the end of the day, sales leadership has to be responsible to call a number. Whether met, exceeded, or missed, the forecast responsibility falls on them.

Sales forecasts touch virtually all departments in a business. For example, the finance department uses sales forecasts to decide how to make annual and quarterly investments. Product leaders use them to plan demand for new products. And the HR department uses forecasts to align recruiting needs to where the business is going.

At some level, sales forecasting affects everyone in the company.

The main objective of sales forecasting is to paint an accurate picture of expected sales. Leaders are looking to these numbers when they’re building out their operational roadmap and budget. If they’re confident in the projected growth, they can get to planning.

They could decide to staff more customer service touchpoints, fund more external marketing events, or invest more in the community. They could get ahead of purchasing new equipment or upgrades that get more expensive the longer they wait. Without a sales forecast, leaders are making critical spending decisions in the dark. If sales don’t go as planned, it could lead to cutting workforce, reducing support, or halting product development.

Sales forecasting is a muscle, not an item to check off your to-do list. While you should absolutely design a framework for your sales forecasting plan each year, you should also change up your strategies from time to time so new muscles develop.

Craft a sales forecasting plan with your team by focusing on three primary activities:

• Calculating number and time  period:  Your plan should explain how you’ll calculate the estimated monetary amount and what the timeframes will be. See the section on  how a CRM can help with forecasting  later in this guide for more on the sales forecasting tools you can use to do this.
• Reviewing and revising:  You should also plan to review the forecast at key milestones and revise it if necessary. Most sales leaders track progress against their forecast daily! But you’ll also want to schedule designated check-ins throughout the quarter. Make sure you’re reviewing the latest numbers with  sales automation tools  that sync your CRM’s forecast data.
• Breaking the patterns:  Even the best sales organizations need to shake up their  sales process  once in a while. Breaking your patterns can help you find new ways of crafting even more accurate forecasting. Try skip-level forecasting, ask different questions, have executive sponsorship reviews, and take different angles of the data.

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What happens to sales forecasts in unpredictable times.

Unpredictable events have an enormous impact on your sales forecast. Extreme weather or economic crises all dramatically change your forecast. What you thought you knew about expected revenue growth can be suddenly flipped on its head.

As soon as an extraordinary event hits, sales and finance leaders at your company will quickly want to know:

• How’s our  sales pipeline  looking today?
• What are the best- and worst-case scenarios?
• How has the forecast changed from a week or a month ago?

Your forecast implicates resourcing, headcount, and more (see the section on  sales forecasting objectives ). So although things may be changing quickly, you don’t want to give up on your forecast.

Rather than attempt to recalculate your forecast based on dubious estimates or conjecture, your best bet is to  rely on a CRM solution  to get an accurate view of deal status and pipeline in real time.

During a crisis, reps need to feed their CRM with data as events unfold so leaders have clear visibility into the rapidly evolving pipe. That data enables those leaders to support their reps with corporate-level decisions about where they should be focusing their time — and craft the new forecasts. Your forecast is only as good as the data coming into it from your sales teams.

In uncertain times, quick access to sales data and the ability to pivot  sales territory  and resource deployment accordingly can make the difference between business continuity and dissolution. There’s no silver bullet to forecast perfectly in a crisis or unforeseen scenario. But vigilantly updating what’s in the pipeline and analyzing sales data more frequently than usual will help you see trends and retool your forecast accordingly.

Empathy and care are always fundamental, but this is especially true in these situations. Empathizing with your customers’ challenges and caring for your own sales reps should come before anything else. Build trust with internal and external partners. That trust will help you grow again in the future. Learn more about  maintaining customer relationships as a sales leader .

Only 45% of sales leaders are confident in their organization’s sales forecasts,  according to Gartner . While it’s natural for sales reps to bring in some intuition to their sales forecasts, that’s where room for error can creep in.

This brings us back to embracing a  strong data culture . To get a more accurate forecast, everyone in the sales cycle — from reps to managers to execs — should have a stake in making sure those numbers reflect the latest reality. Reps can keep all prospect info up to date, managers can track pipeline progress, and leaders can review how all teams are tracking toward those forecast numbers, with AI playing backup to spot any inaccuracies or chances to adjust along the way.

A  CRM  gives sales leaders a real-time view into their entire team’s forecast. The tool forecasts revenue by giving you:

• An accurate view of your entire business.  Comprehensive forecasts in a CRM come with a complete view of your pipeline.
• Tracking of your top performers.  See which reps are on track to beat their targets with up-to-the-minute leaderboards.
• Forecasting for complex sales teams.  Overlay splits allows you to credit the right amounts to sales overlays, by revenue, contract value, and more.

A forecast is based on the gross rollup of a set of opportunities. You can think of a forecast as a rollup of currency or quantity against a set of dimensions: owner, time, forecast categories, product family, and territory. You can collaborate on forecasts with all the necessary people to see how opportunities are stacking up. Drill down into opportunities by sales leader, operating unit, manager, and individuals.

We also love a CRM with  reports and dashboards . These highlight where the business challenges are, in plain and simple terms. It could be that four of five selling teams are at the right growth rate, and we just need to focus on another one. It could be that a certain product is challenged. The data opens up new doors to grow sales and see what could be working more effectively.

Another thing that’s great about a CRM is the guidance from AI. An  AI for sales  tool offers a neutral perspective on what’s actually happening in sales. For example, AI might note that an opportunity has been pushed out three quarters in a row — a finding that would’ve taken an individual reviewing the data longer to discover. Think of AI as your personal data scientist, taking your forecasting and entire sales operations to a new level.

Predictive AI tools take a look at historical sales data to give you a glimpse of what you might expect in the future. The AI will analyze factors like win rate or number of customer meetings. It takes some of the guesswork out of sales forecasting and helps you get to more accurate numbers. Try to analyze sales data for at least 12 months. Otherwise, there may not be enough data to get accurate sales predictions.

Sales forecasting is significantly more accurate when using a CRM instead of a spreadsheet. When a company is just starting out, sales teams usually rely on spreadsheets or back-of-the-napkin ways to calculate their sales forecasts. This may work for a while, but eventually, you’ll find this doesn’t scale.

The reality is, selling is more complex than ever. It involves everything from how demand generation campaigns are performing to how your phone calls to prospects are landing. The more you want to sell, the more you’ll want to  rely on a CRM .

See how Salesforce manages forecasts with confidence

The secret to an accurate forecast? Reliable, well-maintained pipelines. See how we manage both efficiently (with the help of the right technology), and use our best practices in your business.

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Paul Bookstaber is a writer at Salesforce. He has a decade of experience in content marketing in B2B tech. Before that, he published a magazine and ran a tabloid blog. Today, he splits his time between Florida and the Mountain West, and loves to hike, ski, and watch Bravo. He is in a polyamorous relationship with Luke and Roger, who are cats.

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The Ultimate Guide to Sales Forecasting

Learn how to create accurate sales forecasts for your sales team or business.

FREE SALES FORECASTING TEMPLATE

Use this free guide and Excel template to start closing more deals. Easily calculate drop-off rates and learn how to increase conversion and close rates.

Updated: 07/10/23

Published: 07/10/23

Sales forecasting can play a major role in your company's success (and your own career development).

Accurate sales forecasts allow salespeople and business leaders to make smarter decisions when setting goals, hiring, budgeting, prospecting, and other revenue-impacting factors.

Although most salespeople spend a considerable amount of time forecasting each week, less than 25% of sales leaders believe those forecasts are accurate.

• What is Sales Forecasting?

Why Sales Forecasting Is Important

Factors that can impact your sales forecast.

• Sales Forecasting Methods & Examples

How to Forecast Sales

Sales forecasting template, sales forecasting.

A sales forecast is an in-depth report that predicts what a salesperson, team, or company will sell weekly, monthly, quarterly, or annually. Sales forecasts are typically created using past performance data.

Managers use reps' sales forecasts to estimate the business their team will close. Directors use team forecasts to anticipate department sales. The VP of Sales uses department forecasts to project organization sales. These reports are typically shared with company leadership, along with board members and/or stockholders.

A sales forecast is the most critical aspect of meeting quota. These forecasts allow you to spot potential issues while there's still time to mitigate them or avoid them completely. Without a sales forecast, your team could be trending below quota without being able to course correct.

Maybe your competitor has started an aggressive new discounting campaign, or your new sales compensation plan unintentionally encourages bad behavior.

Discovering these problems now — versus at the end of the month or quarter — has a huge impact.

Here are a couple of specific reasons why sales forecasting is important and some scenarios that describe the impact of each one.

• It encourages better decision-making.
• It builds morale and boosts motivation on the team.

Sales forecasts also come into play for a number of decisions, from hiring and resource management to goal-setting and budgeting.

Suppose your sales forecast predicts a 26% increase in opportunities. To make sure you're keeping up with demand, you should start recruiting. If opportunities are predicted to go down, on the other hand, it would be wise to pause your hiring efforts. Simultaneously, look at bumping up marketing spend and investing in prospecting training for your reps.

A sales forecast is a powerful motivation tool.

For example, each week you might update your quarterly sales forecast to see if your team is on track to hit its target. You could also create a forecast every day for an individual sales rep on a performance plan to make sure he's not falling behind.

One of the most important points to remember about sales forecasts: They don't need to be perfect to be valuable. Your sales forecast will often, if not always, be slightly different from your results.

Of course, wildly inaccurate results are problematic — but if you‘re using clean data and have chosen the right method (which we’ll get to), your sales forecast will help you both plan and drive growth.

Free Sales Conversion Rate Template

Easily calculate drop-off rates and learn how to increase conversion and close rates.

• Dropoff and Conversion Rate Calculator
• Monthly & Quarterly Sales Goal Setting Template
• Deal and MRR Pipeline Tracker

You're all set!

Click this link to access this resource at any time.

Sales Forecasting Methods [+ Examples]

Not all sales forecasting methods are created equal. Here are a few of the most common ways to forecast sales. We've also included some examples to further illustrate each sales forecasting method.

1. Opportunity Stage Forecasting Method

The opportunity stage sales forecasting method accounts for the various stages of the sales process each deal is inThe further along in the pipeline, the likelier a deal is to close.

Once you‘ve picked a reporting period—usually month, quarter, or year, depending on the length of your sales cycle and your sales team’s quota—you simply multiply each deal's potential value by the probability it will close.

After you've done this for each deal in the pipeline, add up the total to get your overall forecast.

Although it‘s relatively easy to create a sales forecast this way, the results are often inaccurate. This method doesn’t account for the age of an opportunity.

In other words, a deal that‘s been languishing in your rep’s pipeline for three months will be treated the same as one that‘s a week old — as long as their close dates are the same. You have to trust your salespeople to regularly clean up their pipelines, which isn’t always feasible.

An opportunity stage sales forecast also may rely too heavily on historical data. If you're changing your messaging, products, sales process, or any other variable, your deals will close at different percentages by stage than they have in the past.

Opportunity Stage Forecasting Example

Let‘s say you’ve established the following likely-to-close percentages based on your pipeline:

• Initial Call: 5%
• Qualified:10%
• Product Demo: 35%
• Product Trial: 60%
• Final Call: 80%
• Deal Closed: 100%

According to this forecasting model, a $1,000 deal at the Product Demo stage is 35% likely to close. The forecasted amount for this deal would be $350.

2. Length of Sales Cycle Forecasting Method

The length of the sales cycle forecasting method uses the age of individual opportunities to predict when they're likely to close.

Because this technique relies solely on objective data rather than the rep‘s feedback, you’re less likely to get a prediction that's too generous.

Suppose a salesperson books a demo with a prospect before they‘re ready. They might tell you the prospect is close to buying — but this method will calculate they’re unlikely to buy because they only started talking to the salesperson a few weeks ago.

Furthermore, this technique can encompass different sales cycles. A normal lead might take roughly six months to buy, but referrals could typically need only one month, and leads coming from trade shows may require approximately eight months. You can bucket each deal type by average sales cycle length.

To get accurate results, you‘ll need to carefully track how and when prospects enter your salespeople’s pipelines. If your CRM doesn't integrate with your marketing software as well as automatically log interactions , your reps will be spending a lot of time manually entering data.

Length of Sales Cycle Forecasting Example

Let‘s say your average sales cycle lasts six months. If your salesperson has been working an account for three months, your forecast might suggest they’re 50% likely to win the deal.

3. Intuitive Forecasting Method

Some sales managers simply ask their reps to estimate the likelihood of closing. The salesperson might say, “I'm confident they'll buy within 14 days, and the deal will be worth X.” This is intuitive sales forecasting.

On the one hand, this method factors in the opinions of the ones closest to prospects: Your salespeople. On the other, reps are naturally optimistic and often offer overly generous estimates.

There's also no scalable way to verify their assessment. To see whether a prospect is as likely to close as the salesperson says, her sales manager would need to listen to her calls, shadow her meetings, and/or read her conversations.

This method is most valuable in the very early stages of a company or product when there's close to zero historical data.

Intuitive Forecasting Example

Let‘s say you want to forecast sales for your brand new business. You’ve only been operating for three months and have no historical data. You have two salespeople on your team, so you ask them to forecast sales for the next six months based on their intuition.

Each salesperson examines the deals in their sales pipeline as well as any prospecting opportunities they have planned for the following months. Based on their analysis, they forecast $50,000 in sales for the following six months.

4. Historical Forecasting Method

A quick and dirty way to predict how much you'll sell in a month, quarter, or year is to look at the matching time period and assume your results will be equal to or greater than those results. This is historical sales forecasting.

There are a few issues with this method. First, it doesn‘t take into account seasonality. Second, it assumes that buyer demand is constant. But if anything outside of the ordinary happens, your model won’t hold up.

Ultimately, historical demand should be used as a benchmark rather than the foundation of your sales forecast.

Historical Forecasting Example

Let‘s say your team collectively sold $80,000 in monthly recurring revenue (MRR) in October. Based on this method, you’d assume they'd sell $80,000 or more in November.

You can make this prediction more sophisticated by adding your historical growth. If you consistently increase sales by 6-8% each month, a conservative estimate for November would be $84,800.

5. Multivariable Analysis Forecasting Method

The most sophisticated sales forecasting method—multivariable analysis forecasting—uses predictive analytics and incorporates several of the factors mentioned, such as average sales cycle length, probability of closing based on opportunity type, and individual rep performance.

This forecast tends to be the most accurate. However, it requires an advanced analytics solution, meaning it's not always feasible if you have a small budget.

You‘ll also need clean data—if your reps aren’t dedicated to tracking their deal progress and activities, your results will be inaccurate no matter how great your software is.

Multivariable Analysis Forecasting Example

Imagine you have two reps, each of which is working a single account. Your first rep has a meeting with Procurement scheduled for Friday, while your second rep just gave her first presentation to the buying committee.

Based on your first rep‘s win rate for this stage of the sales process, combined with the relatively large predicted deal size and the number of days left in the quarter, he’s 40% likely to close in this period. That gives you a forecast of $9,600.

Your second rep is earlier in the sales process, but the deal is smaller and she has a high close rate. She's also 40% likely to close, giving you a forecast of $6,800.

Combine those, and you'd get a quarterly sales forecast of $16,400.

6. Pipeline Forecasting Method

The pipeline sales forecasting method can take some time—maybe too much time—if you don‘t have a program in place to handle your calculations. It reviews each opportunity currently sitting in your pipeline and calculates its chances of closing based on unique company variables including the rep’s win rate and opportunity value.

This forecasting method relies on your ability to provide high-quality data. If you mess up the numbers or use imperfect data, you'll end up with forecasting that provides zero value.

Make sure your reps regularly enter accurate, timely data into their CRM to glean the most insight from this method.

Pipeline Forecasting Example

If your sales team typically closes deals worth between $5,000 and $8,000 within 60 days, all current deals in your team's pipeline would be given a high likelihood of closing.

You can then use this data to figure your monthly or quarterly forecast.

• Establish a sales process for your team.
• Set individual and team quotas.
• Invest in a CRM.
• Choose a sales forecasting method.
• Include data from other organizations such as Marketing, Product, and Finance.
• Review prior sales forecasts.
• Keep your sales team informed and accountable.

Here's a breakdown of how to get started with sales forecasting. These steps will ensure an accurate sales forecast for your business.

1. Establish a sales process for your team.

If your sales team isn‘t consistently using the same stages and steps, you won’t be able to predict the likelihood of an opportunity closing. Reference our guide to building a sales process to learn how to create a documented, structured sales process to use when converting any prospect from a lead to a customer.

