How to calculate sales estimates?

Calculate sales estimates

When you start a business, regardless of its size, you must have a plan that details an estimate of sales in the short, medium and long term. This allows you to predict the numbers that your venture will handle in the future and will keep you prepared for current market conditions.

A sales forecast, as it is also known, exposes data that contemplates and informs about consumer behavior, the current state of the competition, the necessary strategies and the possible variants that may occur.

Although estimated sales are not an exact science, since they depend on each undertaking and applied technique, a series of steps must be developed to help us obtain accurate and easily understood results. Keep reading the article and you will learn how you can make sales estimates that help your business grow. 

Also read: How to choose the best place for a business?

What are sales estimates?

Planning and strategy are key points when we decide to start a business . This in order to generate a wide margin of exposure and profitability in the established time. Making sales estimates entails a comprehensive study of external and internal factors, which can intervene in our income. Knowing these variants will allow us to get ahead and create a solid strategy.

Developing a sales estimate is somewhat difficult, even for a professional in the field, since historical market data is used to visualize what may happen in the future, and how this may affect or benefit the performance of our business. The purpose of these projections is to analyze the scope of our sales during a given period of time.

How are sales estimates calculated?

In the sales forecast examples, it is common to see that they are adapted to different periods (monthly, quarterly, half-yearly and annual). Each one will depend on the type of business and its needs. 

Sales estimation will keep you up-to-date on the state of your business by predicting potential revenue and loss, as well as consumer behavior and market opportunities. It is important to consider the following factors:

The economy of the country where the product is marketed

The political and economic decisions of a country are external factors that can intervene in the results of a company. Therefore, when making predictions you must take into account the current conditions of the market in which you work. In this way you will be able to analyze each decision you make and determine its convenience at the same time. 

Seasons and seasons

To make estimated sales it is important to know the stations that are handled in your area, and at the same time consider the type of product you offer. Many items are handled for specific seasons, such as swimsuits or surfboards, and will have a higher sales volume in spring or summer seasons. On the other hand, products such as scarves, coats and boots are better for cold or rainy seasons.

Some products or services offer generic alternatives adaptable for any time of the year. In these cases, you will have to rely on experience to find what your favorable seasons will be and thus make the most of them during those dates.

Also read: Business Coaching What is it?

Consumer behavior

Consumer behavior is another aspect that we must take into account when creating a sales estimate, since their needs, tastes or preferences may vary from one moment to another. Knowing the emerging trends and how to adapt them to the lifestyle of your potential customers will allow you to make specific projections, and with this, get ahead when thinking about a product.

Kind of product

All sales forecast examples are based on knowledge of your product and the sector in which you are immersed since its characteristics can vary your sales. For example, the demand for a product that is bought out of convenience is not the same as one that is bought out of necessity.

Having profitability in your business will depend on how you handle these factors. Identify possible changes you need to make to quickly adapt to the market.

What are the benefits of sales estimates?

Some utilities that we can give to a sales estimate are:

Make the right decisions

Making a sales forecast in our business can serve as a guide when making important decisions about the product we are promoting. The channels we use, the correct season to do it or the demand it is having, are just some of the variables that can influence the moment of sale. It is not just about placing a product and seeing if it sells, we must have complete planning to obtain maximum profitability.

Know consumer behavior

As we mentioned before, the sales forecast examples will help you understand how the behavior of your customers can change according to their needs or desires in a given time. This will give you precision and predictability to make an attractive proposal that adapts to the trend of the moment.

Make investments

Every business needs to grow and become stronger because in this way it can offer a better proposal in the market. It is necessary to invest in the areas in which scalable opportunities are visualized. Sales estimates make taking these risks much easier and serve as guides to identify and prioritize sectors that deserve financial attention.

Control the effectiveness of the sales plan

Sales projections also allow you to keep track of details such as the business plan, closing sales, product exposure, and salesperson performance. This makes it possible to make appropriate decisions to generate changes aimed at meeting the objectives.

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