Master the Art & Science of Sales Forecasting
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Latest Content: Top-Down Forecasting
When it comes to making sales, knowing what’s to come can help your business properly plan for the future. It can help you make key decisions on important processes that affect sales and the business altogether. While you can’t tell the future, a sales forecast is a way to predict what’s to come involving your sales.
What’s a Sales Forecast?
In simple terms, sales forecasting is the process that estimates future sales. These forecasts allow companies to make informed decisions and predict performance for the company in both the short-term and long-term.
The Importance of Sales Forecasting
Want to know the importance of forecasting? Understanding sales can be complicated. In addition, knowing what to expect in the future can also be a serious challenge. That being said, the purpose of sales forecasting is to give an estimation of the performance of sales for the future. This is important because it helps companies make smart and effective decisions based on the findings of the forecasts.
Advantages of Sales Forecasting
Sales forecasting can make or break a business. But it’s important to note that these forecasts vary based on what kind of sales the company is dealing with. For example, using a sales forecast formula for new business will be far different than using a formula to attract existing customers. Researching on the web to find a sales forecast example is best practice for understanding which type of forecast will work for your specific needs.
A huge benefit of sales forecasting is that resources and tools can be found everywhere. From finding a sales forecast example Excel download to locating an importance of sales forecasting PPT document, help can be found in a variety of areas.
Another advantage of sales forecasting is that major programs offer templates and guidance to help with the process. For example, Microsoft Office offers sales forecast Excel sheets that allow you to make these forecasts with ease.
How to Forecast Sales Using Historical Data
In order to fully understand sales forecasting, you’ll need to understand how these forecasts are developed. And that starts with understanding how to forecast sales growth using historical data. However, knowing how to forecast quarterly sales, yearly sales, and sales over the next 10 years is far easier with established businesses. That being said, understanding how to forecast sales for a new product, service, or anything else might be far more difficult for a new company. If these new companies can’t utilize their own historical data, then they might want to choose another tactic.
More Beneficial for the Short-Term
Although historical data is usually very beneficial for predicting the future, it’s important to understand that these trends don’t typically work for long-term sales forecasting. While this data might be very useful, digesting it for future, long-term guidance isn’t the best tactic. So if you’re a sales manager that is trying to utilize historical data, you should be cautious and understand that these trends won’t continue forever.
Know the Factors that Can Skew Data
Another thing to be worried about involving historical data relates to the many factors that are involved with sales. Factors like promotions, specials, and actions taken by the manufacturer can all play a role in how these numbers appear. That being said, when you’re digesting these analytics from historical data, it’s important to know why these numbers were the way they were.
Sales Forecast Template
If you’re looking to utilize sales forecasting strategies, then it’s important to use a sales forecast template. A template works essentially like a sales forecast generator, where the user can plug in information in order to build faster forecast documents. Take a look at a few examples of effective templates out there:
Excel Sales Templates
If you are a startup company in the beginning phases of establishment, then a great solution is the sales forecast template for startup business Excel sheet. These templates can help you create effective sales forecasts that you can use easily time and time again. From a 5 year sales forecast template to a template more focused on the short-term, Excel has outstanding solutions.
Sales Forecast Template Word
Microsoft Word also offers simple and effective sales forecast templates. If you have Word downloaded on your computer, then multiple templates are offered for free on the platform. One tactic to ensure you have consistency throughout every forecast document is to use only one template every time. You never want to confuse your sales team when entering data and you want to ensure consistency, so focusing on one template with the same components is best practice for maximizing results.
Sales Forecast Template Google Sheets
Google Sheets is another fantastic option for building sales forecast materials. They allow you to build useful sales forecasting models and even give you the ability to export sales forecasting and budgeting PDF documents. Another huge benefit of this platform is that it’s on the Cloud. Therefore, these vital documents can be accessed by multiple users from anywhere with an internet connection. This makes collaboration easy and offers a high level of convenience when dealing with these forecasts.
No matter what source you use to gather your templates, consistency is key. You’ll want to have your whole team on the same page and everyone must understand the process to have the best results with the formation of sales forecast templates.
Sales Forecasting Methods
In order to craft effective sales forecasts, then it’s important to understand the different methods out there. We recommend researching online for a variety of sales forecasting methods examples. But for starters, take a look at some of the common sales forecasting methods:
Sales Forecasting Methods Qualitative and Quantitative
Two of the more common types of sales forecasting methods are qualitative and quantitative. The key difference here is that quantitative forecasting involves hard data and a lot of numbers floating around, while qualitative forecasting depends on educated estimates and opinions from sales experts. In order to create a more accurate plan moving forward, it’s recommended to use a combination of both of these methods.
Historical forecasting is a quantitative forecasting method that involves analytics from the past. Simply put, sales experts would predict how much they can sell in a month, quarter, or year by observing the sales from a similar time period. However, this tactic isn’t always very beneficial due to seasonality factors and anything out of the ordinary happening. That being said, historical data should be used as a benchmark instead of a main focus in your forecasting efforts.
Sales Forecasting Tools
If you’re a manager looking for sales forecasting solutions, then there are a lot of tools and resources to consider. For example, the sales forecasting tools Excel provides can be easy-to-follow and very effective. They provide you with a lot of sales projection report solutions aimed at your specific needs. And given how expensive some other tools can be, the Excel forecasting software free option is a great choice.
Paid Vs. Free
If you are new to using sales forecasting materials, then you may be wondering about the pros and cons of both paid and free forecasting solutions. But in order to really know if you should spend money on these tools or not, it really depends on your business and needs. If you’re a new startup business, then we recommend using free sales forecast template for startup business solutions.
Need a Lot of Detail?
While even a free sales forecasting PPT might allow you to do quite a bit when developing reports, paid options usually provide many more tools and resources. Some companies also offer solutions that focus on your specific industry, which provides a high level of convenience and trust. But all in all, if you need very detailed reports, then you might want to consider paid software.
How Large is Your Business?
Free tools and resources for sales forecasting might be a great solution, but you may be limited on the number of forecasts you’re able to create. That being said, deciding on what forecasting tools to use really depends on the size of your business. For example, if you have a very large corporation, then you should definitely choose a provider who caters to your type of business.
Need Help with Forecasting?
Another consideration to make when deciding on which tools to use involves if you need any guidance or not. For example, if you are new to sales forecasting or if you’re just beginning your sales career, then you might want to choose a sales forecasting system to help you develop these forecasting strategies. Luckily, there are many resources and tools out there that include assistance from sales professionals to help you out every step of the way.
Types of Forecasting
When developing sales forecasts, there are many different types of sales forecasting methods to consider. But why it’s important to understand the pros and cons of each method, it’s also extremely vital to understand how you’re going to present these forecasts to a group or individual. Even if you utilize exceptional sales forecasting strategies, they might mean nothing if they’re presented in the wrong way. Take a look at a few types of presentation methods that can be very effective:
Using a PowerPoint presentation to display sales forecasts is a popular and effective method. The types of sales forecasting PPT options available on the program vary greatly, which is beneficial for finding a solution to your specific needs. PowerPoint is very user-friendly and provides an easy way to display your forecasts to any audience.
Using a whiteboard is a traditional, yet effective method for presenting your sales forecasts. This method can be very engaging for the audience and can really be very beneficial in a collaborative environment. However, given that sales forecasts might include many graphs and other visual aspects, a whiteboard might not be very effective for these uses. A great solution involves using both a PowerPoint presentation and a whiteboard to engage with the audience on a high level.