Your sales process will also set standard opportunity, lead, prospect, and close definitions. Everyone needs to agree about when and how to count leads entering and exiting the funnel.

2. Set individual and team quotas.

To gauge performance, you need an objective definition of “success”. Work with your sales reps and leaders to set sales quotas . These will serve as financial baseline goals to compare alongside your sales forecasting.

3. Invest in a customer relationship management (CRM) tool.

CRMs, like the HubSpot CRM , give your sales reps a database for tracking opportunities to give you accurate close predictions. Accurate data will allow for accurate forecasting.

Even if your business is brand new, establishing a CRM and getting your reps in the habit of using one will benefit your future forecasting. (If you are brand new, check out our sales forecasting template in the next section.)

4. Choose a sales forecasting method.

Once you have your sales process, sales quota, and CRM in place, you can choose a sales forecasting method .

The method you choose will depend on a few factors, including the age of your business, the size of your sales team and pipelines, and the quality of your sales data and data tracking habits.

If your business is new or doesn't have much historical sales data, the best method for you would be intuitive forecasting .

If you're just getting started with sales forecasting and have busy sales pipelines, opportunity stage forecasting , length of sales cycle forecasting. These methods both present objective forecasting calculations, however, so if you're looking for more detailed pipeline-specific forecasting, multivariable analysis forecasting and pipeline forecasting may be feasible options.

These two work best if your team has impeccable sales data and is in the habit of keeping up with their pipeline data. Lastly, for the most consistent markets and industries, historical forecasting can be a good forecasting model.

Take a close look at your business model, sales team, data tracking, and broader industry before moving forward with a sales forecasting model.

5. Include data from other organizations such as Marketing, Product, and Finance.

While understanding past sales data is critical for creating a viable sales forecast, other organizations within your company can also provide valuable insight. Make sure you include the following organizations in your forecasting process:

• Marketing – Your marketing organization has a direct correlation to the quality of your pipeline. Sit down with your marketing team to understand their plans and strategies for the time period you're forecasting.
• Product – Is your product team working on anything new for the coming year? How do product launches factor into your overall forecast? Including this data in your analysis can help you create a more well-rounded strategy.
• Finance – The finance team at your company should be running analysis to better understand the financial health of your company as a whole. Work with financial analysts to understand how your sales forecast aligns with the financial goals of the company.
• HR – Will your future sales goals require additional headcount or employee resources? If so, connect with a business partner from your HR department to map out what that process will look like, and how it impacts your forecast.

6. Review prior sales forecasts.

How did your team perform this year? Compare the actual data you have available to the prior year's forecast and take note of any variances or discrepancies.

Are there any clear areas your sales organization under-delivered on? Were the goals set the prior year unrealistic? Did you factor in major events and seasonality? Highlight any major takeaways or lessons learned that your company's leadership should be aware of as you navigate the forecasting process.

7. Keep your sales team informed and accountable.

Regardless of which sales forecasting method you choose, keep your sales reps informed and communicate changes and decisions often. This is another good reason to invest in a CRM — it keeps your reps informed about every interaction with leads and with each other.

Gather regular feedback from your team about what‘s working and what’s not. Hold your reps accountable for their performance against your sales quotas and sales forecasts. After all, they are the closest to and most familiar with your prospects and overall sales performance as a company.

Watch out for these ten internal and external factors, for which you'll need to account in your sales forecast.

Internal Factors That Can Impact Your Sales Forecast

1. hires and fires.

When salespeople leave your company — either because they quit or were terminated — revenue will decrease unless you have a pipeline of potential hires. If a significant number of reps came on board at one time, your sales forecast should predict a big jump in business when they've ramped.

2. Policy Changes

Don't adjust your sales comp plan without adjusting your forecast. If you implement a four-month clawback on commissions, for example, revenue will decrease because your reps will only sell to best-fit prospects. However, in a quarter when far fewer customers churn, your profits will increase.

Or perhaps you say reps can‘t discount after the 15th of every month. You’ll see a spike in close rates in the first two weeks, followed by fewer sales than normal.

3. Territory Shifts

It takes time for reps to familiarize themselves with a new territory and build their pipeline, so expect your close rate to dip before picking up again (assuming you planned your new territories well).

External Factors That Can Impact Your Sales Forecast

4. competitive changes.

Unsurprisingly, what your competitors are doing will impact your win rates. If another company in the space slashes their prices, your reps may need to discount more aggressively or risk losing business. If a competitor goes out of business, on the other hand, you'll probably see increased demand.

5. Economic Conditions

When the economy is strong, buyers are more likely to invest in their businesses. When it‘s weak, the sales cycle usually takes longer and there’s a greater level of scrutiny for every purchase.

6. Market Changes

Stay on top of what‘s happening with your buyer’s customers. For example, if you sell consulting services to hotels, you'd be interested in an anticipated rise in tourism.

7. Industry Changes

If a complementary solution sees unexpectedly high demand, you‘ll probably see your sales go up too. Imagine you sell jelly. The more peanut butter people buy, the more jelly they’ll buy as well.

8. Legislative Changes

New laws and mandates can either help or hurt your business — either by creating demand for your product or making prospects reluctant to buy anything new.

9. Product Changes

Are you rolling out a highly-requested feature, introducing a new pricing model, or offering a complementary product or service? These changes can help your salespeople increase their average deal size, shorten their sales cycle, and/or win more business.

10. Seasonality

Your customers might be more likely to buy at certain times of the year. For instance, school districts typically assess new purchases in spring and decide what to buy in fall.

There's a common theme throughout these sales forecasting methods: Data.

Even the most lightweight forecasting options rely on knowing how many opportunities are in each rep's pipeline and their project's likelihood of closing.

To keep track of all these details, you can use a free sales forecasting template, such as our sales forecasting tracker .

Download this Template for Free

This tracker includes:

• A spreadsheet for tracking which deals are guaranteed, likely, potentially, and unlikely to close this month
• A monthly revenue forecast that automatically updates with the information you entered in the first spreadsheet
• A yearly goal tracker so you can monitor your progress

This sales forecasting template is ideal when you‘re just starting out. However, if your company is more established, consider using a CRM instead. A CRM will calculate all of the above on its own—so you don’t need to lift a finger.

Try HubSpot's free CRM . Not only will it keep track of your actual and predicted revenue, it automatically logs every interaction with prospects—emails, calls, and social media—making your ability to gauge the likelihood of a deal closing even more accurate.

Start Sales Forecasting Today

With a thoughtful sales forecasting strategy, you can be ready for the future — whatever it brings.

Editor's note: This post was originally written in January 2019 and has been updated for comprehensiveness.

This article was written by a human, but our team uses AI in our editorial process. Check out our full disclosure to learn more about how we use AI.

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How to Create a Sales Forecast

11 min. read

Updated October 27, 2023

Business owners are often afraid to forecast sales. But, you shouldn’t be. Because you can successfully forecast your own business’s sales.

You don’t have to be an MBA or CPA. It’s not about some magic right answer that you don’t know. It’s not about training you don’t have. It doesn’t take spreadsheet modeling (much less econometric modeling) to estimate units and price per unit for future sales. You just have to know your own business. 

Forecasting isn’t about seeing into the future

Sales forecasting is much easier than you think and much more useful than you imagine.

I was a vice president of a market research firm for several years, doing expensive forecasts, and I saw many times that there’s nothing better than the educated guess of somebody who knows the business well. All those sophisticated techniques depend on data from the past — and the past, by itself, isn’t the best predictor of the future. You are.

It’s not about guessing the future correctly. We’re human; we don’t do that well. Instead, it’s about setting down assumptions, expectations, drivers, tracking, and management. It’s about doing your job, not having precognitive powers. 

• Successful forecasting is driven by regular reviews

What really matters is that you review and revise your forecast regularly. Spending should be tied to sales, so the forecast helps you budget and manage. You measure the value of a sales forecast like you do anything in business, by its measurable business results.

That also means you should not back off from forecasting because you have a new product, or new business, without past data. Lay out the sales drivers and interdependencies, to connect the dots, so that as you review plan-versus-actual results every month, you can easily make course corrections.

If you think sales forecasting is hard, try running a business without a forecast. That’s much harder.

Your sales forecast is also the backbone of your business plan . People measure a business and its growth by sales, and your sales forecast sets the standard for  expenses , profits, and growth. The sales forecast is almost always going to be the first set of numbers you’ll track for plan versus actual use, even if you do no other numbers.

If nothing else, just forecast your sales, track plan-versus-actual results, and make corrections — that process alone, just the sales forecast and tracking is in itself already business planning. To get started on building your forecast follow these steps.

And if you run a subscription-based business, we have a guide dedicated to building a sales forecast for that business model.

• Step 1: Set up your lines of sales

Most forecasts show several distinct lines of sales. Ideally, your sales lines match your accounting, but not necessarily in the same level of detail.   

For example, a restaurant ought not to forecast sales for each item on the menu. Instead, it forecasts breakfasts, lunches, dinners, and drinks, summarized. And a bookstore ought not to forecast sales by book, and not even by topic or author, but rather by lines of sales such as hardcover, softcover, magazines, and maybe categories (such as fiction, non-fiction, travel, etc.) if that works.

Always try to set your streams to match your accounting, so you can look at the difference between the forecast and actual sales later. This is excellent for real business planning. It makes the heart of the process, the regular review, and revision, much easier. The point is better management.

For instance, in a bicycle retail store business plan, the owner works with five lines of sales, as shown in the illustration here.  

In this sample case, the revenue includes new bikes, repair, clothing, accessories, and a service contract. The bookkeeping for this retail store tracks sales in those same five categories.

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• Step 2: Forecast line by line

There are many ways to forecast a line of sales.

The method for each row depends on the business model

Among the main methods are:.

• Unit sales : My personal favorite. Sales = units times price. You set an average price and forecast the units. And of course, you can change projected pricing over time. This is my favorite for most businesses because it gives you two factors to act on with course corrections: unit sales, or price.
• Service units : Even though services don’t sell physical units, most sell billable units, such as billable hours for lawyers and accountants, or trips for transportations services, engagements for consultants, and so forth.
• Recurring charges : Subscriptions. For each month or year, it has to forecast new signups, existing monthly charges, and cancellations. Estimates depend on both new signups and cancellations, which is often called “churn.”
• Revenue only : For those who prefer to forecast revenue by the stream as just the money, without the extra information of breaking it into units and prices.

Most sales forecast rows are simple math

For a business plan, I recommend you make your sales forecast a detailed look at the next 12 months and then broadly cover two years after that. Here’s how to approach each method of line-by-line forecasting.

Start with units if you can

For unit sales, start by forecasting units month by month, as shown here below for the new bike’s line of sales in the bicycle shop plan:

I recommend looking at the visual as you forecast the units because most of us can see trends easier when we look at the line, as shown in the illustration, rather than just the numbers. You can also see the numbers in the forecast near the bottom. The first year, fiscal 2021 in this forecast, is the sum of those months.

Estimate price assumptions

With a simple revenue-only assumption, you do one row of units as shown in the above illustration, and you are done. The units are dollars, or whatever other currency you are using in your forecast. In this example, the new bicycle product will be sold for an average of $550.00. 

That’s a simplifying assumption, taking the average price, not the detailed price for each brand or line. Garrett, the shop owner, uses his past results to determine his actual average price for the most recent year. Then he rounds that estimate and adds his own judgment and educated guess on how that will change. 

Multiply price times units

Multiplying units times the revenue per unit generates the sales forecast for this row. So for example the $18,150 shown for October of 2020 is the product of 33 units times $550 each. And the $21,450 shown for the next month is the product of 39 units times $550 each. 

Subscription models are more complicated

Lately, a lot of businesses offer their buyers subscriptions, such as monthly packages, traditional or online newspapers, software, and even streaming services. All of these give a business recurring revenues, which is a big advantage. 

For subscriptions, you normally estimate new subscriptions per month and canceled subscriptions per month, and leave a calculation for the actual subscriptions charged. That’s a more complicated method, which demands more details. 

For that, you can refer to detailed discussions on subscription forecasting in How to Forecast Sales for a Subscription Business .

• But how do you know what numbers to put into your sales forecast?

The math may be simple, yes, but this is predicting the future, and humans don’t do that well. So, don’t try to guess the future accurately for months in advance.

Instead, aim for making clear assumptions and understanding what drives your sales, such as web traffic and conversions, in one example, or the direct sales pipeline and leads, in another. Review results every month, and revise your forecast. Your educated guesses become more accurate over time.

Experience in the field is a huge advantage

In a normal ongoing business, the business owner has ample experience with past sales. They may not know accounting or technical forecasting, but they know their business. They are aware of changes in the market, their own business’s promotions, and other factors that business owners should know. They are comfortable making educated guesses.

If you don’t personally have the experience, try to find information and make guesses based on the experience of an employee,  your mentor , or others you’ve spoken within your field.

Use past results as a guide

Use results from the recent past if your business has them. Start a forecast by putting last year’s numbers into next year’s forecast, and then focus on what might be different this year from next.

Do you have new opportunities that will make sales grow? New marketing activities, promotions? Then increase the forecast. New competition, and new problems? Nobody wants to forecast decreasing sales, but if that’s likely, you need to deal with it by cutting costs or changing your focus.

Look for drivers

To forecast sales for a new restaurant, first, draw a map of tables and chairs and then estimate how many meals per mealtime at capacity, and in the beginning. It’s not a random number; it’s a matter of how many people come in.

To forecast sales for a new mobile app, you might get data from the Apple and Android mobile app stores about average downloads for different apps. A good web search might also reveal some anecdotal evidence, blog posts, and news stories, about the ramp-up of existing apps that were successful.

Get those numbers and think about how your case might be different. Maybe you drive downloads with a website, so you can predict traffic from past experience and then assume a percentage of web visitors who will download the app.

• Estimate direct costs

Direct costs are also called the cost of goods sold (COGS) and per-unit costs. Direct costs are important because they help calculate gross margin, which is used as a basis for comparison in financial benchmarks, and are an instant measure (sales less direct costs) of your underlying profitability.

For example, I know from benchmarks that an average sporting goods store makes a 34 percent gross margin. That means that they spend $66 on average to buy the goods they sell for $100.

Not all businesses have direct costs. Service businesses supposedly don’t have direct costs, so they have a gross margin of 100 percent. That may be true for some professionals like accountants and lawyers, but a lot of services do have direct costs. For example, taxis have gasoline and maintenance. So do airlines.

A normal sales forecast includes units, price per unit, sales, direct cost per unit, and direct costs. The math is simple, with the direct costs per unit related to total direct costs the same way price per unit relates to total sales.

Multiply the units projected for any time period by the unit direct costs, and that gives you total direct costs. And here too, assume this view is just a cut-out, it flows to the right. In this example, Garrett the shop owner projected the direct costs of new bikes based on the assumption of 49 percent of sales.

Given the unit forecast estimate, the calculation of units times direct costs produces the forecast shown in the illustration below for direct costs for that product. So therefore the projected direct costs for new bikes in October is $8,894, which is 49% of the projected sales for that month, $18,150.

• Never forecast in a vacuum

Never think of your sales forecast in a vacuum. It flows from the strategic action plans with their assumptions,  milestones , and metrics. Your marketing milestones affect your sales. Your business offering milestones affect your sales.

When you change milestones—and you will, because all business plans change—you should change your sales forecast to match.

• Timing matters

Your sales are supposed to refer to when the ownership changes hands (for products) or when the service is performed (for services). It isn’t a sale when it’s ordered, or promised, or even when it’s contracted.

With proper  accrual accounting , it is a sale even if it hasn’t been paid for. With so-called cash-based accounting, by the way, it isn’t a sale until it’s paid for. Accrual is better because it gives you a more accurate picture, unless you’re very small and do all your business, both buying and selling, with cash only.

I know that seems simple, but it’s surprising how many people decide to do something different. The penalty for doing things differently is that then you don’t match the standard, and the bankers, analysts, and investors can’t tell what you meant.

This goes for direct costs, too. The direct costs in your monthly  profit and loss statement  are supposed to be just the costs associated with that month’s sales. Please notice how, in the examples above, the direct costs for the sample bicycle store are linked to the actual unit sales.

• Live with your assumptions

Sales forecasting is not about accurately guessing the future. It’s about laying out your assumptions so you can manage changes effectively as sales and direct costs come out different from what you expected. Use this to adjust your sales forecast and improve your business by making course corrections to deal with what is working and what isn’t.

