{"id":4384,"date":"2021-01-18T09:30:00","date_gmt":"2021-01-18T09:30:00","guid":{"rendered":"https:\/\/blog.kylas.io\/?p=4384"},"modified":"2023-04-24T10:14:32","modified_gmt":"2023-04-24T04:44:32","slug":"sales-forecasting-small-businesses","status":"publish","type":"post","link":"https:\/\/kylas-v2.staging2.amura.in\/en\/sales-effectiveness\/sales-forecasting-small-businesses","title":{"rendered":"All About Sales Forecasting (And How to Do It Effectively!)"},"content":{"rendered":"\n<blockquote class=\"wp-block-quote is-style-large is-layout-flow wp-block-quote-is-layout-flow\"><p><em>\u201cThe man who is prepared has his battle half fought\u201d&nbsp;&#8211;&nbsp;<\/em><a href=\"https:\/\/www.forbes.com\/quotes\/6869\/\" target=\"_blank\" rel=\"noreferrer noopener\"><em>Miguel de Cervantes<\/em><\/a>&nbsp;<\/p><\/blockquote>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Sales Forecasting is a crucial input to not only the Sales Planning process but also the overall business planning.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Sales forecasting might sound quite intimidating, but it all comes down to a simple matter of well-defined processes. The process of sales forecasting is invaluable to businesses. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Every business you see around you \u2013 whether it\u2019s a store, a services company, or a manufacturing unit \u2013 uses sales forecasting to make informed decisions.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Let\u2019s get down to the details of it then.<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-ht-block-toc  is-style-outline htoc htoc--position-wide toc-list-style-plain\" data-htoc-state=\"expanded\"><span class=\"htoc__title\"><span class=\"ht_toc_title\">All About Sales Forecasting (And How to Do It Effectively!)<\/span><span class=\"htoc__toggle\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"16\" height=\"16\"><g fill=\"#444\"><path d=\"M15 7H1c-.6 0-1 .4-1 1s.4 1 1 1h14c.6 0 1-.4 1-1s-.4-1-1-1z\"><\/path><path d=\"M15 1H1c-.6 0-1 .4-1 1s.4 1 1 1h14c.6 0 1-.4 1-1s-.4-1-1-1zM15 13H1c-.6 0-1 .4-1 1s.4 1 1 1h14c.6 0 1-.4 1-1s-.4-1-1-1z\"><\/path><\/g><\/svg><\/span><\/span><div class=\"htoc__itemswrap\"><ul class=\"ht_toc_list\"><li class=\"\"><a href=\"#htoc-what-is-sales-forecasting\">What&nbsp;is&nbsp;Sales&nbsp;Forecasting?&nbsp;<\/a><\/li><li class=\"\"><a href=\"#htoc-why-is-sales-forecasting-important\">Why is Sales Forecasting Important?<\/a><ul class=\"ht_toc_child_list\"><li class=\"\"><a href=\"#htoc-benefits-of-sales-forecasting\">Benefits of Sales Forecasting<\/a><ul class=\"ht_toc_child_list\"><li class=\"\"><a href=\"#htoc-align-your-production\">Align Your Production<\/a><\/li><li class=\"\"><a href=\"#htoc-prepare-your-sales-team\">Prepare Your Sales Team<\/a><\/li><li class=\"\"><a href=\"#htoc-prevent-wastage-of-supply-opportunities\">Prevent Wastage of Supply\/Opportunities<\/a><\/li><li class=\"\"><a href=\"#htoc-plan-budgets-with-confidence\">Plan Budgets With Confidence<\/a><\/li><li class=\"\"><a href=\"#htoc-analyze-gaps-in-sales-performance\">Analyze Gaps in Sales Performance<\/a><\/li><li class=\"\"><a href=\"#htoc-make-stronger-marketing-plans\">Make Stronger Marketing Plans<\/a><\/li><\/ul><\/li><\/ul><\/li><li class=\"\"><a href=\"#htoc-what-does-the-process-of-sales-forecasting-involve\">What Does the Process of Sales Forecasting Involve?<\/a><\/li><li class=\"\"><a href=\"#htoc-what-you-need-to-forecast-your-sales\">What You Need to Forecast Your Sales<\/a><ul class=\"ht_toc_child_list\"><li class=\"\"><a href=\"#htoc-historical-sales-data\">Historical Sales Data<\/a><\/li><li class=\"\"><a href=\"#htoc-track-market-trends\">Track Market Trends<\/a><\/li><li class=\"\"><a href=\"#htoc-current-economic-trends\">Current Economic Trends<\/a><\/li><li class=\"\"><a href=\"#htoc-use-sales-forecasting-tools-such-as-a-crm\">Use Sales Forecasting Tools Such as a CRM<\/a><\/li><\/ul><\/li><li class=\"\"><a href=\"#htoc-how-to-forecast-sales\">How to Forecast Sales?<\/a><ul class=\"ht_toc_child_list\"><li class=\"\"><a href=\"#htoc-bottom-up-sales-forecasting\">Bottom-up Sales Forecasting<\/a><\/li><li class=\"\"><a href=\"#htoc-top-down-sales-forecasting\">Top-down Sales Forecasting<\/a><\/li><\/ul><\/li><li class=\"\"><a href=\"#htoc-techniques-to-use-with-bottom-up-and-top-down-sales-forecasting\">Techniques to Use With Bottom-up and Top-Down Sales Forecasting<\/a><ul class=\"ht_toc_child_list\"><li class=\"\"><a href=\"#htoc-account-for-internal-changes\">Account for Internal Changes<\/a><\/li><li class=\"\"><a href=\"#htoc-consider-market-trends\">Consider Market Trends<\/a><\/li><li class=\"\"><a href=\"#htoc-consider-economic-trends\">Consider Economic Trends<\/a><\/li><li class=\"\"><a href=\"#htoc-account-for-business-plans\">Account for Business Plans<\/a><\/li><\/ul><\/li><li class=\"\"><a href=\"#htoc-using-a-crm-for-sales-forecasting\">Using a CRM for Sales Forecasting<\/a><\/li><\/ul><\/div><\/div>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"htoc-what-is-sales-forecasting\" style=\"line-height:1.6\"><strong>What&nbsp;is&nbsp;Sales&nbsp;Forecasting?