HOW TO PREPARE A SALES FORECAST – PART 2

Which Factors Affect Your Sales Forecasting?

In my previous article, How To Prepare A Sales Forecast – Part 1, I explained how to go about preparing a sales forecast. Preparing a sales forecast is mainly educated guess work so you can’t expect it to be perfect or accurate. But you can make a reasonable assessment of what you think will happen, based on your market research, understanding of your industry and historical information.

How To Prepare A Sales Forecast

In this article, I’m going to look at the three main factors that could affect your sales forecasting. When you’re putting together your sales forecast for the coming 12 months, you’ll want to consider whether your business is affected by any, or a combination of these factors.

HOW TO PREPARE A SALES FORECAST – PART 1

How Sales Forecasting Works

This is the first in a two-part series about how to prepare a sales forecast, the first step in putting together your 12-month budget, and the backbone of your business plan. Put simply, your sales forecast is a way of estimating the volume of products or services that you realistically expect to sell over a given period of time. It’s usually prepared on a month-by-month basis and projected over a 12-month period.

How To Prepare A Sales Forecast

If you’ve never prepared a sales forecast before, be assured that you don’t need a business degree, accountant’s certification or any other qualification to do so. What you do need is common sense, research and information about the key factors that impact on your sales. If you sell a lot of products, it’ll take you a bit more time to prepare your sales forecast. But I’ve put together this handy spreadsheet to make the task of forecasting easy for you.

UNDERSTANDING BUSINESS GROWTH STRATEGY

How Ansoff's Matrix Will Help You Grow Your Business.

This is the first in a series of articles to help you plan your business growth strategy in 2017. Over the next couple of weeks, I’m going to take you step by step a process for putting together your business plan which will include how to prepare a sales forecast and marketing plan.  We’ll also delve into exactly how to put together a marketing budget and how much you should invest in your marketing.

Which Business Growth Strategy

When it comes to growing a business, any business, there are only four business growth strategies. These are to:

  1. Market existing products to your existing market
  2. Take existing products to new markets
  3. Create new products for existing markets
  4. Create new products for new markets (what you’re doing as a start-up)

I’ve listed these in order of the easiest, least risky business growth strategy, with the greatest potential return. Let’s explore each in turn.

MARKETING DURING A WEAK ECONOMY

7 Ways You Can Adjust Your Marketing When The Economy Is Tough

On 23 November, we heard Philip Hammond warn us in his Autumn Statement that the economic forecast for the UK was gloomy. In summary, he predicted slower growth, higher inflation, weaker tax receipts and higher borrowing. This is because the UK economy is expected to weaken as negotiations on Brexit intensify.

Marketing During A Weak Economy

Speaking after his first autumn statement, Hammond said forecasts from the Office for Budget Responsibility (OBR) for the costs of leaving the EU were based on a “a very high degree of uncertainty in the circumstances we are in”. Meanwhile, the BBC Economics Editor Kamal Ahmed warned that the squeeze on living standards could be worse than after the financial crisis. This is not good news for small business.

Across the pond, the US is expected to lead global growth higher over the next two years despite the growing threat posed by protectionist policies. Moody’s Investors Service has predicted that the US will be the fastest growing of the G7 leading industrial countries in 2017 and 2018, with short-term growth boosted by Donald Trump’s plans to cuts taxes and spend more on American infrastructure.

AUTUMN STATEMENT AT A GLANCE

The Guardian
24 November 2016

Philip Hammond delivered his first Autumn Statement as chancellor on 23rd November. These are the key points, together with political analysis.

Key points to note are that Philip Hammond said growth is expected to be 2.4% lower over the forecast period after Brexit. The Office for Budget Responsibility has forecast economic growth of:

  • 2.1% in 2016 – down from 2% it forecast before the EU referendum
  • 1.4% in 2017 – down from 2.2%
  • 1.7% in 2018 – down from 2.1%
  • 2.1% in 2019 – down from 2.1%
  • 2.0% in 2020 – down from 2.1%

While the OBR is clear that it cannot predict the deal the UK will strike with the EU, its current view is that the referendum decision means that potential growth over the forecast period is 2.4 percentage points lower than would otherwise have been the case.” 