I believe that even if you do nothing else, by the time you use a sales forecast and review plan versus actual results every month, you are already managing with a business plan . You can’t review actual results without looking at what happened, why, and what to do next.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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How to Do a Sales Forecast for Your Business the Right Way

Posted june 8, 2021 by noah parsons.

New entrepreneurs frequently ask me for advice about forecasting their sales . These entrepreneurs are always optimistic about the future of their new company. However, when it comes to the details, most aren’t sure how to predict future sales and how much money they’re going to make.

It’s an intimidating task, looking into the future. The good thing is, none of us are fortune tellers and none of us know any more about your new business than you do. (If you do happen to be able to see into the future, please just skip the whole startup thing and go play the stock market. It’ll be much easier and make you richer!)

So, my advice is always to just take a deep breath and relax. You’re as well equipped as everyone else to put together a credible, reasonably accurate forecast. Let’s dive right in and figure it out.

What is sales forecasting?

Sales forecasting is the process of estimating future sales with the goal of better informing your decisions. A forecast is typically based on any combination of past sales data, industry benchmarks, or economic trends. It’s a method designed to help you better manage your workforce, ash flow, and any other resources that may affect revenue and sales

It’s typically easier for established businesses to create more accurate sales forecasts based on previous sales data. Newer businesses, on the other hand, will have to rely on market research, competitive benchmarks, and other forms of interest to establish a baseline for sales numbers. 

Why is sales forecasting important?

Your sales forecast is the foundation of the financial story that you are creating for your business. Once you have your sales forecast complete, you’ll be able to easily create your profit and loss statement , c ash flow statement, and balance sheet.

Sales forecasts help you set goals

But beyond just setting the stage for a complete financial forecast, your sales forecast is really all about setting goals for your company . You’re looking to answer questions like:

• What do you hope to achieve in the next month? Year? 5-years? 
• How many customers do you hope to have next month and next year?
• How much will each customer hopefully spend with your company?

Your sales forecast will help you answer all of these questions and potentially any others that involve the future of your business.

Sales forecasts inform investors

Having a solid sales forecast also provides a picture of your performance and performance milestones for potential investors. Like you, they want to be sure you have established goals and a firm trajectory for your business laid out. The more detailed, organized, and up-to-date your forecast is, the better you explain the position of your business to third parties and even employees.

How to use your sales forecast for budgeting

Your sales forecast is also your guide to how much you should be spending. Assuming you want to run a profitable business , you’ll use your sales forecast to guide what you should be spending on marketing to acquire new customers and how much you should be spending on operations and administration. 

Now, you don’t always need to be profitable, especially if you are trying to expand aggressively. But, you’ll eventually need your expenses to be less than your sales in order to turn a profit.

How detailed should your forecast be?

When you’re forecasting your sales , the first thing you should do is figure out what you should create a forecast for. You don’t want want to be too generic and just forecast sales for your entire company. On the other hand, you don’t want to create a forecast for every individual product or service that you sell.

For example, if you’re starting a restaurant, you don’t want to create forecasts for each item on the menu. Instead, you should focus on broader categories like lunch, dinner, and drinks. If you’re starting a clothing shop, forecast the key categories of clothing that you sell, like outerwear, casual wear, and so on.

You’ll probably want between three to ten categories covering the types of sales that you do. More than ten is going to be a lot of work to forecast and fewer than three probably means that you haven’t divided things up quite enough.

You really can’t get this wrong. After all, it’s just forecasting and you can always come back and adjust your categories later. Just pick a few to get started and move on.

Which forecasting model is best? Top-down or bottom-up?

Before they have much historical sales data, lots of startups make this mistake—and it’s a big one. They forecast “from the top down.” What that means is that they figure out the total size of the market ( TAM, or total addressable market ) and then decide that they will capture a small percentage of that total market.

For example, in 2015, more than 1.4 billion smartphones were sold worldwide. It’s pretty tempting for a startup to say that they’re going to get 1 percent of that total market. After all, 1 percent is such a tiny little number, it’s got to be believable, right?

The problem is that this kind of guessing is not based on any kind of reality. Sure, it looks like it might be credible on the surface, but you have to dig deeper. What’s driving those sales? How are people finding out about this new smartphone company? Of the people that find out about the new company, how many are going to buy?

So, instead of forecasting “from the top-down,” do a “bottom-up” forecast. Just like the name suggests, bottom-up forecasting is more of an educated guess, starting at the bottom and working up to a forecast.

Start by thinking about how many potential customers you might be able to make contact with; this could be through advertising, sales calls, or other marketing methods. This is your SOM (your “share of the market”), the subset of your 1 percent of the market that you will realistically reach—particularly in the first few years of your business. This is your target market .

Of the people you can reach, how many do you think you’ll be able to bring in the door or get onto your website? And finally, of the people that come in the door, get on the phone, or visit your site, how many will buy?

Here’s an example:

• 10,000 people see my company’s ad online
• 1,000 people click from the ad to my website
• 100 people end up making a purchase

Obviously, these are all nice round numbers, but it should give you an idea of how bottom-up forecasting works.

The last step of the bottom-up forecasting method is to think about the average amount that each of those 100 people in our example ends up spending. On average, do they spend $20? $100? It’s O.K. to guess here, and the best way to refine your guess is to go out and talk to your potential customers and interview them. You’ll be surprised how accurate a number you can get with a few simple interviews.

How to create a sales forecast

Keep in mind that your sales forecast is an estimate of the number of goods and services you believe you can sell over a period of time. This will also include the cost to produce and sell those goods and services, as well as the estimated profit you’ll come away with.

We’ll dive into specific methods, assumptions, and questions you’ll need to ask in order to build a viable sales forecast. But to start, here are the general steps you’ll need to take to create a sales forecast:

• List out the goods and services you sell
• Estimate how much of each you expect to sell
• Define the unit price or dollar value of each good or service sold
• Multiply the number sold by the price
• Determine how much it will cost to produce and sell each good or service
• Multiply this cost by the estimated sales volume
• Subtract the total cost from the total sales

This is a super basic rundown of what is included in your sales forecast to give you an idea of what to expect. For example, you may find the need to aggregate similar items into unified categories, if you sell a large variety of items. And if at all possible, try to keep your forecasted items grouped similarly to how they appear on your accounting statements to make updates easier.

Check out this video for a quick overview of how to forecast sales:

Now let’s dive into some specific elements of your forecast you’ll need to define ahead of time.

Should you forecast in units or dollars?

Let’s start by talking about “unit” sales.

A “unit” is simply a stand-in for whatever it is that you are selling. A single lunch at a restaurant would be a unit. An hour of consulting work is also a unit. The word “unit” is just a generic way to talk about whatever it is that you are selling.

Now that’s out of the way, let’s talk about why you should forecast by units.

Units help you think about the number of products, hours, meals, and so on, that you are selling. It’s easier to think about sales this way rather than to think just in dollars (or yen, or pounds, or rand, etc.).

With a dollar-based forecast, you are only thinking about the total amount of money that you’ll make in a given month, rather than the details of the number of units that you are selling and the average price you are selling each unit for.

To forecast by units, you predict how many units you’re going to sell each month—using the bottom-up method of course. Then, you figure out what the average price is going to be for each unit. Multiply those two numbers together and you have the total sales you plan on making each month.

For example, if you plan on selling 1,000 units at $20 each, you’ll make $20,000.

When you forecast by units, you have a couple of different variables to play with: What if I’m able to sell more units? What if I raise or lower my prices?

Also, there’s another benefit: At the end of a month of sales, I can look back at my forecast and see how I did compared to the forecast in greater detail. Did I meet my goals because I sold more units? Or did I sell for a higher price than I thought I would? This level of detail helps you guide your business and grow it moving forward.

Sales forecast assumptions

One thing to remember is that your sales forecast is built on assumptions. You’re not predicting the future, but aggregating information to help define your future outlook. These assumptions are always changing, meaning that you’ll need to have a pulse on the following:  

Market conditions

Having a general understanding of the macro effects on your business can help you better predict overall growth. A growing or shrinking market can either provide a low or high ceiling for potential sales increases. So, you need to understand how your business can react to any changes.

What does the broader market look like? Is the economy slowing or growing? Is the industry you operate in seeing an influx of competition? Maybe there’s a labor or material shortage? Are there new customers you now have access to?

Products and services

You may find yourself making regular changes to your products and services. This can be sales factors that impact the customer, or production factors that impact the overall cost. 

Are you making any changes or updates to current offerings? Are you launching a new product or service that compliments or disrupts your existing sales? Are you adjusting prices or sales channels? Are you able to decrease the cost of production? Or are expenses rising due to material, labor, or other production costs?

Seasonality

Depending on what you’re selling, you may find dips or increases in sales at specific times during the year. This seasonality may have to do with the weather, holidays, product/feature releases, or a number of other predictable factors. 

If you have been operating for a while, you can likely look at your accounting data to identify any trends. If you’re a new business look to your competitors to see how they act during specific times of the year to help you identify these trends earlier on.

Marketing efforts

How much you spend on marketing, and even your messaging may have an impact on your overall sales. Make sure that you connect any performance changes to marketing efforts that may affect your performance.

Are you launching a new marketing campaign? Are you spending more or less on advertising? Are you adjusting your targeting for digital ads? Are you branching out or removing specific marketing channels from your overall strategy?

Regulatory changes

You may find that specific laws or regulations directly impact your industry. It’s difficult to anticipate what legislation will provide a negative or positive impact, and just how often this type of regulatory change may occur. The best thing you can do is keep your ear to the ground, and be ready to adjust expenses or sales when any changes appear to make traction.

How far forward should you forecast?

I recommend that you forecast monthly for 12 months into the future and then just develop an annual sales forecast for another three to five years.

The further your forecast into the future, the less you’re going to know and the less benefit it’s going to have for you. After all, the world is going to change, your business is going to change, and you’ll be updating your forecast to reflect those changes.

12 months from now is far enough into the future to guess. You’ll have to update your forecasts regularly with actual performance to help keep them accurate. 

And don’t forget, all forecasts are wrong—and that’s O.K. Your forecast is just your best guess at what’s going to happen. As you learn more about your business and your customers, you can change and adjust your forecast. It’s not set in stone.

Why using visuals will make forecasting easier

My final word of advice is to make sure that you graph your monthly sales with a chart.

A chart will make it easy to see how your sales might dip during a slow period of the year and then grow again during your peak season. A chart will also highlight potentially unreasonable guesses at your sales growth. If for example, you show a big jump in sales from one month to the next, you should be able to back this up with a strategy that’s going to deliver those sales.

Adjust your forecasts based on actual results

Your sales forecast isn’t done when you start sharing it with lenders and investors. Instead, smart businesses use their sales forecast to measure their progress and ensure that they’re on the right track. Their sales forecast becomes a live forecast . An up-to-date management tool that helps them run their business better.

The easiest way to convert your sales forecast into a management tool is to have a monthly financial review meeting where you look at your business’s finances. You shouldn’t just look at your accounting system, though. You should compare the numbers from your accounting software to your forecast and see if you’re on track. 

Are you exceeding your goals? Or maybe you’re falling a little bit short. Either way, knowing if you’re meeting your goals or not will help you determine if you need to make some shifts in strategy. This way, your business numbers drive your strategy.

Forecasting is easier with LivePlan

Tools like LivePlan can help with this. LivePlan uses a smart dashboard to automatically compare your forecast to your numbers from your accounting system—no cutting and pasting or complicated spreadsheets required. And with LivePlan’s LiveForecast feature , you can update the forecasts within your Profit and Loss Statement, with the push of a button. 

This allows you to spend less time updating and more time analyzing performance to make better decisions. In fact, the LiveForecast feature allows you to expand the details of your performance and identify the variance in performance within your statements. You’ll know your current cash position and the impact on projected year-end totals at a glance. It provides you with enough information to then explore the dashboard with questions and potential steps in mind.

Sales forecasting isn’t as difficult as you think

Just remember that sales forecasting doesn’t have to be hard. Anyone can do it and you, as an entrepreneur, are the most qualified to do it for your business. You know your customers, and you know your market, so you can forecast your sales.

Editor’s note: This article was originally published in March 2016, and was updated for 2021.

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Noah Parsons

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6 Ways to Create an Effective Sales Forecast

Table of Contents

In business, you’re always selling something. Even if your company is the furthest thing from a storefront with cash registers and credit card readers — say, a consultancy that charges by the hour — you make a sale every time you earn money by providing goods or services. Of course, you also incur certain expenses to make these sales, so you’ll need to know ahead of time whether you’ll make enough sales to cover your costs. That’s where sales forecasting comes in.

What is sales forecasting?

Sales forecasting is the use of current and previous sales data to predict your team’s sales activity during an upcoming monthly, quarterly, semiannual or annual period. You can use sales forecasts to identify internal or external sales issues and resolve them with enough time remaining to reach sales goals .

Because a sales forecast is a prediction, it relies on current knowledge to preview upcoming changes. As such, the following factors influence sales forecasts:

• Your industry’s recent growth or contraction rates
• The economy in general
• Your competition’s sales of similar items
• Your newest product or service launches
• Fluctuations in your usual operating costs or sales prices
• New regulations restricting your usual operations
• Your company’s marketing activities

Although sales forecasts extrapolate from current data, they are primarily concerned with future conditions. As a result, they constitute an integral part of your company’s larger sales plan and should be taken into account alongside your other expectations for the quarter or year.

Sales forecasting is an important financial planning tool and should be part of budgeting. It can also be used as a motivator for sales teams, setting a clear target for them to hit in a given period of time.

How to create a sales forecast

Creating a sales forecast involves basic math and thorough knowledge of your typical sales cycle (although newer companies may lack this information and should conduct research instead). Follow these steps to create a sales forecast:

1. Choose your forecasting method.

Using the past to predict the future is essential to sales forecasting, but not all usage of past data is equal. Try one or more of these three prominent forecasting methods:

• Opportunity stage forecasting. This forecasting method pertains to your sales funnel. For example, if you know that 80 percent of past leads in the fourth stage of your funnel became customers and a current fourth-stage lead is inching toward a $50,000 deal, you can forecast the revenue you earn from this deal as $50,000 x 0.80 = $40,000.
• Historical forecasting. This forecasting method pertains to recent or seasonal data. For example, if you see month-to-month sales of $100,000 for a certain product, you can forecast that same amount for next month. If your company operates seasonally, use the numbers from the same month of the previous year instead of using the previous month’s sales. You can also incorporate growth trends into this method: Using the above example, if your sales typically grow 5 percent each month, you should forecast $100,000 + (0.05 x $100,000) = $105,000.
• Length-of-cycle forecasting. This method pertains to the period of time over which your sales funnel progresses. For example, if your sales funnel usually spans one month and you identify a lead with whom your team has been negotiating for three weeks, the sale has a likelihood of three to four weeks = 75 percent. If the sale would result in $100,000 in revenue, you can forecast $100,000 x 0.75 = $75,000 in sales.

Note that each of these methods has advantages and disadvantages regarding data accuracy, external factors and other considerations. That said, they are more straightforward and reliable (and less technical) than other methods, so they may still be best for your sales forecasts.

2. Identify what you’re selling.

This step may seem obvious, but a thorough sales forecast requires you to identify every item you’re selling. Excluding an item that you sell or including an item you’re no longer producing can lead to inaccurate sales forecasts.

3. Determine your sales prices and quantities.

Once you know what you’re selling, figure out your sales prices and the number of sales that you estimate will occur. The forecasting methods explained in step one can be used to quantify your sales. For example, the sale mentioned in the length-of-cycle example can be seen as a sale of 0.75 units.

4. Multiply your prices and quantities.

Likewise, the $100,000 x 0.75 operation in the above length-of-cycle example shows how to multiply your prices and quantities. This step looks a bit different if you’re using historical forecasting; in that case, multiply your previous period’s sale quantity by its number of products sold.

5. Factor in your costs.

Without taking sales costs into consideration, you can’t get a meaningful picture of your profit margins . That’s why you should also multiply the cost of making each sale by the number of sales.

For example, let’s say you use the historical forecasting method and predict sales for one month of $500,000 based on the previous month’s sales of 500 units at $1,000. Then, if each unit costs $100 to sell, your sales costs are 500 x $100 = $50,000. This means your profit forecast is $500,000 – $50,000 = $450,000.