<\/strong>&nbsp;<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Sales forecasting is the process of estimating future revenue or sales, in order to make certain business decisions relating to demand, supply, and&nbsp;human resources.&nbsp;<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">The easiest way to understand it is to think of it as a backward-oriented process- <\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/All-About-Sales-Forecasting-Inblog-1-e1613561600896-983x1024-1.png\" alt=\"Sales data &amp; reports icon\" class=\"wp-image-4432\" width=\"205\" height=\"213\"\/><\/figure>\n<\/div>\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Once you predict the sales you\u2019ll make next quarter, you\u2019ll know how much end product\/service will need to be supplied to meet that number, and you will be able to plan the manpower, supplies, logistics, and everything else it takes for you to get your product and\/or service to the market.<\/p>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">You can forecast sales for the next week, month, quarter, or year, depending on your industry.&nbsp;<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"htoc-why-is-sales-forecasting-important\" style=\"line-height:1.6\">Why is Sales Forecasting Important?<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">As we mentioned earlier, sales forecasting forms the basis of several business decisions. When it comes to making decisions for your business, the more informed you are the better decisions you make. You can estimate short-term and long-term costs, plan to hire, and even plan for external investments.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-benefits-of-sales-forecasting\" style=\"font-size:22px;line-height:1.6\">Benefits of Sales Forecasting<\/h3>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/All-About-Sales-Forecasting-Inblog-2-e1613561698589-983x1024-1.png\" alt=\"Production line warehouse icon\" class=\"wp-image-4433\" width=\"209\" height=\"218\"\/><\/figure>\n<\/div>\n\n\n<h4 class=\"has-vivid-cyan-blue-color has-text-color has-medium-font-size wp-block-heading\" id=\"htoc-align-your-production\" style=\"line-height:1.6\">Align Your Production<\/h4>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Sales forecasts help you align your production in a way that can deliver adequate and high-quality products to the market within the right time frame, and ultimately support those sales targets.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"has-vivid-cyan-blue-color has-text-color has-medium-font-size wp-block-heading\" id=\"htoc-prepare-your-sales-team\" style=\"line-height:1.6\">Prepare Your Sales Team<\/h4>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">One of the foremost benefits of sales forecasting is that you can prepare your sales resources \u2013 your sales team \u2013 and account for any hiring, any allocation of resources to salespersons, and setting of targets, that may be required to meet numbers.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/All-About-Sales-Forecasting-Inblog-3-e1613561818763-1010x1024-1.png\" alt=\"Garbage truck icon\" class=\"wp-image-4434\" width=\"220\" height=\"237\"\/><\/figure>\n<\/div>\n\n\n<h4 class=\"has-vivid-cyan-blue-color has-text-color wp-block-heading\" id=\"htoc-prevent-wastage-of-supply-opportunities\" style=\"font-size:22px;line-height:1.6\">Prevent Wastage of Supply\/Opportunities<\/h4>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">With a sales forecast plan in hand, you can produce an adequate amount of your products without having to create an oversupply, or fall short of demand. With your plan in hand, production teams can plan for material procurement, production schedules, and more.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"has-vivid-cyan-blue-color has-text-color has-medium-font-size wp-block-heading\" id=\"htoc-plan-budgets-with-confidence\" style=\"line-height:1.6\">Plan Budgets With Confidence<\/h4>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Sales forecasting allows you to plan your spending with confidence, by giving you a realistic understanding of how much revenue you can expect.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img src=https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/All-About-Sales-Forecasting-Inblog-4-e1613561898973-1010x1024-1.png\" alt=\"Analyze Gaps in Sales Performance\" class=\"wp-image-4435\" width=\"178\" height=\"193\"\/><\/figure><\/div>\n\n\n\n<h4 class=\"has-vivid-cyan-blue-color has-text-color has-medium-font-size wp-block-heading\" id=\"htoc-analyze-gaps-in-sales-performance\" style=\"line-height:1.6\">Analyze Gaps in Sales Performance<\/h4>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Regular sales forecasting helps you understand if your sales team is not performing as per expectations, as it involves an analysis of your sales pipeline as well as an understanding of the market and current economy.