Automate your sales forecast process for Purchasing

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in this video you are going to learn sales forecasting let's start the video sales forecasting is an essential business practice sales forecasts allow business leaders to make wiser decisions about setting up goals budgeting hiring and other things involving cash flow sales forecast is an expression of expected sales revenue it estimates how much your company plans to sell within a certain time period like a quarter or year market research conducted by a firm plus analysis of the current sales experience and trends forms the basis for the construction of a sales forecast the sales forecast is a commitment on the part of the sales department and it should be very accurate because production and stockholding plans and the whole train of events following from these are based on them sales forecasting is one of the vital tools of marketing planning since adequate planning and the effective deployment of marketing resources are based on sales forecasting data accurate forecasts are vital aids to decision making so sales forecasting is essential if more accurate sales budgets production and purchasing schedules are to be set check out my sales and marketing playlist to learn more about sales and marketing what are the types of sales forecasting there are mainly 2 types of sales forecasting short-term sales forecasting and long-term sales forecasting let's discuss these types separately short term sales forecasting this type of sales forecasting can be defined when it covers three months six months or one year one year is the most preferred the period depends on the business if the demand varies from one month to another forecasting may be done only for a limited period purpose of short-term forecasting to adopt a suitable production policy to gain proper control of the inventory to cut down the cost of the raw materials and machinery to determine the sales targets in order to arrange the financial needs to meet the demand long-term sales forecasting the forecasting that covers 5 10 and even 20 years are called long-term sales forecasting the period here also depends upon the business but beyond 12 years the future is uncertain but in some industries like petroleum refinery paper-making industries and shipbuilding long-term forecasting is needed as the total investment cost of equipment is relatively high purpose of long-term sales forecasting to estimate long-term financial requirements to plan for the new production units to expand the existing unit to meet the demand to train the employees in order to meet the strong manpower requirement for future methods of sales forecasting there are several methods you can use to forecast sales many businesses use two or more sales forecasting techniques together to create a range of forecasts common sales forecasting methods include 1. sales force opinion sales managers generally ask their representatives when will this deal close and how much will it close for sales agents are in touch with the consumers and possess expert knowledge about future demand or trends but sometimes sales reps tend to overestimate sales forecasts and there is no repeatable process to generate a consistent forecast with this method 2. assess historical trends this method includes examining sales from the previous year under similar conditions to estimate how you'll perform in the present year split the numbers down by price sales period product reps and other important factors form those into a sales run rate which is the number of projected sales per sales period this serves as the basis of your sales forecast this method is somewhat more accurate but ignores other factors that may have changed in the previous year like the number of sales reps you have or how your competitors are doing number three customers buying plan as a crucial information source consumers are meant to know their likely purchases during the period under a set of conditions this approach is good enough when there are few customers this type of forecasting is adopted for industrial goods it is useful for industries that produce costly goods for a few buyers like wholesalers retailers potential consumers etc a survey is run on a face-to-face basis because changes are constant while buyer behavior and buying decisions change frequently four test marketing result in the market test method products are presented in a limited geographical area and the result is studied then a sales forecast is made based on this result this test is conducted in order to understand the market feedback 5. expert opinion in this method several types of consultancy agencies have entered the field of sales the consultancy agencies have specialized experts in their respective fields this includes trade unions dealers etc they may run market research and acquire ready-made statistical data to forecast sales firms or factories use the opinions of such experts now come to importance of sales forecasting it helps businesses in planning budgeting managing risks and making better decisions sales forecasting allows companies to allocate resources effectively for future growth and manage their cash flow it helps sales teams achieve their goals by identifying early warnings in their sales pipeline sales forecasting also encourages businesses to estimate their costs and revenue precisely based on the prediction of their short-term and long-term performance sales opportunities are searched out based on the forecast and therefore the discovery of selling success is made it helps in preparing production and purchasing schedules and it helps to decide policies factors affecting sales forecasting the factors to be considered when making the sales forecast are government action this is important when most of the purchases are made by government-controlled bodies nationalized industries etc economic trends the trends at home which are affected by government action and the trend in the world market both affect sale forecasting competition existing competitors and new competitors changes in technology and markets internal factors such as capacity available resources marketing mix etc if you want to read in details or download the pdf go through the link in the description like the video it will motivate me to make more videos for you and don't forget to subscribe to education leaves