Nomizon Associateswww.nomizon.co.uk    1
Sales forecasting made                                  easywww.nomizon.co.uk                        2
Who is this for?Owner managed businesses wanting morefinancial security.Those seeking to work more on theirbusinesses rath...
Forecasting                       Financial controllers should be preparing                        forecasts for their bu...
Basic                       There are two simple forms of sales forecast and                        these are most suitab...
Sales team                       Many businesses prepare sales forecasts based                        on information from...
In volatile times                       More accurate sales forecasts can be developed                        by analysin...
John’s credentials    Profession:         Ernst & Young entrepreneurial business unit         Fellow of the Institute o...
Sales forecasting made                                  easy      © John Toppin 2012      The right of John Toppin to be i...
Sales forecasting made                                  easy      © John Toppin 2012      The right of John Toppin to be i...
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Sales forecasting made easy

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Four simple to follow methods for forecasting sales in your business.

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Sales forecasting made easy

  1. 1. Nomizon Associateswww.nomizon.co.uk 1
  2. 2. Sales forecasting made easywww.nomizon.co.uk 2
  3. 3. Who is this for?Owner managed businesses wanting morefinancial security.Those seeking to work more on theirbusinesses rather than in their businesses.Company owners building for an eventualtrade sale.www.nomizon.co.uk 3
  4. 4. Forecasting  Financial controllers should be preparing forecasts for their businesses, especially in volatile market conditions.  The most common forecasting tool used is for cash flow.  A profit and loss forecast is a fundamental component of any cash flow forecast.  It is relatively easy to forecast your fixed overhead costs and much harder to forecast cost of sales and variable overheads.  To do this properly, you need to be able to forecast your company’s sales.www.nomizon.co.uk 4
  5. 5. Basic  There are two simple forms of sales forecast and these are most suitable for use in more stable market conditions.  The first method is to use actual sales for elapsed months of the current year and to add the budgeted sales figures for the balance of the year.  The second method is to use actual sales for the elapsed months of the year and for the forecast of the balance of the year, to use the sales figures for the corresponding months of the prior year.   You can flex the sales figures for future months of the year by increasing or decreasing the budget or prior year figures in line with the trend for the elapsed months of the current year.www.nomizon.co.uk 5
  6. 6. Sales team  Many businesses prepare sales forecasts based on information from the sales team.  These forecasts can be more accurate than the two basic models, particularly where your business accumulates sales order information and especially if the orders are for delivery over an extended time period.  Ensure you allow for potential cancellations and unconfirmed orders and for any systematic overconfidence of your sales team when you prepare your sales forecast from the basic figures they provide you. If the sales team’s forecasts do not extend as far as the end of the financial year use one of the other methods in this article to complete the balance of the year.www.nomizon.co.uk 6
  7. 7. In volatile times  More accurate sales forecasts can be developed by analysing potential sales for future months by any or all of: client, client type, product and product category and by salesman or sales team. This method requires more sophisticated management information systems but produces the best results.    By using this method you can take into account material differences between prior years and the current year, for example losing or winning clients, a collapse in the sales of a particular product or the launch of a new product.    Revise your sales forecasts each month and compare actual to forecast for the last month so that you can assess the accuracy of your forecasts.www.nomizon.co.uk 7
  8. 8. John’s credentials Profession:  Ernst & Young entrepreneurial business unit  Fellow of the Institute of Chartered Accountants  Member of Faculty of Financial Management, ICAEW Marketing services:  Saatchi & Saatchi European FD  Triangle Group FD then CEO  Publicis UK CFO  Marketing Society Consulting firms:  Kroll Associates International FD  FT Knowledge European Commercial Directorwww.nomizon.co.uk 8
  9. 9. Sales forecasting made easy © John Toppin 2012 The right of John Toppin to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. To contact John, see http://www.nomizon.co.ukwww.nomizon.co.uk 9
  10. 10. Sales forecasting made easy © John Toppin 2012 The right of John Toppin to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. To contact John, see http://www.nomizon.co.ukwww.nomizon.co.uk 9

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