6. Consider your inventory.

Now that you’ve seen the basic math of sales forecasting, you might feel overwhelmed. Maybe you’re wondering whether you really have to calculate these numbers for all of your items. The answer is usually yes, though if your inventory is large and diverse, you may need to condense revenues and costs into larger categories, as shown in this sales forecast table .

To create a sales forecast, choose a forecasting method; determine your sales prices, quantitie, and costs; make some basic calculations; and consider your inventory.

Why is sales forecasting important?

Sales forecasting gives you the information you need to adjust your company’s upcoming sales strategies and budget. An accurate forecast can point to gaps in your sales team’s methodology; areas where sales costs can be cut; or increases, decreases and trends in your sales. It does so while giving you more than enough time to make these adjustments and remain on track to meet your sales goals.

In addition, a sales forecast gives your sales team a target to strive toward. In sales, staying motivated is critical, and if your sales forecast sets a target, your salespeople will keep their eye on it. That’s especially true if you tie some sort of incentive to beating the forecast for a given period of time, such as team bonuses or boosted commissions for sales that exceed predictions.

What are some key sales forecasting challenges?

Here are some factors that may complicate your sales forecast:

• Sales history. Creating an accurate sales forecast requires thorough data on your recent company sales. This can present a substantial challenge for newer companies with little or no sales history. Without much past data to go on, several forecast influences — operating costs, sales prices, marketing activities — don’t yet exist for your company.
• Research. If your company doesn’t have an extensive sales history, you can patch this information gap somewhat via thorough research into your competitors , target market, industry and more. If your company does have an extensive sales history, this research remains important, though perhaps less so. In both cases, the time and money that go into research can pose sales forecasting challenges.
• Data accuracy. Sales forecasting assumes correct data sets, but in reality, human error — even with the use of customer relationship management (CRM) software — remains possible. When sales reps record inaccurate data in your CRM program , an incorrect sales forecast — and therefore poor planning — can result.
• Superficiality. In some cases, sales data only showcases numbers without explaining the reasoning behind fluctuations. Without these explanations, predicting future customer behavior can be tougher, which affects the accuracy of your sales forecast. Nearly every industry has a slow or busy period. A sales forecast for a busy period may be inaccurate if it’s based on a slow period, and even the most diligent sales executives can sometimes miss this discrepancy.
• Sales funnel inconsistency. Not only can two companies’ sales funnels look completely different, but the funnels that two sales reps within the same company use can also vary. Work proactively to prevent this internal discrepancy, as terminology gaps or unstandardized sales processes can result in misleading information and in turn skew sales forecasts.

What to do if you fall short of your sales forecast

Sales forecasts are predictive tools, and sometimes your team may fall short of predictions. If that happens, you should do two things: Analyze your forecasting methodology and review operations and market conditions for the period during which you missed the forecast.

First, take a closer look at your sales forecast and how you developed it. If it was grounded in lofty ambition rather than historical sales data, that may be a clear indicator that it wasn’t realistic. For example, if your team has historically brought in between $100,000 and $200,000 in revenue per quarter, suddenly expecting them to generate $500,000 without any demonstrable changes in operations is setting your team up to fail.

Similarly, if the sales forecast was built on a dependency that wasn’t met, that could explain the failure. For example, if your forecast was built on the premise that your marketing team would generate 20 percent more leads than it did in the previous period and the team only generated 5 percent more leads, it’s unlikely the resulting sales forecast could be met.

If your forecasting methodology appears sound — that is, it’s grounded in historical sales data and realistic assumptions about the upcoming period — take a look at market conditions. Has the economic landscape changed? For example, record inflation between 2021 and 2023 saw declines in consumer spending and reduced marketing budgets. Sales forecasts made before inflation impacted the broader economy are likely to miss the mark. In a case like this, it’s important to revise future sales forecasts once you understand why previous ones were not met. 

Missing a sales forecast isn’t the end of the world, but you should analyze what caused your expectations to be off base and adjust future sales forecasts accordingly.

Sales forecasting supports financial planning and sets sales targets

Sales forecasting is important not only for benchmarking a successful quarter or year for your sales team, but also giving them a clear goal or target to surpass. While meeting a sales forecast is an important goal in itself — especially when that forecast is based on historical sales data and expected lead generation — eclipsing it can be a mark of great success. Sales forecasting is not only an important financial planning tool, it’s also a great motivator to get more out of your sales team.

Jacob Bierer-Nielsen contributed to this article.

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9 Free Sales Forecast Templates to Super-Charge Sales Growth in 2024

Sales forecasting templates might not sound all that exciting. Fair enough. After all, who wants to create more reports—on top of all your other responsibilities?

If you're feeling a little skeptic, take a walk with me and imagine this scenario involving two different sales managers :

Which of these sales managers is more likely to get the budget they want?

No brainer. It's Sales Manager 2 every day of the week.

What's the difference between their pitches? A solid sales forecast to back up the substantial investment they're asking the VP to make.

Sales forecasts can be exciting—they give you the superpower to see what's coming down the pipeline. More importantly, they're easy to create using the right sales forecasting templates.

In this guide, we'll give you a step-by-step method to create a sales forecast and access to several free sales forecast templates (in both Microsoft Excel & Google Sheets format).

But first, let’s quickly touch on why sales forecasts are key to growing your sales team—and your business.

Why are Sales Forecasts Crucial for Sales Teams?

Sales forecasting provides a window into your business's future. Depending on the template, it can help you:

• Predict sales figures for the next quarter: Much like projecting total contract value growth, sales forecasting provides a roadmap for anticipated revenue, enabling you to plan and allocate resources accordingly.
• Make more accurate cash flow projections
• Predict expenses
• See where to invest marketing dollars
• Better allocate hiring budgets
• Spot emerging trends early on
• Diagnosis potential issues in your sales flow early

Lastly, it is a powerful motivation tool for your sales team—especially if you have a longer sales cycle. It allows you to paint a clear picture showing how the work your team is doing today will pay off.

9 Best Sales Forecast Templates (Free Google Sheets + Excel Templates)

Not every sales team needs a super complex sales forecasting model. For instance, small businesses only want (and need) to track a few important metrics. On the other hand, eCommerce companies must track multiple products—which gets challenging without a template.

So, we've sorted through all the free sales forecast templates we could find (in Excel + Google Sheets format), and even created one of our own. Choose the template that works best for your company, sales team, and industry.

Pro tip: Tired of spreadsheets? Cut out the third-party tools with Close's built-in Sales Funnel Reporting .

1. Best General Forecast Template (Without a CRM)

This sales forecasting template from Close provides a simple way to track and forecast two years of sales. The first tab allows for adjusting funnel metrics depending on your sales cycle, average deal size, lead growth, and number of leads.

The second tab forecasts sales by month based on meetings booked, new opportunities created, and leads closed/won. A chart at the bottom displays expected growth.

The only thing better than this is having sales forecasting built right into your CRM ( like with Close ), which enables you to have powerful integrations that enrich your forecasting accuracy and pipeline health over time.

Get the free template here .

2. Best Forecast Template for a Lead-Driven Sales Process

This template is ideal for companies that track their lead generation efforts and monitor their monthly sales forecast. You’ll see it breaks the year into quarters and tracks leads in all stages of the sales funnel .

The best part? This is a Google Sheets template (which can be accessed via Google apps and can also be downloaded for use in Microsoft Excel).

This template tracks deal value and uses a weighted forecast model. It can also predict the probability of closing, which is a helpful metric for B2B companies. You can download it right here .

3. Best Free Forecasting Template for Multiple Product Businesses

Does your company sell multiple products or services? This sales projection template could be a great choice for a business with more complex offerings. It tracks the number of units sold for each product line over 12 months on a single spreadsheet to streamline your forecasting accuracy.

It also carries over sales history from three previous years, making it easy to compare sales by unit, month, or across years. You can download it right here in Google Sheets or Microsoft Excel format. Just make a copy, and start editing the sheet.

4. Best Forecasting Template for Retail Businesses

This template is ideal for retail stores that want to forecast sales, track gross sales, and mark up percentage and profit margin for each item with the goal of generating more new business. The yellow cells allow you to input your own data, and the spreadsheet uses smart Excel automation formulas to calculate forecasts.

While it doesn't display the previous year's data in this view, you could easily create a pivot table in Excel or Google Sheets to pull data from several years. That way you can compare average sales, total sales, and other sales KPIs that matter to your leadership. You can pick this one up right here .

5. Best for Long-Term Future Sales Analysis (36 Months of Historical Data)

This is one of the most colorful templates on the list, but that's not why we included it. This template is ideal for companies that want to monitor long-term data closely.

In addition to 12 months of full historical sales data, you'll also see detailed insights and data for the past five years, including overall revenue for each type of item. This is a good option if you want to focus your sales analysis on the long and short-term. You can grab this one right here .

6. Best Sales Forecasting Model for Scenario Planning (New Product Launches)

Forecasting sales for a new product launch can be a challenge—which is why many companies do a soft launch without high expectations.

After a soft launch, use this forecasting template to track initial sales data and project your next five years of sales. Head over here to download this one .

7. Best Free Template for Multiple Products at Different Growth Rates

Looking to track product sales that grow at different rates? This spreadsheet tracks growth and forecasts revenue for 12 months—even if the products or services grow at different rates. This is a great fit for businesses with legacy products that regularly launch new products.

This forecasting chart also includes five years of historical data so you can see overall sales growth at a glance. Pick this template up right here .

8. Best for Short-Term Forecasts

Want to plan your inventory or marketing campaigns for just the next few weeks? This 3-month forecast template can help.

Customize the start date, then enter your number of units and price per unit to get projections. It’s simple and effective. Download this template right here .

9. Best for Daily Forecasts

Now, let’s shorten the projections even more—to a daily window. This one is primarily useful for businesses in the retail, restaurant, and hospitality industries.

With this template, predict your sales on a daily or weekly time frame. This granular vision can help you optimize day-to-day sales. Plus, you can rely on the historical sales data and add weekly notes.

Grab this forecast template here .

How to Choose the Right Sales Forecast Template (& Forecasting Methods for Your Business)

The right forecasting template provides access to the sales KPIs that matter most to your sales team. But not all businesses are the same.

Retail businesses may need to track hundreds of products and dozens of different suppliers, while a SaaS company might only offer three pricing plans—but have a really long sales cycle.

You need to find the right template for your business needs. Otherwise, you'll be left floundering in a sea of useless data.

Here's how to select the right sales forecast template for your organization.

Get Clear on Your Sales Goals & Set Realistic Sales Revenue Targets

Different sales goals and revenue targets rely on different data. For example, if you want to predict sales over the next two years, you'll want a forecast template that covers a longer time period.

Goals can also impact which template will work best for your team.

For example, suppose an eCommerce company wants to increase monthly sales by 10 percent and boost customer lifetime value . In this case, they'll need a different template than a small business looking to increase sales from a specific customer segment.

Next, set realistic revenue targets using overall market growth as a benchmark. If your industry expands by 25 percent, a 10 percent growth rate might be too low, while 50 percent is likely too high.

Look for a template that fits your business goals and revenue targets.

Consider Your Business Type & Plan Ahead for Sales Fluctuations

Your business type is one of the most important factors to consider when selecting a template. The size, industry, age, and growth rate can all impact which template will work for you.

Also, consider how often your sales fluctuate. For example, an eCommerce store may have 10 to 15 fluctuations a year, so they need a template that can handle their data. On the other hand, a small fly fishing business may have just two fluctuations—on and off-season.

Look for a template that suits your business model and accommodates your sales fluctuations.

Decide Which Method of Sales Forecasting to Use for Your Sales Team

When it comes to sales forecasting methods, there is no one-size fits all solution.

You'll need to adjust your forecasting based on your historical data, the metrics you need to track, and your confidence in the data. Your goals and KPIs also impact the forecasting methods you use.

Here are seven sales forecasting methods, including who should use them:

• Lead-driven forecasting : Looks at previous lead conversion rates and projects future sales based on current lead volume. Best for organizations with clear historical data and a steady stream of inbound leads, such as SaaS or technology companies.
• Length of sales cycle forecasting : Tracks how long a typical lead takes to close based on lead type. Best for organizations with insights into the entire sales pipeline and well-aligned sales and marketing teams, especially B2B.
• Opportunity stage forecasting: Calculates how likely a lead is to close based on specific actions and lead type. Ideal for businesses with good historical data on closing rates.
• Test-market analysis forecasting: Leverages data from a soft release to get a sense of projected revenue. Best for startups or businesses launching a new product line or service.
• Historical forecasting : Forecasting data based on historical data and market trends. Works well for any business with at least a year of historical data.
• Multivariable analysis: A complex analysis that considers multiple factors and closing ratios. Best for companies with varying deal sizes and close rates or selling multiple products or services.

Make sure whatever template you choose fits your analysis method.

Look at Historical Data & Past Sales Metrics

We've already discussed how historical data can impact your sales forecasting, but it's also an important factor in choosing the right template.

Before choosing a template, look at your past metrics and historical data. How much data do you have? If you have several years' worth of data, consider a template with a longer forecasting model.

What data do you want to include based on your business type and forecasting methods? Make sure the template you choose includes the fields important to your business.

Research External Market Conditions to Create an Accurate Sales Forecast

Finally, spend a few hours researching current market conditions and consider how they may impact your sales forecast. For example, if your industry is growing fast, you might select a forecasting template that updates in near real-time.

On the other hand, if a large competitor is acquiring another company, that might make growth more challenging, and you might need to lower your growth expectations.

Look for a template that works well with current market conditions.

How Do You Calculate Sales Forecasts Quickly?

Here’s a simple formula that SaaS businesses can use for a specific forecast period:

Number of expected new customers x Average deal size

The accuracy of such a forecast depends on various factors, including your churn rate, upsells, changes to your existing subscriptions, market conditions, etc. The more informed your assumptions, the better your accuracy.

Pro tip: Are you starting to notice your time is getting consumed by forecasting sales and managing your sales process? Maybe it's time to move to a CRM .

For example, Close’s Opportunity Funnel Report displays funnel insights and graphs to help visualize the health of your pipeline—and make forecasting a breeze.

START YOUR FREE TRIAL→

How to Create a Custom Sales Forecast Template: Five Easy Steps

Sometimes, you need to do it yourself. Sales forecasting can be simple—especially if you create a forecasting template based on your own sales process and KPIs. Assuming you’re already tracking your sales, here are the steps to create your own template.

Step 1: Choose Sales Performance Metrics

What do you want to track? Whether it’s the sales quotas of individual sales reps, your gross profit, or simply one-year sales projections, choose KPIs based on your goals.

You can check out this exhaustive list of KPIs , but most SaaS businesses can start by calculating their run rates. Keep in mind that it requires a few months of revenue data to project your annualized revenue.

Here's the sales run rate formula :

Projected sales = Run rate (Current sales/number of sales periods elapsed) X the remaining number of sales periods

This is one of the easiest ways to predict future growth, and it’s a great starting point. We’ll refine it in the fourth step, but now let’s start creating a template.

Step 2: Create a Layout for Your Template and Add Formulas

Now, add relevant formulas for your chosen metrics so that your sheet can make automatic forecasts based on your data input.

The specific columns you include in your layout depend on the KPIs you want to track, and the information you want to include.

If we were calculating the annual run rate, you could use one column for the month, another for the sales in that month, and another for calculating the total sales up to the current month.

Next, you want to create formulas for the average monthly rate and the annual run rate formula (ARR), which will be your average monthly sales X 12. These two can be additional columns.

Step 3: Calculate Your Sales Forecast

Now it’s time to test your template. Input data and let the spreadsheet automatically calculate your sales forecast. In our example, after inputting data for January through March, here’s what the forecasted annual run rate looked like:

Step 4: Adjust for External Factors and Strategic Business Plans

Our simple run rate formula doesn't consider seasonality, competition, market changes, or business growth.

If seasonality or trends impact your sales, calculate the percent change from your average month during periods of spike or dip. For example, if your sales typically spike by 30 percent in November, you can adjust your sales run rate to account for these trends.

Internal changes can also impact sales forecasting. Are you launching new products ? How have product launches performed in the past? Are you marketing to new customer segments? How many new customers do you expect these new markets to add to your customer file?

Refining your formula will improve your forecast's accuracy, leading to informed sales plans and decisions.

If you want to create a comprehensive SaaS revenue forecast model from scratch in Excel, check out this tutorial .

