1. Sales Forecast

2. Objective
Draw up
sales forecast and budget
for year …….

3. Sales Forecast defined
• The Sales Forecast is the expected level of company sales
based on a chosen marketing plan and an assumed marketing
environment
• A sales forecast is a prediction based on past sales
performance and an analysis of expected market conditions
• It's a self-assessment tool that uses past and current sales
statistics to intelligently predict future performance.
• Sales forecasting involves predicting the amount people will
purchase, given the product features and the conditions of
the sale

4. Benefits of sales forecasting
• Enhanced cash flow
• Knowing when and how much to buy
• In-depth knowledge of customers and the products they order
• The ability to plan for production and capacity
• The ability to identify the pattern or trend of sales
• Determine the value of a business above the value of its
current assets
• Ability to determine the expected return on investment
• See how well you are stacked against industry average

5. Company Wide Benefits
• Increased revenue
• Increased customer retention
• Decreased costs
• Increased efficiency

6. Factors that affect sales forecasting
• Market Potential/Size
• Market Share
• Sales contracts that won't be renewed
• New sales contracts that are on the horizon
• Industry analysts' predictions for growth or shrinking in your
market segment
• Economic analysts' predictions for the increased or decreased
buying power of consumers in your market
• Political changes that could affect government contracts
• Direct and indirect competition
• Consumer earnings

7. Forecasting Techniques
• Historical Data
– Prior Period
– Moving Average
– Decomposition
• Manager’s Judgment
• Executive Judgment

8. Forecasting Methods
1. For predictable /stable monthly Sales
– Sales Forecast=Past Sales+%age of inflation
2. For cyclical Monthly Sales
– Suppose, for instance, that a short-term forecast is being made for the
month of December. For some past years now sales in December have
totalled 15% of annual sales. During the same period, August sales
have averaged 10 percent of annual sales.
– Sales during the previous August wN10,000,000ere N10,000,000.
– N10,000,000 / .10 = N100,000,000(estimated annual sales)
– Projected sales for December will be 15% of N100,000,000(or
N15,000,000).
– Sales for other months can be forecast in the same way.

9. Forecasting Methods cont’d
3. Annual Sales Forecast
– Last Years’ Sales (N100,000,000)
– Guaranteed contracts (N5,000,000)
– Projected Growth for next year (10%)
– Sales forecast= 5,000,000+ 100,000,000+10%X 100,000,000=115,000,000

10. DATA COLLATION & ANALYSIS

11. How close to the truth do you want to come sir?

12. Data Needed
• Economic Environment of Business
– PEST
• Products and Services
• Business Model
– OTC & MRC
• Market Segments
– Industries Served
• Last 3 years revenue
– By Product
– By Segment
– By Industry

13. Data Needed
• Next year growth drivers
– By Product
– By Segment
– By Industry
• Sales Opportunity funnel
– By Product
– By Segment
– By Industry
• Risk Analysis
– By Product
– By Segment
– By Industry/Clients

14. FORECASTING

15. Femi Olaiya
femi@redwdood-consulting.com