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"has-vivid-cyan-blue-color has-text-color has-medium-font-size wp-block-heading\" id=\"htoc-make-stronger-marketing-plans\" style=\"line-height:1.6\">Make Stronger Marketing Plans<\/h4>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">The sales forecast basically impacts all the activities that lead up to sales, which includes marketing. With the targets you derive from your sales forecast, the marketing team can prepare their own lead generation targets to help meet the quota.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"htoc-what-does-the-process-of-sales-forecasting-involve\">What Does the Process of Sales Forecasting Involve?<\/h2>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/All-About-Sales-Forecasting-Inblog-5-e1613561989194-991x1024-1.png\" alt=\"The Process of Sales Forecasting Icon\" class=\"wp-image-4436\" width=\"203\" height=\"210\"\/><\/figure>\n<\/div>\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">You can forecast sales based on historic sales data, industry data, and economic trends. If you\u2019ve just started your business, you may need to rely on data and research available online about the industry to form forecasts and then test them.<\/p>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Generally, the stronger the data you use the more accurate your sales forecast will be. A forecast will usually be a combination of historical data and a prediction of future trends based on external information. <\/p>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">The golden rule of sales forecasting, however, remains to treat it as a guideline or a plan rather than a definitive end result.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"htoc-what-you-need-to-forecast-your-sales\">What You Need to Forecast Your Sales<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">When preparing to create a sales forecast plan, arm yourself with as much verified data as you can, both from within and without the company. Here\u2019s what you\u2019ll need:<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-historical-sales-data\">Historical Sales Data<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Create a sheet of previous sales data over the last year, broken down by product\/sales team\/sales rep and time period. Use that to calculate the sales run rate for each of your products or for each of your sales teams (more on calculating sales run rates later).<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/All-About-Sales-Forecasting-Inblog-6-e1613562074565-1024x956-1.png\" alt=\"Track market trends\" class=\"wp-image-4437\" width=\"205\" height=\"191\"\/><\/figure>\n<\/div>\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-track-market-trends\" style=\"font-size:22px;line-height:1.6\">Track Market Trends<\/h3>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">To forecast sales, you need to continuously track market trends over the year. Then, when it\u2019s time to forecast, factor in trends that you think will affect revenues positively or negatively.<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-current-economic-trends\" style=\"font-size:22px;line-height:1.6\">Current Economic Trends<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Be well-informed of any economic trends or decisions that have affected your industry in the past year or may affect your industry in your forecast period.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/All-About-Sales-Forecasting-Inblog-7-e1613562138467-1024x1002-1.png\" alt=\"Use Sales Forecasting Tools Such as a CRM\" class=\"wp-image-4438\" width=\"207\" height=\"203\"\/><\/figure>\n<\/div>\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-use-sales-forecasting-tools-such-as-a-crm\" style=\"font-size:22px;line-height:1.6\">Use Sales Forecasting Tools Such as a CRM<\/h3>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Sales CRM software makes forecasting sales much easier, and some of them will even do it for you. Using a CRM brings all the data you need to your fingertips, so you spend less time manually gathering data about your sales.<\/p>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\"><em>Plug: <\/em>The Kylas Growth Engine is an ecosystem of technology products designed to help you grow, with sales CRM software at its core. Bonus &#8211; it has a <a href=\"https:\/\/www.kylas.io\/pricing\" target=\"_blank\" rel=\"noreferrer noopener\">free CRM<\/a> plan too!<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"htoc-how-to-forecast-sales\">How to Forecast Sales?<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">There are a few techniques to forecasting sales, but here are two main approaches you need to be aware of before we get down to techniques:<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-bottom-up-sales-forecasting\" style=\"font-size:22px;line-height:1.6\">Bottom-up Sales Forecasting<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">In this method of sales forecasting, you start by making predictions at the unit level and work up to an overall sales forecast. <\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/All-About-Sales-Forecasting-Inblog-8-e1613562230596-1024x1006-1.png\" alt=\"Bottom up icon\" class=\"wp-image-4439\" width=\"199\" height=\"196\"\/><\/figure>\n<\/div>\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">A bottoms-up sales forecast involves understanding how many units of a particular product you\u2019re likely to sell in the upcoming time period and then expanding that to an overall sales number. <\/p>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">To get the base number of units right, you need to rely on historical data. <\/p>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">But, if you\u2019re a newly formed company and don\u2019t have historical data, you can make an educated guess based on your industry, product, the likelihood of leads closing into sales, etc. The more realistic your educated guess, the more accurate your forecast.