Step 5: Integrate the Template Into Your Process (& Keep Improving It)

Most sales reps spend only one-third of their day selling to prospects. So, you want to integrate the sales forecasting template into your workflow naturally, so it doesn’t diminish productivity. Work to blend it with your team's existing spreadsheets or software.

Set up a regular cadence for importing data into the template—either manually, or automatically from another software. Then, generate forecasts based on inputted data.

To keep your forecasts relevant, regularly review the accuracy of the results. Make adjustments to your template as needed—and remember that a change in business strategy or market conditions should also invite revisions.

Want to sophisticate your forecasts and consider advanced trends? Then you must use evolved sales forecasting methods. Get more detailed insights into sales forecasting here .

Using Forecasting Templates to Predict + Optimize Future Revenue

When it comes to sales forecasting, the right template can make all the difference. If you're still doing the process manually, you might miss out on actionable insights that could help your team meet and exceed your sales goals. Plus, manual forecasting takes a lot of valuable time—and is prone to error.

So, choose one of the above templates to create a standardized forecasting approach for your company, but don’t be afraid to make it your own. Add columns, include metrics that matter, and even plug in your brand color and name.

Or, you can just design a template from scratch.

Remember that your template isn’t static. Keep refining your forecast assumptions, and iterate to improve accuracy. Over time, you'll end up with a custom sales forecasting spreadsheet that makes you look like a superstar—and boosts your revenue potential.

Want even more actionable insights? See how Close gives you access to the reporting metrics that matter .

But even if you’re working without a CRM, or using another product to manage your sales process, grab our free sales forecast template to achieve your goals that much faster.

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The beginner’s guide to sales forecasting

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The platform for orchestrating performance.

Learn how to create an accurate sales forecast with key features and step-by-step examples in our sales forecasting guide

Sales forecasting  is the process of estimating future revenue by predicting how much of a product or service will sell in the next week, month, quarter, or year. At its simplest, a sales forecast is a projected measure of how a market will respond to a company’s go-to-market efforts.

Whether you’re new to sales forecasting or a seasoned pro in need of a refresher, use this blog as your sales forecasting guide.

Why is sales forecasting important?

Forecasts are about the future. It’s hard to overstate how important it is for a company to produce an accurate sales forecast. Privately held companies gain confidence in their business when leaders can trust forecasts. For publicly traded companies, accurate forecasts confer credibility in the market.

Sales forecasting adds value across an organization. Finance relies on forecasts to develop budgets for capacity plans and hiring, and production uses sales forecasts to plan their cycles. Forecasts help sales operations with territory and quota planning, supply chain with material purchases and production capacity, and sales strategy with channel and partner strategies.

There are many types of sales forecasts depending on your go-to-market strategy such as:

• Opportunity forecasting
• Retail sales forecasting
• E-commerce sales forecasting
• Services forecasting
• Consumption-based forecasting
• Run-rate forecasting

These are only a few examples. Unfortunately, at many companies these methodologies stay disconnected, which can produce adverse business outcomes. If information from a sales forecast isn’t shared, for example, product marketing may create demand plans not aligned with sales quotas or sales attainment levels. This leaves a company with too much inventory, too little inventory, or inaccurate sales targets — all mistakes that hurt the bottom line. Committing to regular, quality sales forecasting can help avoid such expensive mistakes.

Close the gap between how you run your business and how you plan for it. Check out our guide for more reliable sales forecasting.

How to accurately forecast sales

To create an accurate sales forecast, follow these five steps:

Assess historical trends

Examine sales from the previous year. Break the numbers down by price, product, rep, sales period, and other relevant variables. Build those into a “sales run rate,” which is the amount of projected sales per sales period. This forms the basis of your sales forecast.

Incorporate changes

This is where the forecast gets interesting. After you have your basic sales run rate, you want to modify it according to several changes you see coming. For example:

• Pricing:  Are you changing the prices of any products? Are there competitors who may force you to modify your pricing schemes?
• Customers:  How many new customers do you anticipate landing this year? How many did you land the previous year? Have you hired new reps, gained quantifiable brand exposure, or increased the likelihood of gaining new customers?
• Promotions:  Will you be running any new promotions this year? What is the ROI on previous promotions, and how do you expect the new ones to compare?
• Channels:  Are you opening any new channels, locations, or territories?
• Product changes:  Are you introducing new products or changing your product suite? How long did it take for previous products to gain traction in the market? Do you expect new products to act similarly?

Anticipate market trends

Now is the time to project all the market events you’ve been tracking. Will you or your competitors be going public? Do you anticipate any acquisitions? Will there be legislation that changes how your product is received?

Monitor competitors

You’re likely doing this already, but take into account the products and campaigns of competitors, especially the major players in the space. Also check around to see if new competitors may be entering your market.

Include business plans

Add in all your business’s strategic plans. Are you in growth mode? What are hiring projections for the year? Are there any new markets you’re targeting or any new marketing campaigns? How might all this impact the forecast?

Once you’ve quantified these things, build them into your forecast. You want everything to be itemized, so you can understand the forecast in as granular a level as possible. Different stakeholders in the company will likely want to understand different aspects of the forecast, so it behooves you to be able to zoom in or out as far as needed.

Keys to success in sales forecasting

Improving the accuracy of your sales forecasts and the efficiency of the forecast methodology depends on multiple factors, including strong organizational coordination, automation, reliable data, and an analytics-based process. Ideally, sales forecasts should be:

• Collaborative.  Leaders should synthesize input from a variety of sales roles, business units, and regions. Frontline sales teams can be of great value here, providing a perspective on the market you hadn’t considered before. 
• Data-driven.  Predictive analytics can reduce the impact of subjectivity, which is often more backward-looking than forward-looking. Using common data definitions and baselines will foster alignment and save time. 
• Produced in real time.  Investing in the real-time capability to course-correct or reforecast allows sales leaders to quickly gain insight so they can make more informed decisions. This enables them to quickly and accurately update the forecast based on demand or market changes.
• Single-sourced with multiple views.  Generating the forecast as a single source of data gives you great visibility into rep, region, and company performance, and helps align different business functions across the organization. 
• Improved over time.  Use the insights provided by an improved sales forecasting process to create more refined future forecasts where accuracy improves over time against a set of accuracy goals.

Companies with more advanced forecasting processes and tools perform better than their peers because they more deeply understand their business drivers and can shape the outcome of a sales period before the period closes.

Top sales forecasting challenges

It can be difficult to produce a consistently accurate sales forecast. Here are some of the top sales forecasting challenges to avoid:

Accuracy and mistrust

When companies use spreadsheets for sales forecasting, they can run into issues with accuracy, which in turn creates a less trustworthy forecast.

Subjectivity

Although producing a quality sales forecast does rely to a small degree on the forecaster making good decisions about how to use the data, in general, companies rely more on judgment and less on credible predictive analytics than they should.

When a sales forecast isn’t generated in a way useful for stakeholders across the company, it becomes far less effective than it should be. A good forecast should produce relevant and understandable data for multiple teams.

Inefficiency

Sales forecasts can be especially difficult to produce when inefficiencies are built into the forecasting process. For example, when a forecast has multiple owners, or the forecast process is not clearly spelled out with a standard set of rules, there can be disputes about how the forecast will be produced.

Company forecasts across the enterprise

To forecast across the enterprise, a company needs different elements from each business function. Here’s what different functions can contribute to the sales forecast:

• Sales:   Provides the bottom-up view, using data from the CRM and PRM, building in judgment from sales leaders. Sales can manage this process through the sales operations function, using the right tools and reporting. 
• Finance:   Provides macroeconomic guidance and works with the product teams. Finance can help integrate the forecast with their financial planning software. 
• Marketing:   Provides macro-market guidance, especially in industries like telecom, retail, and CPG. Marketing can also provide finance teams with market data. 
• Supply Chain:   Provides input on supplies and production. 
• HR:  Assists with sales capacity planning and headcount forecasting based on attrition and staffing needs across every function that touches revenue such as contact centers, professional services, and retail stores.
• IT:  Assists sales forecasting by providing platforms, data, integration, and technical support.

Features to look for in sales forecasting software

Best-in-class sales forecasting software should be able to immediately improve the accuracy of your forecasts and make the forecasting process more efficient.

• Execute sales forecast simulations and outcomes.  Make changes to drivers and execute sales forecast simulations to project future impact on sales performance. 
• Analyze trends, changes, and seasonality of the sales forecast over time.  Develop time-based dashboards and key performance indicators (KPIs), such as velocity calculations, trending analytics, and seasonality fluctuations. 
• Model and analyze “what-if” scenarios . Create “what-if” scenarios and modeling to analyze the impact to the sales forecast if a specific business, economic, or competitive situation were to occur.
• Build sales forecasting calculations with familiar formulas . Apply an easy-to-use formula builder to configure sales forecast benchmarks using familiar formulas and syntax. 
• Snapshot Salesforce CRM accounts and opportunities to compare period-over-period . Compare week-over-week, month-over-month, and year-over-year changes to current periods. 
• Compare forecasts based on multiple modeling techniques.  Create sales forecasts based on qualitative, time series analysis and projection, and casual modeling techniques while determining the degree of uncertainty. 
• Forecast across geographies, products, and accounts.  Develop sales forecasts by geographic locations, product lines, and accounts, or change any of these dimensions to analyze the sales forecast at any granularity of these hierarchies.
• Analyze performance with data visualization.  With built-in dashboards, reporting, and analytics with data visualization you can analyze sales forecast and sales performance metrics to make better decisions with actionable insights.

Why use Anaplan for sales forecasting?

The Anaplan platform is uniquely configured to improve sales forecasting . By putting all relevant employees — salespeople, sales leaders, ops teams, finance, supply chain, marketing, and executives — on the same platform, companies can do the following:

• Increase accountability and ensure the sales team reports sales pipeline activity more accurately.  Identify sales deals at risk, eliminate “sandbaggers,” and reduce overcommits. 
• Standardize sales forecasting and pipeline management.  Provide a single line of sight across the entire organization so everyone has a view into revenue projections, sales projections, and operational insight. 
• Create accurate and trusted sales forecasts.  Enable functional leaders to make better and more informed decisions by providing accurate and trusted sales forecasting to all business units, including sales, finance, operations, HR, and marketing.
• Access data-driven sales benchmarking and trend analysis.  Enable sales leaders to use historical and current sales performance as a benchmark to predict future sales results. Make changes to functional plans and implement these changes across all other business models.

By adopting a  Connected Planning  approach, bringing together people, data, and processes from across the enterprise, companies can produce an accurate sales forecast that connects teams throughout the company. 

Additional sales forecasting resources

Looking for more sales forecasting guidance. Check out these insightful resources:

• White paper: The finance leader’s guide to reliable sales forecasting
• Case study: DocuSign transforms sales forecasting with the Anaplan platform
• Webinar: Increase forecast accuracy with sales planning optimization

Explore our demo series to learn more about Anaplan for sales forecasting

What is a sales forecast: definition, importance, and how to build one

Posted November 16, 2021

By Serena Miller

Editor, Sales Best Practices at Outreach

Proper forecasting is essential for any sales organization. It’s a process that enables data-driven business decisions, helps revenue leaders identify new opportunities, and provides a clear picture of projected revenue.

Even so, building accurate sales forecasts is complex if you don’t know where to start, or if you’re not leveraging the types of tools that yield precise results.

In an August 2021 commissioned study conducted by Forrester on behalf of Outreach, almost one-third of B2B sales leaders said their forecasts were derived by selecting key deals and adding in qualitative analysis to arrive at their final number. 

However, this static and unscientific approach to forecasting makes it impossible to drive predictable business growth. If you’re not accurately and consistently forecasting your sales, you could be missing out on key insights that impact budget, hiring, scalability, and — ultimately — cash flow.

Here, we’ll take a deep dive into what a sales forecast is, how forecasting can benefit your organization, and how Outreach helps revenue teams bring science to the the traditional approach to sales forecasting. 

What is A Sales Forecast?

A sales forecast predicts  expected revenue over a given period of time. When used correctly, sales forecasts help teams to accurately estimate how much product or service they’ll sell, which helps to keep the expectations of reps, managers, leaders and other stakeholders on the same page.

Sometimes, the concept of a sales forecast is conflated with other related terms, like sales goal setting. But the two are actually quite distinct: sales goal setting is an expression of what you’d like to occur, while a sales forecast predicts what will actually happen — regardless of what you may have wanted to achieve.

Depending on the unique elements of your business (like age, size, existing systems of record, etc.), the level of detail and accuracy with which you forecast will vary. Forecasts are limited by their inputs, so you can only expect a high degree of precision if you have enough clean data to use.

Extremely accurate forecasts also require a range of complicated calculations, which is why many businesses have turned to technology for support. 

Why does sales forecasting matter?

If you already have clearly defined goals, a strong sales process , and a healthy pipeline, you might wonder if creating accurate forecasts is worth the effort. In short: yes, confident sales forecasting is an absolutely critical component of a company’s growth. 

Accurate forecasts support business growth

Consistent forecasting can improve both internal and external operations by helping your business:

• Efficiently plan for demand - In order to make sound decisions regarding hiring, supply chain management, and inventory, you need a clear understanding of what your operation will need to run smoothly. Because forecasts act as precise pictures of expected sales, each department within your business can use them to fully address staffing needs, product development, and budget before these factors ever become an issue.
• Make informed business investments - Whether you’re looking to develop a new product or boost customer service through increasing your staff, you first need the funds to actually cover those costs. Sales forecasting helps you better estimate incoming profit vs. anticipated costs, so you can make wise investments in the growth of your business without the risk of mismanaging your capital.
• Quickly uncover and resolve potential problems - Proper forecasting gives you transparency into your sales pipeline , so you can quickly identify trends that might otherwise cause significant issues.
• Improve your sales process - Your sales process should be modified based on what works and what doesn’t. Identifying areas that take longer than they should, have low conversion rates, or don’t meet customers’ needs is essential for refining your playbooks and closing more deals.

Multiple teams contribute to the forecasting process

Each sales organization is unique, so the person or team responsible for creating the forecasts often varies from one business to the next. In some instances, each sales rep is responsible for committing the deals they believe are likely to close. In others, revenue operations managers or sales leaders build forecasts to more objectively categorize and project their reps’ performance.

Regardless of who builds them, decision makers and stakeholders use sales forecasts to make choices about an organization's growth, how they’ll strategize that growth, and what kind of timeline they’ll need to succeed. Predictions in both short- and long-term performance help businesses uncover potential opportunities that help them scale.

Sales managers who rely on their reps to commit deals that feed into the forecast also find great value in confident forecasts, as they help ensure that reps’ deals are on track to close for the quarter. Managers need an easy way to gauge potential risk in their teams’ pipeline so they can focus on deals that are slipping, and forecasts provide them with the visibility to do just that.

Forecasts impact a variety of other departments, too. Product leaders rely on sales forecasts to evaluate and prepare for product demand, while finance teams use them to make investments. Sales forecasts are highly valuable to HR departments, too, as they’re frequently used to determine staffing needs.

Getting it right is easier said than done

That means getting it right (and doing so consistently) is a critical part of a business’s growth. In fact, sales organizations that utilize a formal, structured forecasting process increase their win rates of forecasted deals by 25% versus those that take a less formal approach.

But accurate sales forecasting is art and science — and many organizations don’t have the necessary skills. Less than 50% of sales leaders and sellers have confidence in their organization’s forecasting accuracy, as poor data quality and quantity threaten the precision of their process. These limitations are a result of some unfortunately common challenges among businesses, including:

• A lack of accurate, up-to-date data in their CRM
• An inability to identify and monitor key deal signals
• A lack of visibility into the numbers/math that drive their forecasts
• Manual, error-prone data entry processes

Sales Forecast Methods

Leveraging the proper tools can certainly help ensure forecasting accuracy, but you must also consider which method is right for your business. Forecasting isn’t a one-size-fits-all process: it’s a balancing act that requires a thorough understanding of context, relevance, and available data.

Thus, it’s important to keep in mind that there are some key factors you should take into account before settling on a particular forecasting method, including:

• The availability of historical data
• What time period the forecast will cover
• The realistic timeline for developing the forecast
• How accurate the forecast needs to be
• The purpose of the forecast

Once you’ve nailed down these considerations, you can more easily determine the forecast method that best suits your needs. There are several popular sales forecast methods from which to choose, each of which offers a distinct advantage:

How to Create a Sales Forecast

The forecasting process should be tailored to your unique business, based on your specific goals, available data, sales process, and tools for support. But to help get you started, we’ve outlined the most critical steps you should follow when building your forecast:

Choose a Sales Forecast Method

In the past, many organizations relied on qualitative methods for forecasting. But the art of selling has become much more of a science, with the emergence of tools and technologies that help form data-driven insights.

