Sales Forecasting Software Can Provide Superb Value to Your Business

If you are starting a new business, you might find sales forecasting more than a little difficult. Sales forecasting software typically works by analyzing past trends and looking at reports from field sales force to project most likely levels of sales.

On the other hand, if yours is a business that has a field sales force in touch with the market, the sales forecasting software can help you develop realistic forecasts, and also to keep them current based on feedback from the field.

Significance of Sales Forecasts

It is sales forecasts that make realistic business planning possible. Sales determine the levels of production, which in turn determine the levels of materials to be procured, personnel to be engaged and funds to be arranged. With this information, you will be able to estimate the profits you can make during a forecast period. And the profits will determine the scale of your expansion projects.

A realistic sales forecast is thus the starting point of a successful business planning exercise.

What Does Sales Forecasting Software Do?

Sales forecasting software typically starts with analyzing past sales performance. It identifies the key trends such as growth in sales from year to year, seasonal patterns, and sales performance by regions and sales agents. Based on these data, the forecasting software will be able to generate a sales model for the following period.

The forecasting exercise should be able to eliminate the impact of special events in the past, such as a strike in a competitor’s factory that pushed up sales during the past period, but is not expected to recur in the forecast period.

The result would be a basic forecast that can be affected by various expected changes in the field. For example, any changes in the field sales force, either in its strength or its composition, will most likely change the levels of achievable sales.

Developments in the industries that consume your products can also affect the likely levels of sales. For example, a big expansion of road construction projects can push up the demand for road-building materials.

Sales forecasting software should be able to work out the impact of such developments, and modify the basic forecast to generate a more realistic sales forecast.

The forecasting exercise is improved through experience. The software will monitor actual sales performance against relevant forecasts and analyze the factors for any variances between the two. Well-designed sales forecasting software will be able to factor in the findings of the analysis during future forecasts. Even current forecasts will be revised for the remaining period.

Because sales forecasting drives production planning and materials procurement planning, the ability to revise forecasts is a key feature that adds value to sales forecasting software.

Before You Select Your Sales Forecasting Software

Check that the software:

• Can develop a “basic forecast” by projecting historical data
• The basic forecast can be modified by eliminating the impact of non-recurring events in the history, and that this modification can be done in an easy, yet authentic, manner
• Similarly, it should be possible to modify the basic forecast for changes in the field, and changes in major customers’ or consuming industry’s plans
• The software must document all changes, so that you will know what changes were made and why

Sales forecasting software that incorporates such facilities, and is also easy to learn and use, will provide superb value to your business.