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Then, multiply the base unit number by the unit price and there you have it \u2013 your bottoms-up sales forecast.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-top-down-sales-forecasting\" style=\"font-size:22px;line-height:1.6\">Top-down Sales Forecasting<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">A top-down forecast takes into account the total size of the market, then considers how much of it the business can capture. <\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/All-About-Sales-Forecasting-Inblog-9-e1613562307505-978x1024-1.png\" alt=\"Top down icon\" class=\"wp-image-4440\" width=\"211\" height=\"221\"\/><\/figure>\n<\/div>\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">For example, if the size of the market is $2 billion and you estimate you can win 2% of the market in the next year, your sales forecast will be $200 million for the next year. <\/p>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">The challenge with the top-down sales forecasting model is that it tends to take more of an idealist view, especially for start-up businesses. <\/p>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">So, if you don\u2019t have historical data in hand, we recommend you stick with only the bottom-up sales forecasting technique. If you do have historical data in hand, we recommend you use both until you form a balance between the two numbers you get!<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\"><em>Tip: <\/em>When you don\u2019t have historical sales data in hand, you can start by calculating the sales run rate based on even a month\u2019s worth of sales data. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">A sales run rate is basically an annualization of a monthly or quarterly sales revenue (though you can do it based on even shorter time periods). To calculate the sales run rate, take your historical sales data and multiply it to apply for a year. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">For example: If you made $100,000 worth of sales in Q1 of this year and want to predict sales for the year, you simply multiply it by 4.&nbsp;<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">However, as you can imagine, these approaches aren\u2019t foolproof in predicting sales data. That\u2019s where the different factors and techniques come in.&nbsp;<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"htoc-techniques-to-use-with-bottom-up-and-top-down-sales-forecasting\">Techniques to Use With Bottom-up and Top-Down Sales Forecasting<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-account-for-internal-changes\" style=\"font-size:22px;line-height:1.6\">Account for Internal Changes<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">When calculating the base number of units you\u2019re likely to sell, don\u2019t just take into account the number of units you sold in the last corresponding sales period. Also take into account internal factors that might affect the predicted number, such as:<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ul class=\"wp-block-list\" style=\"font-size:20px\"><li>Changes in pricing of the product<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\" style=\"font-size:20px\"><li>Any sales you might be planning to run<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\" style=\"font-size:20px\"><li>Number of new customers you\u2019re likely to pull in based on marketing data<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\" style=\"font-size:20px\"><li>Number of repeat customers you\u2019re likely to be pulling in<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\" style=\"font-size:20px\"><li>Any changes to the product itself that might make it more popular<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\" style=\"font-size:20px\"><li>Any new sales channels you might be planning on exploring<\/li><\/ul>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-consider-market-trends\" style=\"font-size:22px;line-height:1.6\">Consider Market Trends<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Account for changes in the market when calculating the base number of units you\u2019re likely to sell. For example, with the COVID-19 pandemic, you may have had to increase or decrease the expected number of units you\u2019ll sell. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">For companies in the EdTech or e-commerce or hygiene space, the pandemic would be a trigger to boost sales. And for companies that are in the hospitality or travel goods space, the pandemic would have been a barrier to meeting predicted sales units.<\/p>\n\n\n\n<div style=\"height:15px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"alignright size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/All-About-Sales-Forecasting-Inblog-11-e1613562385738-1010x1024-1.png\" alt=\"Global economic impact icon\" class=\"wp-image-4442\" width=\"208\" height=\"211\"\/><\/figure>\n<\/div>\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-consider-economic-trends\" style=\"font-size:22px;line-height:1.6\">Consider Economic Trends<\/h3>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Just like with market conditions, economic conditions and policies are constantly impacting the number of units you\u2019ll sell. <\/p>\n\n\n\n<p class=\"has-white-color has-text-color wp-block-paragraph\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Take into account the policies affecting your supply chain, your production, and even your demand, and adjust the base number of units you&#8217;re likely to sell.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-account-for-business-plans\">Account for Business Plans<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\"><em>Are you aiming for rapid expansion? Putting a new growth strategy in place? <\/em><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Try and quantify these changes (if you\u2019re targeting a new market, how much demand do you expect to see?) and then account for them for the boost you\u2019re likely to see in your sales numbers.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"htoc-using-a-crm-for-sales-forecasting\">Using a CRM for Sales Forecasting<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">A sales CRM software helps as a sales forecasting tool and does all the data retrieval and analytics part of the process for you (and some will also directly give you sales forecasts). <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">It takes all your funnel data (what is the probability of leads closing in each stage, how many leads you currently have in each stage, how many you have in previous months, etc.) and extrapolates it to apply for the forecast period. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">Sales CRM software also comes with tools such as lead scoring that add accuracy to its function as a sales forecasting tool.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size wp-block-paragraph\" style=\"line-height:1.6\">We hope you\u2019re now equipped to make your very own sales forecast! <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n<div style=\"background-color: #d9edf7;color: #31708f;border-left-color: #31708f\" class=\"ub-styled-box ub-notification-box wp-block-ub-styled-box\" id=\"ub-styled-box-0930411c-727c-4eba-8204-d0a93de4902c\">\n<p class=\"has-medium-font-size wp-block-paragraph\" id=\"ub-styled-box-notification-content-\">If you have any difficulty at all, feel free to reach out to us \u2013 we can answer any questions you have and we can also get you signed up for your <a href=\"https:\/\/kylas.io\/\" target=\"_blank\" rel=\"noreferrer noopener\">Kylas<\/a> account.<\/p>\n\n\n<\/div>","protected":false},"excerpt":{"rendered":"<p>\u201cThe man who is prepared has his battle half fought\u201d&nbsp;&#8211;&nbsp;Miguel de Cervantes&nbsp; Sales Forecasting is a crucial input to not only the Sales Planning process but also the overall business planning. Sales forecasting might sound quite intimidating, but it all comes down to a simple matter of well-defined processes. The process of sales forecasting is &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/kylas-v2.staging2.amura.in\/en\/sales-effectiveness\/sales-forecasting-small-businesses\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;All About Sales Forecasting (And How to Do It Effectively!)&#8221;<\/span><\/a><\/p>\n","protected":false},"author":23,"featured_media":4420,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[12,34],"tags":[9,21,22],"class_list":["post-4384","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sales-effectiveness","category-sales-strategy","tag-sales-reporting","tag-sales-analytics","tag-sales-strategy"],"acf":[],"featured_image_src":null,"author_info":{"display_name":"Shagun Sharma","author_link":"https:\/\/kylas-v2.staging2.amura.in\/en\/author\/shagun"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>All About Sales Forecasting (And How to Do It Effectively!)<\/title>\n<meta name=\"description\" content=\"Sales forecasting can sound intimidating, especially if you\u2019re a small business owner! Read this guide for a simpler explanation.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/kylas-v2.staging2.amura.in\/en\/sales-effectiveness\/sales-forecasting-small-businesses\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"All About Sales Forecasting (And How to Do It Effectively!)\" \/>\n<meta property=\"og:description\" content=\"Sales forecasting can sound intimidating, especially if you\u2019re a small business owner! 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