Hammond predicted SLOWER growth, HIGHER inflation, WEAKER tax receipts, HIGHER borrowing. This means the economy is expected to weaken as the Brexit negotiations intensify. To be clear, this is seriously bad fiscal news.

The Guardian runs an excellent daily business live stream, the link for which is HERE. I highly recommend it, along with the BBC Business live stream, for keeping up to date with current developments.

THERESA MAY HINTS AT BREXIT TRANSITION DEAL FOR BUSINESS

The Guardian
21 November 2016

For those of you here in the UK, this is a story to keep your eye on.

Theresa May was speaking to the CBI on 21 November 2016 at its annual conference, and hinted at a transition deal on Brexit to avoid a cliff edge for business. I checked other news sources, including the CBI website to find out more. At this point, the story is little more than a hint. So we’ll have to see how it develops.

 

YES, YOU DO HAVE TO HAVE A MISSION STATEMENT

How A Well Crafted Mission Statement Gets To The Heart Of Your Brand

Oh no, I hear you groaning! You’re not really asking me to write a mission statement, are you? Isn’t a mission statement just a load of hot air, a meaningless set of words that you find displayed in corporate brochures and reports? If your mission statement is nothing more than a generic platitude or trite slogan like “this company is customer-focused” or “this company is committed to delivering excellence,” then yes you’re right.  Because that’s not a mission statement.

Yes, You Do Have To Have A Mission Statement

I believe the words ‘mission statement’ are two of the least understood in the business vocabulary. I also know that putting together a decent mission statement is no easy task because its job is to encapsulate, in as few words as possible, precisely what the company stands for. There are no unintentional words in a mission statement; the words used are concrete, clear and concise. E.g.

  • Nike: To bring inspiration and innovation to every athlete in the world.”
  • Starbucks: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
  • Amazon: To be the most customer-centric company in the world, where people can find and discover anything they want to buy online.

THE ESSENTIAL ROLE OF BUSINESS

How Small Business Helps To Fuel Economic Growth

On Monday evening, Theresa May gave a major speech at a black-tie event at London’s Guildhall, criticising the global elite. In it, she said liberalisation and globalisation are forces for good, and free markets and tree trade are the best way to lift people out of poverty.

The Essential Role of Business

But in a nod to the anti-establishment feeling that gave rise to Trump’s election and the Brexit vote, she said that governments must help people who have seen “their jobs being outsourced and wages undercut.” The Prime Minister went on to make reference to company bosses who are suspicious that May has a “growing anti-business agenda”, after she criticised firms which fail their workers and targeted a rootless “global elite.”

Earlier in the month, in an interview with CNBC about what the US election could mean for business, former Medtronic CEO and Harvard Senior Fellow, Bill George, made the point that there had never been a Presidential candidate in his lifetime who hadn’t set out a pro-business policy agenda. He followed this up with an excellent article, ‘The Working Persons Cry From The Heart,’ explaining what he’s sees as the responsibilities of business going forward.

PRESIDENT OBAMA ON THE BACKLASH AGAINST GLOBALISATION

The Guardian
16 November 2016

Speaking in Athens during his visit to Europe, President Obama made this important speech, warning that a backlash against globalisation is boosting populist movements both at home and abroad and called for a “course correction” so the benefits of an increasingly interconnected world are shared more equally.

During the speech, he said:

We cannot sever the connections that have enabled so much progress,” he said. But, he warned, it was leading to increasing inequality around the world, and fast-moving technological innovation – as well as causing enormous disruption to many workers’ lives – was making it easier for people to see it.

The current path of globalisation demands a course correction,” Obama said. “In the years and decades ahead, our countries have to make sure that the benefits of an integrated global economy are more broadly shared by more people, and that the negative impacts are squarely addressed.”

When we see people, global elites, wealthy corporations seemingly living by a different set of rules, avoiding taxes, manipulating loopholes … this feeds a profound sense of injustice.

The impulse to pull back from a globalised world is understandable. Leaders around the world must do more to reduce inequality, fight corruption, ensure governments are effective, and restore citizens’ trust in institutions: “We have to make clear that governments are there to serve the people.”

You can read more in this article from The Guardian.