Competitive sales organizations should implement a forecasting method that uses reliable, actionable data to better inform business decisions moving forward. Revenue leaders can’t afford to use the inaccurate “guesstimation” methods of the past if they want to deliver predictable growth.

As you consider your options for forecasting methods, keep in mind that a quantitative, scientific, data-driven approach (backed by powerful analytics, user-friendly dashboards, and tools for complete pipeline visibility) is key to unlocking a clear competitive advantage.

Acknowledge Sales Forecast Assumptions

Your team’s performance — and the factors that impact that performance — are likely dynamic. As you build your sales forecasts, don’t forget that they’re based on assumptions instead of facts that are set in stone. They’re not crystal balls that can reveal the future, but they do offer helpful predictions based on an accumulation of information. Thus, you should make sure you have an up-to-date understanding of the following factors:

• Your products/services - You probably modify the cost of your products and services (and the products and services themselves) over time to better serve your customers and improve profitability. Make sure you take these changes into account, including any new product launches, current product updates, price or sales channel adjustments, and cost of production, labor, and materials.
• Market conditions/state of your industry - The industry in which your business operates can impact your growth, so it’s important not to ignore broader conditions and trends. Take a look at overarching changes in the economy, number of viable competitors, and size of your current and potential customer base.
• Regulatory changes - Some companies must operate under certain industry laws or regulations, so make sure you’re always up-to-date with any relevant legislation.
• Marketing inputs - Sales and marketing alignment can be challenging to achieve, but doing so can make forecasting that much easier. Bringing the two together can help you better understand how specific marketing activities (e.g. new marketing campaigns, changing advertising budgets, new marketing channels) impact overall sales performance, so make sure you take them into account.

Create Your Forecast

Armed with the specific elements needed for an accurate prediction, you’re now finally ready to build your sales forecast! It’s important to note that the following forecasting steps are just a starting point, as they reflect a simplified approach to the process. Of course, enterprise-level organizations require a more intricate approach that takes into account other market complexities.

If you’re a beginner, here are some basic steps to get you started with building a forecast:

• List out the goods and services you sell
• Estimate how much of each you expect to sell
• Define the unit price or dollar value of each good or service sold
• Multiply the number sold by the price
• Determine how much it will cost to produce and sell each good or service
• Multiply this cost by the estimated sales volume
• Subtract the total cost from the total sales

Once you have a fully defined sales forecast, you can leverage the results to drive your business goals.

Sales Forecast Examples: How to Commit with Confidence

The traditional approach to sales forecasting is filled with gaps, particularly for teams who use disparate systems and processes to manage the revenue cycle. Without a consolidated view of pipeline health and buyer insights, revenue leaders must guess their forecast, so they are perpetually at risk of surprise outcomes. They have dozens of dashboards, but they’re not sure they can trust the data. Instead, they are forced to rely on the gut intuitions of their whole team to inform their forecasting models.

But with a single, unified platform for support, forecasting can shift from a critical gap to a seamless, highly-valuable component of your business. Outreach Commit delivers real-time pipeline data and buyer engagement signals to bring science to the art of forecasting, enabling revenue leaders to go from guessing the future to changing it with recommended actions.

More Forecasting Resources for Sales and RevOps Teams

Today’s shifting economy means revenue leaders have to do more with fewer resources. So how do you deliver on lofty revenue targets while also reducing costs? It starts with more efficient forecasting processes. Instead of spending anxious hours on manual forecasts, modern revenue leaders are embracing ways to save time and refocus their energy on growing revenue. For Outreach's top resources on forecasting efficiency, download the free content bundle: Your Road to Forecasting Efficiency .

How a customer success manager uses Outreach to build relationships

How an enterprise AE manages her book of business in Outreach

How Outreach makes your inbox work for you

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Sales | Templates

9 Free Sales Forecast Template Options for Small Business

Published March 7, 2023

Published Mar 7, 2023

REVIEWED BY: Jess Pingrey

WRITTEN BY: Jillian Ilao

This article is part of a larger series on Sales Management .

• 1 Simple Sales Forecast Template
• 2 Long-term Sales Forecast Template
• 3 Budget Sales Forecast Template
• 4 Month-to-month Sales Forecast Template
• 5 Individual Product Sales Forecast Template
• 6 Multi-product Sales Forecast Template
• 7 Retail Sales Forecast Template
• 8 Subscription-based Sales Forecast Template
• 9 B2B Lead Sales Forecast Template
• 10 CRMs with Built-in Sales Forecasting
• 11 Frequently Asked Questions (FAQ)
• 12 Bottom Line

Using a sales forecast, business owners can create realistic projections about incoming revenue and business performance based on their current data and how they have performed in the past. Sales forecasts may cover weekly, monthly, annual, and multi-annual projections, and can be done using Google Sheets or Excel templates, as well as through customer relationship management (CRM) software.

We’ve compiled nine free sales projection templates you can download. Each downloadable file contains an example forecast you can use as a reference. We also included a blank template you can copy and fill in with your own sales data.

Did you know? Sales forecasts create projections you can use for things like goal setting, performance measurement, budgeting, projecting growth, obtaining financing, and attracting investors. This is why it is important to use software tools or a CRM system that gives you realistic, data-driven forecasts.

1. Simple Sales Forecast Template

Our free simple sales forecast template will help you get started with sales estimates to plan and grow your business. You can modify this multi-year projection sheet in either Google Sheets or Excel. It can also generate future revenue estimates based on units sold, pipeline growth percentages, lead conversion rates, and your product pricing. This gives you an idea of how much your business can grow sales-wise in the next few years.

Sales projection template for multiple years

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FREE Sales Forecasting Template - One-Year

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FREE Sales Forecasting Template - Multi-Year

2. Long-term Sales Projection Forecast

Part of creating a sales plan is forecasting long-term revenue goals and sales projections, then laying out the strategies and tactics you’ll use to hit your performance goals. Long-term sales projection templates usually provide three- to five-year projections. These templates are accessible in both Excel and Google Sheets.

Long-term sales prediction templates are best for businesses looking to scale and want insights about how much working capital they can expect to be able to tap into for growth initiatives. This type of sales projection template is also often required when applying for commercial loans or through other channels such as outside investors or crowdfunding.

Three-year forecast template

Projection of units sold and gross profit from a three-year forecast template

Three-year projection of units sold

FREE 3-Year Forecast Template

FREE 5-Year Forecast Template

3. Budget Sales Projection Template

A budget sales forecast template shows expense estimates in relation to revenue, allowing you to calculate how much you can spend during a specified period. Budget templates will enable you to enter income projections and available cash to indicate your spending capabilities for that time frame.

This type of template is best for new and growing businesses trying to figure out their future available expenditures. Additionally, businesses interested in making a large asset purchase, such as a company vehicle, piece of equipment, or commercial real estate, can use this template to see how much of the asset can be self-financed.

Budget forecast template example

Budget forecast template for services example

FREE Budget Sales Forecast Template

4. Month-to-Month Sales Forecast Template

The month-to-month (or monthly) sales projection template shows sales projections for a year divided into monthly increments. This type of revenue forecast template makes it easier to estimate your incoming revenue. This is because you can break down your pricing model, such as the average number of units sold, on a monthly rather than an annual basis.

This monthly sales projection example is best for seasonal businesses that experience significant revenue fluctuations in some months compared to others. It’s also appropriate for businesses that want to view rolling 12-month projections as a key performance indicator (KPI). You can also use it to project one-year sales estimates before implementing major campaigns or initiatives, such as a growth strategy.

Month-to-month forecast template example

FREE Month-to-Month Forecast Template

5. Individual Product Sales Forecast Template

An individual product sales projection template can be used by businesses that sell one product or service or for projecting sales of a new (or any single) product or service. This forecast indicates how you expect the product to perform based on units sold and the price per unit monthly.

An individual product forecast template benefits businesses that sell products through a storefront or ecommerce medium. It helps businesses that are adding a new product to their arsenal in estimating sales exclusively for that product. It is also recommended for companies that need to track individual performance for the most popular or profitable products.

Individual product forecast template example

FREE Individual Product Forecast Template

6. Multi-product Sales Forecast Template

Use this revenue projection template to generate sales projections if your business sells multiple products. Through this type of template, you can compare the estimated performance of specific products by tracking the units sold and the price per unit. In turn, this will yield a total sales revenue estimate.

The multi-product forecasting template is best for retail or wholesale businesses selling various products. You can also use it to project the revenue of multiple product categories. Here, each “item” represents a category rather than an individual product, and the price per unit is calculated in aggregate.

Multi-product sales forecast template example

FREE Multi-product Forecast Template

7. Retail Sales Forecast Template

A retail sales projection template forecasts revenue for brick-and-mortar stores since it includes data related to foot traffic. The retail sales template calculates projected revenue by year based on foot traffic, the percentage of foot traffic that enters the store, and the scale of conversions or those who make a purchase. Since it has a field for “other revenue,” it can be used by retail stores selling online.

This business forecast template is mostly designed for brick-and-mortar retail businesses. However, a combination of ecommerce and brick-and-mortar businesses, as well as ecommerce operations, can also use this forecast template. The estimated customers passing store data fields can be replaced with website traffic to convert this sales forecast Excel sheet into an ecommerce sales forecasting template.

Retail forecast template example

FREE Retail Forecast Template

8. Subscription-based Sales Forecasting Template

Businesses relying on recurring revenue from sign-ups or contract renewals should use the subscription-based sales prediction spreadsheet. Enter data into the visitor and sign-up fields to show the visitor-to-sign-up conversion rate. Then, enter the number of new customers to show the percentage of sign-ups that convert to paying customers.

This business projection template also helps you track customer churn. It calculates your churn and retention rate based on the number of paying customers at the end of the period compared to the number at the beginning, plus the number of new customers added. Knowing your churn rate is essential since a high or increasing rate of customer turnover could indicate problems with your organization or its products or services.

How to Calculate Churn Rate:

To manually calculate churn rate, divide the number of lost customers by the total customers at the start of the time period, then multiply the result by 100. For example, if your business had 200 customers at the beginning of January and lost 12 customers by the end, you would divide 12 by 200. The answer is 0.06. Then, multiply that by 100, giving you a 6% monthly churn rate.

Churn Rate Calculator

Manual calculation of monthly customer churn rate

The fields of this template can be altered for use by contract renewal businesses like insurance agencies, information technology (IT) companies, and payroll processors. For example, subscribers can be replaced with “leads,” and new subscribers can be replaced with “presentations,” “free trials,” or “demos.” Then, change the churn rate to “non-renewed contracts” to estimate new and recurring business revenue year-to-year.

Subscription-based forecast template example

FREE Subscription-based Forecast Template

9. B2B Lead Sales Forecast Template

A business-to-business (B2B) lead forecast template estimates sales revenue from current deal opportunities in the sales pipeline through business leads. Businesses can use estimated deal values and the percent chance of closing those deals to obtain a sales projection.

This revenue projection template is best for B2B organizations, aka businesses selling to other businesses or organizations, rather than business-to-consumer (B2C) organizations. It can also be used for direct sales prospecting activities and for businesses that submit business proposals in response to solicitation requests.

FREE B2B Lead Forecast Template

CRMs With Built-in Sales Forecasting Features

Sales forecast sample templates are easy to modify. However, customer relationship management (CRM) systems generally offer more robust tools for managing revenue opportunities that can be converted into sales forecasts. They are valuable tools for providing sales predictions on premade charts through the data collected in the system. Below are examples of CRM platforms that could double as great sales forecasting software :

• HubSpot CRM

HubSpot CRM can instantly create revenue projections or automatically produce these reports for you monthly or quarterly at no additional cost, saving you time and helping your business stay on track.

Users can easily generate sales prediction reports on HubSpot with their historical data. (Source: HubSpot )

Starting price: Free for unlimited users or $45 per month (annual billing) for two users

Visit HubSpot

Pipedrive can take information such as potential deal value and probability of closing for a lead or opportunity to provide sales estimates in highly customizable templates.

Pipedrive weighted deal forecasting (Source: Pipedrive )

Starting price: $14.90 per user, per month (annual billing)

Visit Pipedrive

Zoho CRM provides sales forecasting through its native integration with Zoho Analytics, which analyzes and visualizes the data. Users can customize their forecasts by viewing them on different visual channels, including line, bar, and scatter charts.

Zoho Analytics sales prediction (Source: Zoho )

Starting price: Free for three users or $14 per user, per month (annual billing)

Providing the right tools for your sales team to organize leads, communicate with prospects, and analyze sales data is crucial for streamlining a sales operation, one of many responsibilities of a sales manager. Other insights for managing your sales team can be found in our ultimate guide to sales management .

Visit Zoho CRM

Frequently Asked Questions (FAQ)

Why is sales forecasting essential.

Sales forecasting provides a clear picture of your anticipated sales performance based on the number of opportunities in your pipeline and the industry that your business operates in. Having visibility will help you plan your business correctly—especially when the forecast is downward, and you need to scout for new opportunities to meet your sales targets.

What is a sales forecast template?

A sales forecast template is a predesigned spreadsheet that allows businesses to project their future sales revenue for a specific period. It is typically based on historical sales data figures and market trends. It also includes various factors that may potentially affect future sales performance, such as new product launches, seasonality, economic conditions, and changes in consumer behavior.

Bottom Line

Business forecast spreadsheets are available in both Excel and Google Sheets templates as well as other premade templates you can download, customize, and use. You may also take advantage of CRM features that organize, estimate, and visualize your company’s sales information, including sales predictions.

A CRM can save sales reps time in making projections as well as optimize your sales pipeline to generate leads and close more deals. We highly recommend CRMs such as HubSpot CRM , Pipedrive , and Zoho CRM , which all provide excellent sales forecasting features on top of robust sales management and lead nurturing tools.

About the Author

Jillian Ilao

Jill is a sales and customer service expert at Fit Small Business. Prior to joining the company, she has worked and produced marketing content for various small businesses and entrepreneurs from different markets, including Australia, the United Kingdom, the United States, and Singapore. She has extensive writing experience and has covered topics on business, lifestyle, finance, education, and technology.

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Free Sales Forecasting Templates

By Kate Eby | December 4, 2019

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In this article, you’ll find a wide range of pre-built sales forecast templates, available in Excel, Google Sheets, and PowerPoint formats. 

Included on this page, you'll find a sales forecast sample , a 12-month sales forecasting template for multiple products , a sales forecast presentation example , and many more helpful templates.

Basic Sales Forecast Sample Template

Download Basic Sales Forecast Sample Template

Excel | Google Sheets | Smartsheet

This sales forecast sample template is simple to use and provides an example of the forecasted sales of a product. Customize this template by using a forecasting technique to gather data, including historical sales information, economic trends, or comparisons within your industry. Enter the year, product, and unit type. Then, add the number of units sold and price per unit — the sales amount and percentage totals will calculate for each month with built-in formulas.

12-Month Sales Forecasting Template for Multiple Products

Download 12-Month Sales Forecasting Template for Multiple Products

Excel | Smartsheet

This sales forecasting template provides an estimate of future sales for multiple products in a yearly view, but you can customize it to project sales for any period of time. Enter the product, service, or other category name according to your needs. Then, enter your estimated monthly sales. There is also space to add historical sales, which can help you identify trends and other information that will be useful for making future projections.

3-Year Sales Forecast Template

Download 3-Year Sales Forecast Template - Excel

This customizable sales forecast template is designed to forecast sales for a 36-month time period. Enter the number of units sold, unit price, and unit cost of goods sold (CoGS). Once you’ve entered those values, built-in formulas will calculate the monthly and yearly sales growth rate, revenue, margin, and gross profit. This template also provides year-to-year comparisons to identify the years that saw the highest rate of growth.

5-Year Sales Forecast Template

Download 5-Year Sales Forecast Template

Excel | Google Sheets

This sales forecast template is user-friendly and displays the monthly and yearly sales projection for a product at a glance. Simply enter the number of units sold and price per unit for a product. Then, the total sales and percentages will auto-calculate with pre-built formulas. This template displays the highest performing month and provides insight into sales trends and fluctuations.

