image20In today’s soci­ety, every­one seems to be obsessed with sales.  While sales may not be the most impor­tant num­ber on the finan­cial state­ments, it is def­i­nite­ly the most empha­sized. Yet few peo­ple actu­al­ly use a tool to help them fore­cast their sales.

So what’s the big deal with fore­cast­ing sales? For starters, fore­cast­ing sales can help you mea­sure against your goals and bud­get. Are your sales at the lev­el that you expect­ed?  If sales are low­er than bud­get, you could ask your­self the fol­low­ing ques­tions:  Is there some­thing in the mar­ket­place that is chang­ing?  Are prices too high?  Are we tar­get­ing the right cus­tomers?  Do we have the right team sell­ing?  If sales are high­er than bud­get, you want to know why.  Did you low-ball the bud­get­ed num­ber just so that you could say you did bet­ter than bud­get or did you change some­thing in your sales process that is a new­found strength to help you grow?

Once you learn to start look­ing at the infor­ma­tion this way, these ques­tions should come more nat­u­ral­ly which will help you make bet­ter deci­sions in your busi­ness. For instance, let’s look at the fore­cast­ed sales being low­er than bud­get sce­nario. In this instance, you do not have enough in the pipeline to reach your goals. One key rea­son could be that your sales team has a piece miss­ing.  This could be due to not hav­ing the prop­er tools to help them sell your prod­uct or ser­vice, a lack of moti­va­tion whether inter­nal­ly or due to com­pen­sa­tion struc­ture, or them sim­ply not being a good fit for your com­pa­ny. On the oth­er hand, you might find out that the sales team has had plen­ty of activ­i­ty, but the price is just too high for con­sumers to buy.  Just know­ing that you need to start inves­ti­gat­ing the caus­es of the low fore­cast­ed sales num­bers can help you pre­vent months of unim­pres­sive numbers.

In a more pos­i­tive sce­nario, fore­cast­ed sales could be much high­er than bud­get. While this sounds great, there could still be deci­sions that need to be made. For instance, what if your team is at capac­i­ty, yet the fore­cast shows that sales are going to be much larg­er in the future. Now you have to look at a poten­tial hir­ing deci­sion. If the sales are only fore­cast­ed high­er for the next two months, it might make more sense to work with con­trac­tors to out­source the work so that you can sur­vive those busy months. How­ev­er, if the fore­cast is over­loaded for the next six months, then it might make more sense to find some­one who is a good fit for the com­pa­ny and hire them.

The idea with using the sales fore­cast is that it is a tool for you to use so that you are more pre­pared to make more edu­cat­ed deci­sions in your busi­ness. At the very least, tools like these can help the deci­sion mak­ing process much easier.