ales Forecasting is the process of using a company’s sales records over the past years to predict the short- term or long-term sales performance of that company in the future. This is one of the pillars of proper financial planning. As with any prediction- related process, risk and uncertainty are unavoidable in Sales Forecasting too.

Hence, it’s considered a good practice for Sales forecasting teams to mention the degree of uncertainties in their forecast. Sales Forecasting is a globally-conducted corporate practice where a number of objectives are identified, action-plans are chalked out as well as budgets and resources are allotted to them.

The first step to proper Sales Forecasting is to know the things that fall within your domain directly as a salesperson. This usually relates to your sales staff, clients and prospects. Other factors to consider during the setup of a forecast are the negative ones like uncertainty, abrupt changes in consumer shopping patterns, etc.One of the most common yet basic challenges that the management of companies face in making business sales forecasts is that their usual approach is a “top to down” one. This approach leaves very little scope for interaction with the sales manager and the salespersons during the data collection process.

For a successful and accurate Sales Forecasting, it’s necessary to take into consideration the direction from significant departments of the organization, comprising of seniors, managers, sales teams and finally – your own gut feeling. Let’s list down these sources of instructions and how they contribute towards designing a reliable sales forecast.

• Directions from Top-level Seniors– It may be initially necessary for you to increase your sales by 10%, however your seniors, being wiser, may ask you to reconsider your target depending on promises made to outside investors as well as stockholders.

• Directions from one’s own manager– These kind of directions are mostly integrated along with the direction from the top level, but their expectations are generally little more conservative and realistic. If the top management gives you a target of 15% sales growth, your manager will tell you what the real expectations are.

• Direction from Sales Teams– For instance, if the Sales Teams may project a growth of 10% over the management’s forecast figure of 20%; this extra-conservative number is a cushion, so that they could increase their chances to beat the sales forecast.

• Direction from other Entities – Many other entities also take part in Forecasting. Chief among them are the Research and Development department, Human Resource department, Marketing department finance team, manufacturing unit, etc.

Once you are done taking feedback and inputs from all these people, the final question to ask is what is your interpretation of all these factors? Most often a person’s gut feeling is more accurate than all the numbers put in front of him. Although it’s not advisable to go against the company’s decision, it is always a good policy to do further research till the negative hunch doesn’t go away.