A thorough and believable sales forecast is the cornerstone of your business plan and your financial projections. Learn how LivePlan makes sales forecasting easy.
What is a Sales Forecast?
A sales forecast is a prediction of the sales and revenue that you're hoping your business will achieve over the next 3-5 years. Sales forecasts are usually done month-by-month for the first twelve months and then simple annual predictions for the following 2-4 years.
Most companies create an initial sales forecast at the beginning of their fiscal year and then revise it on a monthly or quarterly basis. A sales forecast is a critical component of any business plan. Find out more about creating your business plan.
Why sales forecasts are important
When you're starting a business and building a business plan, putting together a solid sales forecast is one of the most important steps and the foundation of your financial forecast.
Meeting your sales projections is the goal that you're going to aim for as you get up and running. So, getting your sales forecast right is crucial.
More importantly, if you're seeking outside investment, investors will want to know what your sales goals are and how you're going to hit them. Projecting your sales in a way that's easy to understand and realistic is critical for investors.
Your sales forecast will also be one of the key tools you'll use to build your expense budget. Your sales will help determine how much you can spend and when you can spend it.
Without a sales forecast, you won't be able to measure your profitability or determine how much money you should spend on market and business operations.