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

1. Nomizon Associates
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2. Sales forecasting made
easy
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3. Who is this for?
Owner managed businesses wanting more
financial security.
Those seeking to work more on their
businesses rather than in their businesses.
Company owners building for an eventual
trade sale.
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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.
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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.
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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.
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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.
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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 Director
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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.uk
www.nomizon.co.uk 9

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.uk
www.nomizon.co.uk 9