Monthly Sales Projection Template

Download Monthly Sales Projection Template

This monthly sales projection template is customizable and shows forecasts in a monthly and yearly view. Enter the year forecasted at the top, add total projected sales goals for new business and reorders for each month, and then add actual sales for comparison. The variance will calculate via built-in formulas, so you can measure the accuracy of new monthly sales, product reorders, and combined totals.

Daily Sales Forecast Template

Download Daily Sales Forecast Template - Excel

This daily sales forecast template enables you to estimate sales projections for a daily or weekly time frame. Use historical sales data for the same time period in previous years, and use the additional space beneath each week’s start date to add notes, including weekly sales or holidays that influenced the price per unit or total sales.

Sales and Budget Forecast Template

Download Sales and Budget Forecast Template

This customizable sales and budget forecast template is used to project monthly sales and planned expenses for a company, including advertising, insurance, payroll, and overhead. Add the estimated number of customers, average sale per customer, and average cost per sale. Then, add budgets for operating, payroll, and office expenses. Once you’ve entered those values, pre-built formulas will calculate the total sales, gross profit, total expenses, and net profit for a 12-month period.

Product Sales and Profit Forecasting Template

Download Product Sales and Profit Forecasting Template - Excel

This sales and profit forecasting template provides the projected sales, operating income, and market share for a product over a five-year span. Once you’ve entered the product data, the forecasted values will auto-calculate on the Output Scenario tab with built-in formulas. The results provide the forecasted sales and profit based on target operating income and target market share.

Sales Forecast Presentation Template

Download Sales Forecast Presentation Template - PowerPoint

This sales forecast presentation template provides visually appealing graphics that you can customize according to your needs. Add projected sales and growth percentages for any time period. Then, add charts and historical data to display trends. This presentation template also includes a slide that allows you to add key takeaways or other pertinent information to support your forecasts.

Deal-Based Sales Forecasting Template

Download Deal-Based Sales Forecasting Template

This sales forecasting template is based on the deal stage, size, and probability. Enter the company name and contact information related to each deal, select the deal stage, and add the deal size. Once you enter the stage and size, the probability and weighted forecast will auto-calculate with built-in formulas. This template also has space to assign a sales representative, select anticipated close dates, and detail necessary further actions.

Opportunity-Based Sales Forecast Template

Download Opportunity-Based Sales Forecast Template - Excel

This sales forecast template provides a weighted forecast for opportunities based on the probability of the sale. Add the opportunity name, sales phase, sales agent, region, and sales category. Then, add the forecasted amount and probability for each opportunity. Based on the  values you enter, the weighted forecast will auto-calculate with pre-built formulas and display a visual of sales projections on the Forecast Totals and Forecast Graph tabs.

Sales Forecasting by Lead Stage Template

Download Sales Forecasting by Lead Stage Template - Excel

This lead-driven forecasting template enables you to project the value of each lead on a monthly basis, based on historical data (e.g., the previous sales cycle, lead conversion rates, and average unit price). When you customize the Deal Stage key, the deal stages use formulas to automatically update accordingly. Add contact information, key dates, and the deal value for each lead. Then, the weighted forecast value will auto-calculate according to the closure probability you assign to each stage in the key.

E-Commerce Sales Forecast Template

Download E-Commerce Sales Forecast Template

This sales forecast template is designed to project future revenue for an e-commerce business over a five-year time period. Enter the marketing budget at the top of the template. Then, enter the number of organic visits, conversion rate, average order value, and other revenue. Once you enter those values, the paid and organic visits, sales, and total revenue will auto-calculate with built-in formulas.

Retail Sales Forecast Template

Download Retail Sales Forecast Template

This customizable retail sales forecasting template projects the total annual revenue for a five-year time span. Enter the estimated daily footfall, percentage of customers who enter the store and make a purchase, average sale value, and other sources of revenue. Once you enter those values, the total number of customers, sales, and revenue will calculate with pre-built formulas.

Hotel Revenue Projection Template

Download Hotel Revenue Projection Template

This sales forecasting template projects the annual revenue of a hotel over a five-year time span. Enter the total number of rooms and the number of operating days in a given year, the occupancy rate and average daily room rate, and the food and beverage percentage, if applicable. The projected room occupancy and total revenue will calculate automatically with built-in formulas.

Bed and Breakfast (B&B) Sales Forecast Template

Download Bed and Breakfast (B&B) Sales Forecast Template

This sales forecast template is designed to estimate the total revenue for a bed and breakfast (B&B) for a five-year time period. At the top, enter the number of rooms available, the number of days open by season, average room rates, and other revenue. Occupancy rates, available nights, and total projected revenue will calculate with pre-built formulas.

Why Is Sales Forecasting Important?

Performing a sales forecast , or estimating future sales, is a valuable tool you can use to predict the short and long-term performance of your company. When done accurately, a sales forecast can provide keen insight and enable your company to make informed strategic decisions that reinforce and align with your organization’s sales plan . 

Learn more about the key steps involved in performing a sales forecast, along with helpful tips and examples, by visiting " The Last Guide to Sales Forecasting You'll Ever Need: How-To Guides and Examples ."

Improve Sales Forecasting with Smartsheet for Sales

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The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

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How to calculate a sales forecast for a new business

Table of Contents

Definition of a sales forecast

The uses of a sales forecast, how to calculate sales forecast for a new business, calculate a sales forecast using the accounts of your competition , calculate a sales forecast using a target market, manage your finances with countingup.

When you’re running a business, you should always keep one eye on the future. If you don’t have a rough idea of what the next week, month, or year might bring, you’ll be at a disadvantage when making business decisions. This means that calculating a sales forecast is essential, especially when you’re just starting a business or beginning to write a business plan . 

Sales forecasting can be tough if you don’t have much business experience, but we’re here to help. This article will cover a range of different topics related to sales forecasting, including:

Creating a sales forecast is the first step in managing your company’s cash flow . Your cash flow is the movement of money in and out of your business. By forecasting your sales, you’ll be able to predict your gro s s profit and net profit , which means you can start anticipating what money you’ll have to spend on running your business for the next month. 

Put simply, a sales forecast is a prediction of how much you’re going to sell in the coming month. This forecast doesn’t need to be a guess — it’s possible to calculate a fairly accurate forecast with some thorough research. The focus of your research will differ depending on which sales forecast method you pick.

Firstly, your sales forecast is important because it helps you set sales goals . Measuring the success of your business is a vital part of deciding its future, and setting sales goals is one of the simplest ways to measure success. 

If you have an accurate sales forecast, you’ll be able to set realistic sales goals. You’ll want your goals to be realistic, as this will give the clearest picture of how well your company is doing and if significant changes are needed.

Similarly, sales forecasts can also help create an accurate budget for your business. As a sales forecast is essential for predicting the money your business will make, it also plays an important part in working out how much money you’ll have to spend. 

Finally, sales forecasts help with finding investors for your business . If you’re looking for financial support to start your business, any investor you approach will likely be interested in the amount of money you expect the business to make. If you’ve created a sales forecast, you’ll be able to provide this information.

Large, well-established businesses rely on the sales figures of previous months to calculate their sales forecasts for the future. While having previous sales figures helps create more accurate forecasts, it’s not essential. There are a couple of methods new businesses can use to calculate their sales forecasts, even if they don’t have a sales history to look back at.

It’s always a good idea to research the competition when you’re setting up a new business. This is also true when calculating a sales forecast, but it depends on the type of businesses that make up your competition.

If any of your competitors are registered with the government as limited companies , they will have to make their accounts publicly available. These accounts will contain things like their monthly expenses, total profits, and (most importantly) the money they’ve made from sales. 

Using this last figure, you can work out how much your competitors are making from sales each month, and get a reasonable estimate of your own sales. You can find these accounts by searching for your competitor’s business on Companies House .

Please note that this method isn’t effective if your competitors are sole traders , as this means they won’t need to publish their accounts publicly. In this instance, you should use the forecasting method below. 

This method is known as ‘bottom-up’ forecasting, as you start at the bottom — your potential market of customers — and then work up to a forecast — the percentage of those customers that make a purchase.

The first step of this method is identifying your target market . This is the section of the population that you think will be interested in your product. With a little market research — things like sending out surveys, or posting polls on social media — you can work out how many people are in your target market. 

Once you have the size of your target market, you need to make realistic estimates of how many people will make a purchase. For example, if 1000 people in the local area are potential customers, you should expect 10% to visit your store or website, and 1% to actually make a purchase.

This method of calculating a sales forecast is good because it’s very adaptable. If you get many more or far fewer sales than you originally calculated, then you can adjust your figures accordingly and record the new forecast. 

It’s also a good idea to categorise this sort of sales forecast. Instead of estimating your overall sales, estimate the sales of each type of product you sell. That way, you can use the forecast to work out how many of each product to make or order each month. 

Creating a sales forecast is a great start, but it’s only the first part of managing your sales revenue. Once you start making sales and money starts coming in, you’ll need to track that cash so you can work out where to spend it. If you think you might have trouble with this, try using a financial software tool like Countingup.

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward!  Find out more here .

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Run » finance, how to create a financial forecast for a startup business plan.

Financial forecasting allows you to measure the progress of your new business by benchmarking performance against anticipated sales and costs.

When starting a new business, a financial forecast is an important tool for recruiting investors as well as for budgeting for your first months of operating. A financial forecast is used to predict the cash flow necessary to operate the company day-to-day and cover financial liabilities.

Many lenders and investors ask for a financial forecast as part of a business plan; however, with no sales under your belt, it can be tricky to estimate how much money you will need to cover your expenses. Here’s how to begin creating a financial forecast for a new business.

[Read more: Startup 2021: Business Plan Financials ]

Start with a sales forecast

A sales forecast attempts to predict what your monthly sales will be for up to 18 months after launching your business. Creating a sales forecast without any past results is a little difficult. In this case, many entrepreneurs make their predictions using industry trends, market analysis demonstrating the population of potential customers and consumer trends. A sales forecast shows investors and lenders that you have a solid understanding of your target market and a clear vision of who will buy your product or service.

A sales forecast typically breaks down monthly sales by unit and price point. Beyond year two of being in business, the sales forecast can be shown quarterly, instead of monthly. Most financial lenders and investors like to see a three-year sales forecast as part of your startup business plan.

Lower fixed costs mean less risk, which might be theoretical in business schools but are very concrete when you have rent and payroll checks to sign.

Tim Berry, president and founder of Palo Alto Software

Create an expenses budget

An expenses budget forecasts how much you anticipate spending during the first years of operating. This includes both your overhead costs and operating expenses — any financial spending that you anticipate during the course of running your business.

Most experts recommend breaking down your expenses forecast by fixed and variable costs. Fixed costs are things such as rent and payroll, while variable costs change depending on demand and sales — advertising and promotional expenses, for instance. Breaking down costs into these two categories can help you better budget and improve your profitability.

"Lower fixed costs mean less risk, which might be theoretical in business schools but are very concrete when you have rent and payroll checks to sign," Tim Berry, president and founder of Palo Alto Software, told Inc . "Most of your variable costs are in those direct costs that belong in your sales forecast, but there are also some variable expenses, like ads and rebates and such."

Project your break-even point

Together, your expenses budget and sales forecast paints a picture of your profitability. Your break-even projection is the date at which you believe your business will become profitable — when more money is earned than spent. Very few businesses are profitable overnight or even in their first year. Most businesses take two to three years to be profitable, but others take far longer: Tesla , for instance, took 18 years to see its first full-year profit.

Lenders and investors will be interested in your break-even point as a projection of when they can begin to recoup their investment. Likewise, your CFO or operations manager can make better decisions after measuring the company’s results against its forecasts.

[Read more: ​​ Startup 2021: Writing a Business Plan? Here’s How to Do It, Step by Step ]

Develop a cash flow projection

A cash flow statement (or projection, for a new business) shows the flow of dollars moving in and out of the business. This is based on the sales forecast, your balance sheet and other assumptions you’ve used to create your expenses projection.

“If you are starting a new business and do not have these historical financial statements, you start by projecting a cash-flow statement broken down into 12 months,” wrote Inc . The cash flow statement will include projected cash flows from operating, investing and financing your business activities.

Keep in mind that most business plans involve developing specific financial documents: income statements, pro formas and a balance sheet, for instance. These documents may be required by investors or lenders; financial projections can help inform the development of those statements and guide your business as it grows.

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Home > Financial Projections > Sales Forecast in a Business Plan

Sales Forecast in a Business Plan

The sales forecast sometimes referred to as the revenue forecast or revenue projection, is one of the most crucial set of numbers used in the business plan. Many of the numbers developed later in the financial projections such as inventory levels, staff costs, cash flow, funding requirements, and ultimately the business valuation, depend on the numbers used in the sales forecast.

Most sales forecasts will be wrong. Investors are not looking to see whether you can predict the future (you can’t), they are looking for you to demonstrate that you understand the issues that will impact on your forecast and to show that even in the worst case scenario, your business can survive.

Sales Forecast for New Business

A bottom up sales forecast should take into account many factors including the following:

Competitor Comparisons

If possible, start the sales forecast by looking at how others in the same industry (competitors) have performed over the past few years by obtaining copies of their published annual accounts. This will show at the very least whether the market for your product is growing or declining, and if the business is of a similar scale to your intended business, will show you the level of sales achievable, and how fast the sales can grow.

So for example, if you plan to open a retail outlet, monitor the number of customers passing, entering, and purchasing goods at a similar retail premises over say a period of a week. Using these estimates, and estimates of the average sale value per customer from sources such as trade magazines, it is possible to forecast the weekly sales for a typical retail outlet at that location.

If trade magazines and websites reveal the seasonality for the industry and show that this month normally represents 6% of annual sales, then the annual sales forecast might be 6,100 / 6% = 102,000 per year.

Business Operational Limitations

All businesses have operational limitations due to such factors as the number of staff, the size of the available premises, or the availability of finance. When producing a sales forecast it is important to check whether the forecast arrived at is achievable within the operational capabilities of the business.

For example, a restaurant has a given number of tables, seats and therefore covers available. The sales forecast needs to be developed such that the number of available covers is not exceeded. This can be seen in operation in our restaurant revenue projection template.

Market Research

The sales forecast can be improved using market research and customer surveys. By attending trade shows, interviewing a selection of potential customers, or placing a small advert for the product, it is possible from the numbers of positive responses, to estimate the number of customers your business is likely to get when it opens for trade. With this information, using the average sales value for the product, an estimated opening sales forecast can be developed.

Seasonality

The sales forecast needs to take into account the seasonality of the industry in which you operate. Few businesses have steady sales throughout the year. Many businesses are dependent on the weather or holiday periods such as Christmas, others are dependent on major trade show activity.

Rules of Thumb used in the Industry

Research in trade magazines and websites or discussion with people already in the industry will reveal any useful rules of thumb which can be applied to the business. For example it might be possible to estimate the level of repeat business using a rule of thumb.

One final approach, if information is not available, is to work out the sales forecast needed to generate the owner a required level of net income. While this approach will not have any foundation on which to support a financial projection, it will allow the owner of the business to decide whether the level of sales required is achievable before investing too much time and effort in the new venture.

Forecasting Sales and the Financial Projections Template

A good sales forecast should look five years ahead with the first year sales forecast on a monthly basis. How you forecast sales will depend on the type of industry in which it operates. We have created simple forecast templates for a number of industries, some which are listed below.

• Website Traffic Estimator
• Salon Business Plan Revenue Projection
• Drop Shipping Business Revenue Projection
• Microbrewery Business Plan Revenue Projection

More templates are available in our Business Templates Section , and more will be added in the future. If your industry is not listed contact us and let us know, and we’ll try to help.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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How to Create a Sales Forecast Business Plan

Sales forecasting is a powerful way to improve decision-making and make smarter choices as a business. But the reality is, many organisations don’t get it right.

Accurate sales forecasts rely on astute insights driven from robust, holistic data. If your business has struggled to accurately predict future sales revenue in the past, our guide could help you get it right in the future.

Ready to get started? Use the links below to navigate or read on for our full guide to accurate sales forecasting.

Quick Links

What is a Sales Forecast?

Why is sales forecasting important, what factors can affect sales forecasting, how to create a sales forecast, tools to help with sales forecasting.

A sales forecast is an estimate of what a company will sell in a week, month, quarter or year. It’s used to predict future revenue, accounting for the number of units an individual, team or company is likely to sell over a set period.

