How Do You Prepare A Sales Forecast?
Businesses use sales forecasts in order to predict cash flow requirements, enhance effective inventory management, allow for better procedures to understand the markets and prepare for contingencies. It is important to forecast sales for a business as increasing sales will often call for more capital requirements. Banks and lending institutions also require sales forecasts to review business profitability before they can approve credit lines. Sales forecasts help project input requirements and form the basis for production plans in organizations. Divide the business operations into identifiable segments by separating them according to products or business areas. For example, a cosmetics manufacturer might divide his business into segments according to the products produced, such as shampoos, lotions and hair dyes. Produce an appropriate timeline for the sales projections. A five-year forecast is desirable because it incorporates adequate historical information without including too muc