Sales forecasting offers many benefits when leveraged as part of a broader business strategy. At all levels and across all functions within a business, forecasting can facilitate shrewd decision-making, whether that’s setting goals and budgets, prospecting for new leads, deciding on the best time to hire new staff, or effective stock management to help maximise cashflow.

Accurate sales forecasting is a projection of where a company will stand in the future. And that’s important, not only for business continuity and growth, but for cultivating credibility, trust and advocacy with key stakeholders – be it partners, investors, clients or customers.

Let’s take a look at some of the reasons why sales forecasting matters:

• Bolsters decision-making – accurate predictions about future revenue can facilitate improved decision-making across all business functions, from hiring managers tasked with recruiting new talent, to procurement teams discerning when and how much stock to source.
• Adds value to all business functions – sales forecasting defines the value brought by different departments across the business. It highlights how different functions and channels contribute to revenue generation, helping businesses manage their resources.
• Accurate sales and buying for reduced costs – a sales forecast simplifies inventory management, with accurate stock predictions reducing costs and freeing up valuable resources, like warehouse space.
• Allocation of sales and marketing budget – Forecasting helps account for peaks and troughs in sales, so you can assign marketing budgets and determine which products and services need attention.
• Guarantees timely recruitment and outsourcing to drive business growth – understanding the areas of your business that drive the most revenue can make for seamless recruitment. Reinvesting revenue in personnel is a seismic driver of business growth, and sales forecasting can help you decide where to make hires and when. Not only that, but it can help companies decide whether they should look at outsourcing or whether to bring outsourced activities back in-house, e.g., the use of courier companies versus investing in your own delivery fleet.
• Provides valuable revenue expectations to outside stakeholders, like investors – sales forecasting quantifies your revenue predictions, making it easier and less risky to attain outside support from investors and stakeholders.
• Allows for simple company benchmarking against competitors – where your business ranks against competitors is important, and sales forecasting highlights how your trajectory compares to your closest rivals.
• Offers a powerful means of motivating sales personnel – a sales forecast is the best way of benchmarking the performance of salespeople within your business. It’s also a great motivator, particularly for staff incentivised by the promise of commission.

Many internal and external factors can impact the accuracy of your sales forecasts. You’ll need to account for all sorts of influences when predicting sales activity, including:

• Economic uncertainty and conditions
• Competitor changes
• Market trends and seasonality
• Product changes and future innovations
• Internal pricing or policy changes
• Available marketing spend and budgets
• Staff levels (more or fewer sales personnel will affect figures, for example)
• Future business plans e.g., expansion or diversification plans

This isn’t an exhaustive list of factors that can affect sales forecasting, but it does provide a steer for the types of influences that you’ll need to factor into your predictions.

Sales forecasting isn’t rocket science, but it does require a methodical approach to guarantee accuracy. Here, we’ll demonstrate how to make accurate sales predictions in five easy-to-follow steps.

Step 1: Consider Sales History

The first step to accurate sales forecasting is to look not to the future, but the past. By examining sales data over the past 12 months, you’ll glean insights that you can use as the basis of your future sales predictions, noting things like volumes, trends, and seasonality changes that caused peaks and troughs in demand.

When exploring historic sales data, be mindful of your ‘sales run rate’ – the number of projected sales for a particular period. For example, sales data may reveal a large disparity between quarterly sales figures, affecting the overall run rate; you’ll need to factor this into your forecasts for the future.

Step 2: Anticipate Changes and External Influences

While historic sales data provides a clear view of when and where sales typically happen over a year, it doesn’t guarantee the same sales figures for the future. Depending on a plethora of external and internal influences, next year’s sales could be up or down – so how do you accurately predict future revenue?

Start by taking each influence in turn and assess how such a force would have impacted last year’s sales figures. For example, do you plan to increase prices over the next 12 months? If so, how might this affect sales in relation to previous figures?

Here are some of the factors you should consider when predicting future sales performance:

• Pricing changes – will your prices change? How might this affect custom?
• Customer changes and trends – are consumer trends turning in your favour, or going the other way? Market awareness is crucial for accurate sales forecasting.
• Promotions – do you have any sales or promotions lined up to increase demand? How might these affect sales targets?
• Product alterations – are you improving your products and services?
• Sales channels – do you plan to expand into additional sales channels in the near future or acquire new branches?

Step 3: Lean on the Right Systems for Accurate Data Capture and Analysis

Sales forecasting becomes much simpler and more accurate when the right tools are used to capture and analyse data. Integrated ERP software, for example, collates sales data from every channel of your business – including trade counter or EPOS sales, telesales, sales rep orders, ecommerce etc. – so you can make data-backed predictions with confidence.

A great example of the types of tools you can use for accurate sales forecasting is predictive stock management. Automating the forecasting process, it presents the user with a forecast prediction aligned to their stock preferences, e.g., how much buffer stock you want to carry, as well as stock lead times.

Presented with this data, the procurement team can then use their insight and knowledge to tweak this forecast where necessary. It’s a great example of the marriage of automation to reduce manual work, whilst still allowing people to have input on the end result.

Elsewhere, utilising customised dashboards or control desks, instead of static reports, to differentiate pipeline value by rep, branch, prospect customer etc., can give businesses dynamic information to adjust their forecasts and be agile around expectations and demand.

What’s more, clever use of the CRM in conjunction with opportunity probability management enables you to allocate an estimated percentage chance that you think you will win a sales deal. By giving each sales opportunity/quotation a probability, you can produce a sales weighting forecast that will give you a fairly accurate idea of what your sales will be.

This will give you a better chance of forecasting the revenue and stock position of months and years ahead.

Step 4: Align Sales Predictions with Your Business Strategy

Many businesses have a five-year plan, a strategy that looks to drive business growth and profitability. But remember, such a plan will impact sales in one way or another, so it’s important that you align your sales forecasts with your short and long-term business objectives.

Say, for example, your business plan sets out a period of growth in the form of new hires or the creation of a whole new department. How will this affect sales? And to what extent should it be factored into your revenue forecasts?

Aligning your business strategy and sales forecasts is a crucial step. It helps prioritise business activity, ensuring that the right decisions are made to drive the business forward.

Step 5: Set Out Your Sales Forecasts in the Right Way

Charts, graphs and annotations can all be used to set out your sales forecasts for the year ahead. These should be included in your business plan, providing an accessible means of sharing forecasts with key stakeholders, personnel and investors.

As well as charting forecasts in number terms, you should set out your sales strategy, including how you arrived at the quoted figures. This not only quantifies your reasoning, but serves as a reminder of the market position at the time of writing – something that could prove useful if you need to refer back to where the figures came from at a later date.

Sales forecasting can be a laborious process, particularly if you want to guarantee accuracy. There are, however, a range of tools and software which can be leveraged to automate some elements of the process, removing some of the legwork associated with sales forecasting.

At Intact, we’re well aware of the importance of sales forecasting – and the arduous nature of it. That’s why we offer specialist expertise and solutions to help automate and simplify the process, from ERP software and predictive stock management to data analytics tools designed to improve data-driven decision-making.

We hope this guide helps you take stock of sales forecasting. If you’d like to optimise this area of your business, the Intact team can help. For more information or to speak to a member of our specialist team, visit the homepage . Alternatively, for more help and advice on ways to manage your inventory, take a look at our free guide to effective stock management .

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Ford to delay production of new electric pickup and large suv as us ev sales growth slows.

Associated Press

DETROIT – With U.S. electric vehicle sales starting to slow, Ford Motor Co. says it will delay rolling out new electric pickup trucks and a new large electric SUV as it adds gas-electric hybrids to its model lineup.

The Dearborn, Michigan, company said Thursday that a much ballyhooed new electric pickup to be built at a new factory in Tennessee will be delayed by a year until 2026.

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The big electric SUV, with three rows of seats, will be delayed by two years until 2027 at the company's factory in Oakville, Ontario near Toronto.

The retreat comes as U.S. electric vehicle sales growth slowed to 2.7% in the first quarter of the year, far below the 47% increase that fueled record sales and a 7.6% market share last year. Sales of new vehicles overall grew nearly 5% , and the EV market share declined to 7.1%.

Hybrid sales, however, grew 45% from January through March, while plug-in hybrids, which can go a short distance on battery power before a gas-electric system kicks in, grew 34% according to Motorintelligence.com.

Ford also said it “expects to offer” hybrid versions of all its gasoline passenger vehicles by the end of the decade in North America.

Industry analysts say most early technology adopters and people who want to cut emissions have already purchased EVs. Automakers now have to convince skeptical mainstream buyers to go electric, but those customers fear limited range and a lack of charging stations.

Ford expects pretax losses for its electric vehicle unit to widen from $4.7 billion last year to a range of $5 billion to $5.5 billion this year. But it foresees commercial vehicles making $8 billion to $9 billion, up from $7.2 billion last year. Gasoline powered vehicles and hybrids are expected to make $7 billion to $7.5 billion, about even with last year.

Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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Planning, Startups, Stories

Tim berry on business planning, starting and growing your business, and having a life in the meantime., standard business plan financials: sales forecast example.

Continuing my series on standard business plan financials , this is an example of a startup sales forecast. It’s a direct follow-up to yesterday’s How to Forecast Sales . The goal is to take a hypothetical case and open up the thinking involved, not so anybody just copies it, but rather to serve as an example. The underlying goal is to open up the idea that forecasting isn’t a technical feat; it’s something that anybody can do.

We had Garrett the bike store owner yesterday. Today it’s Magda, who wants to open up a new café in an office park. She wants a small locale, just six tables of four. She wants to serve coffee and lunches. She hasn’t contracted the locale yet, but she has a good idea of where she wants to locate it and what size she wants, so she wants to estimate realistic sales. She assumes a certain size and location and develops a base forecast to get started.

Establishing a base case

She starts with understanding her capacity. She does some simple math. She estimates that with six tables of four people each, she can do only about 24 sit-down lunches in an average day, because lunch is just a single hour. And then she adds to-go lunches, which she estimates will be about double the table lunches, so 48 per day. She estimates lunch beverages as .9 beverages for every lunch at the tables, and only .5 beverages for every to-go lunch. Then she calculates the coffee capacity as a maximum of one customer every two minutes, or 30 customers per hour; and she estimates how she expects the flow during the morning hours, with a maximum 30 coffees during the 8-9 a.m. hour. She also estimates some coffees at lunch, based on 3 coffees for every 10 lunches. You can see the results here, as a quick worksheet for calculations.

Where do those estimates come from? How does Magda know? Ideally, she knows because she has experience. She’s familiar with the café business as a former worker, owner, or close connection. Or perhaps she has a partner, spouse, friend, or even a consultant who can make educated guesses. And it helps to break the estimates down into smaller pieces, as you can see Magda has done here.

And, by the way, there is a lesson there about estimating and educated guesses: Magda calculates 97 coffees per day. That’s really 100. Always round your educated guesses. Exact numbers give a false sense of certainty.

Café monthly assumptions

She then estimates monthly capacity. You saw in Illustration 7-2 that she estimates 22 workdays per month, and multiplies coffees, lunches, and beverages, to generate the estimated unit numbers for a baseline sample month.

So that means the base case is about 1,500 lunches, about 1,000 beverages, and about 2,000 coffees in a month. Before she takes the next step, Magda adds up some numbers to see whether she should just abandon her idea. At $10 per lunch and $2 per coffee or beverage, that’s roughly $15,000 in lunches, $2,000 in lunch beverages, and $4,000 in coffees in a month. She probably calls that $20,000 as a rough estimate of a true full capacity. She could figure on a few thousand in rent, a few thousand in salaries, and then decide that she should continue planning, from the quick view, like it could be a viable business (And that, by the way, in a single paragraph, is a break-even analysis).

From base case to sales forecast

With those rough numbers established as capacity, and some logic for what drives sales, and how the new business might gear up, Magda then does a quick calculation of how she might realistically expect sales to go, compared to capacity, during her first year.

Month-by-month estimates for the first year

All of which brings us to a realistic sales forecast for Magda’s café in the office park (with some monthly columns removed for visibility’s sake). This is a spreadsheet view, so, if you’re a LivePlan user, all you need is to figure the assumptions and the software will do the calculations and arrangement.

Notice that Magda is being realistic. Although her capacity looks like about $20,000 of sales per month, she knows it will take a while to build the customer base and get the business up to that level. She starts out at only about half of what she calculated as full sales; and she gets closer to full sales towards the end of the first year, when her projected sales are more than $19,000.

Important: these are all just rough numbers, for general calculations. There is nothing exact about these estimates. Don’t be fooled by how exact they appear.

Notice how she’s working with educated guessing. She isn’t turning to some magic information source to find out what her sales will be. She doesn’t assume there is some magic “right answer.” She isn’t using quadratic equations and she doesn’t need an advanced degree in calculus. She does need to have some sense of what to realistically expect. Ideally she’s worked in a restaurant or knows somebody who has, so she has some reasonable information to draw on.

Estimating direct costs

We’ve seen direct costs already, in the previous section. They are also called COGS, or cost of goods sold, or unit costs. In Magda’s case, her direct costs or COGS are what she pays for the coffee beans, beverages, bread, meat, potatoes, and other ingredients in the food she serves.

Just as with the sales categories, forecast your direct costs in categories that match your chart of accounts.

So, with her unit sales estimates already there, Magda needs only add estimated direct costs per unit to finish the forecast. The math is as simple as it was for the sales, multiplying her estimated units times her per unit direct cost. Then it adds the rows and the columns appropriately.

Here again you see the idea of educated guessing, estimates, and summary. Magda doesn’t break down all the possibilities for lunches into details, differentiating the steak sandwich from the veggie sandwich, and everything in between; that level of detail is unmanageable in a forecast. She estimates the overall average direct cost. Coffees cost an average of 40 cents per coffee, and lunches about $5.00. She estimates because she’s familiar with the business. And if she weren’t familiar with the business, she’d  find a partner who is, or do a lot more research.

wow this was very helpful thanks!

Dear There,

Somehow, I found the above-mentioned is very interesting in its simplicity explanation and guide through. FYI , I am an SME level, you could say a beginner ,trying hard as an SME category to build on my new product.

Of course the above coffee case was an excellent example, but would like to have a realistic outlook for my new product. how about giving me a hand in this?

If I have an answer from your side I will in a position to share with my concern.

Mutaz thanks for the offer, and best of luck to you … I’m overbooked, oversubscribed, not able to help with specific forecasts. Thanks for asking. Tim

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$10K grants soon available to South St. Pete businesses through new program

ST. PETERSBURG, Fla. — Small businesses and startups in South St. Petersburg will soon have access to grants of up to $10,000 through a new city program.

What You Need To Know

A  'microfund program' will launch in south st. petersburg during spring 2023  existing brick-and-mortar businesses can get up to $10,000 grants  a mentoring program is in place for participants .

The Microfund Program is set to launch this spring and is unlike a traditional grant program that would require the business owner to provide matching funds or something similar.

“What is different about this program is it does not require upfront funding,” explained Tracey Smith, small business liaison with the city of St. Petersburg Economic and Workforce Development. “Past programs have required matching funds, while with this program, the buy-in for the owner is the work they’ll put in with a business navigator and a business mentor.”

In this program, small business owners will create an improvement plan and be paired with a business mentor and business navigator through the city’s business development center, The Greenhouse. After working with their mentors for approximately 45 days and completing the educational portion, the small business owner will have access to up to $10,000 in grant funding.

“Each business owner’s plan will be unique and specialized for what they need to grow their business,” Smith said.

Existing brick-and-mortar businesses enrolled in the Microfund Program will have access to up to $10,000. Co-working and home-based businesses will have access to a $5,000 grant and $2,500 for startups.

The program is reserved solely for businesses in the South St. Petersburg Community Redevelopment Area (CRA) , and the grants are paid for through tax increment funding gathered through city and county tax dollars.

Beth Miranda opened The Muddy Walrus Pottery in South St. Pete around three years ago. She said business owners in the area often struggle with the age and conditions of the available storefronts and the lack of traffic passing through the area.

“One of the big problems in ‘The Duces,’ as they call it, is a lot of the buildings are older. They need work,” she said. “And I think getting traffic down here is a big deal.”

Miranda said she loves having her business in South St. Pete and her neighbors make the experience special. She said she’s hoping this grant program will help bring even more potential customers to the area.

“People don’t think about coming to South St. Pete for art and food," she said. "I guess if anything it’s the advertising, the demystifying the south side. I think it gets a bad rap.”

More information on how to apply to the new Microfund Program will be available this spring on the website for St. Pete Greenhouse.

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