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The Ultimate Guide to Sales Projections

Published: September 13, 2023

Wouldn't it be great if you could look into a crystal ball and find out just how much revenue your company will generate in the next quarter? Or fiscal year? Or in the next 3-5 years?

It turns out you can do that through sales projections. However, projecting sales is riddled with uncertainty because you‘re trying to estimate revenue generated from leads that you haven’t yet captured. So, how do you create an accurate sales projection for your company?

That’s why this guide exists. By the end, you’d have learned what a sales projection is, how it benefits your business, how to create accurate sales projections, and some tools you can use to ease the sales projection process.

Table of Contents

What is a sales projection?

• What are the benefits of sales projection?

How to Create a Sales Projection

Sales projection tools, tips for making sales projections.

A sales projection estimates future sales revenue over a particular period. It’s made by analyzing historical sales data, identifying patterns and trends, and using that to predict the revenue they’ll generate in the near future.

The sales team also considers the following when creating a sales projection:

• The economic factors that might affect the business.
• The current state of the market and the position the business occupies within it.
• Your budget for customer acquisition .

If you’re launching a new product or feature, the sales team will try to project sales for three scenarios: the best-case scenario, the worst-case scenario, and the most likely scenario — which is usually the middle ground between the first two.

Sales projections are critical because they allow companies to set realistic sales goals, track their progress over time, and estimate future revenue. Without accurate sales projections, companies will find it hard to set SMART sales goals or make data-driven decisions on allocating resources.

When this happens, companies usually teeter between underperforming and overperforming against their targets. This is a disorienting place to be because of the uncertainty that comes with not knowing whether you’ll hit your set targets or not.

The accounting department also uses sales projections to determine the budgets for different aspects of the business, estimate financial outcomes, assess financial risk, and conduct overall business planning.

What are the benefits of sales projections?

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How to Create a Sales Forecast (Examples & Templates)

Every business needs management tools to maximize performance and keep everything running smoothly. A sales forecast is a critical tool that businesses use to measure their progress and check everything is going to plan. Here’s a closer look at why sales forecasts are important and how to create them. We have some great templates for you, too.

What Is a Sales Forecast – And Which Factors Impact It?

Sales forecasts are data-backed predictions about the sales volume a business will experience over a specific period.

A sales forecast is very important because it provides the foundation for almost all other planning activities. Businesses will rely on accurate sales forecasting to better understand how they should plan financially and execute their game plan .

This means that sales forecasts have the potential to make or break a business.

As with anything in life, though, nothing is certain. Sales forecasts can be affected by a range of factors. This means that businesses have to prepare for any and all eventualities.

Here’s a look at some of the factors that can affect sales forecasting:

A lack of sales history

Sales forecasts are often built using historical data. Businesses analyze previous results to extrapolate and create predictions. If a business starts and lacks a good body of historical sales data, it will struggle to create an accurate sales forecast.

The type of business

Each industry has its series of unique challenges and quirks. Those factors are sometimes unpredictable and could affect a business’s revenues. The ad tech industry, for instance, is often rocked by new data privacy regulations.

Outside factors

Some businesses find that everything is moving according to plan before blindsiding by an unpredictable event they cannot control. Consumer earnings may plummet, for instance, and cause people to restrict their spending.

Inside factors

Some businesses are forced to change their pricing or payment structures. This new dynamic can often have unpredictable effects and cause a business to veer off course from what its sales forecast predicted.

Why Should You Establish Sales Forecasts?

Sales forecasting is essential for every business. Here are some of the key reasons.

Perform accurate financial planning

Sales forecasts help the CFO and financial team understand how much cash is going to be coming into a business. This gives businesses a better understanding of how they can use that capital and makes it possible to calculate what profit they can expect over a given period .

Plan sales activities

A sales forecast can help executives with sales planning. Those executives will understand how many salespeople to employ, for instance, and which quotas and targets to attribute to each of those salespeople. This means that an accurate sales forecast can help salespeople to understand and hit their objectives.

Coordinate marketing

A sales forecast will have a big impact on marketing. For instance, the sales forecast might show that sales are waning, and a bigger investment needs to be placed within marketing. It might also show that a particular product or service fails to deliver appropriate amounts of value.

Control inventory

A sales forecast gives businesses a good understanding of how much inventory they will need to purchase and retain. This is an important factor; it helps businesses balance overstocking and running out of materials. This is also true for SaaS businesses needing customer support and success.

Avoid fluctuations in price

An accurate sales forecast helps businesses maintain consistent product and service pricing. A poor sales forecast might mean a business is forced to adjust its pricing unpredictably. This tactic is often the result of panic; without the proper strategy, it jeopardizes a business’s profitability.

How to Forecast Sales – The Best Sales Forecasting Methods

Businesses around the world use a range of sales forecasting techniques. Here’s a closer look at some key methods you could use.

Opportunity Stage Forecasting

What is it?

This sales forecasting technique calculates the likelihood of deals closing throughout a pipeline.

Most businesses use a sales pipeline divided into a series of sections. The likelihood of converting a prospect increases the deeper the prospect moves into the sales process. To get the most from this technique, the team must dig into the current performance of the sales team.

After that analysis, the probabilities might look something like this:

• Sales Accepted lead : 10% probability of closing
• Sales Qualified Lead : 25% probability of closing
• Proposal sent : 40% probability of closing
• Negotiating : 60% probability of closing
• Contract sent : 90% probability of closing

Using these probabilities, you can extrapolate an opportunity stage sales forecast. You’ll want to take the deal’s potential value and multiply that by the win likelihood.

Who should use it

This is a great sales forecasting method if you have access to historical data, lots of leads in your pipeline, and you need a quick estimate. It’s important to understand that this isn’t the most accurate option, given that many random factors affect those probabilities.

Length of Sales Cycle Forecasting

This sales forecasting method finds the average length of your sales cycle. This helps you predict when your deals will likely close and reveal opportunities for your sales team to expedite the sales cycle.

This method is simple. You can find the length of your average sales cycle using the following basic formula:

Total # of days to close deals / # of closed deals

Let’s imagine, for instance, that you find the following:

• Deal 1: 28 days
• Deal 2: 15 days
• Deal 3: 50 days
• Deal 4: 38 days

We closed four deals, and it took 131 days to close them all together. This means that the average length of our sales cycle is 33 days.

Equipped with that information, we can look at our pipeline and estimate how likely we are to close deals based on how old they are. The closer a deal moves toward the average sales cycle length, the more likely it will be closed.

This is a great sales forecasting method for sales managers who want to learn more about the deals spread across their pipeline. For instance, they can use this method to differentiate between different types of groups.

Sales managers might find that the average sales cycle length is much shorter for web leads, for example, when compared to email leads.

Historical Forecasting

Historical forecasting is a very quick and simple sales forecasting technique. The process involves looking back at your previous performance within a certain timeframe and assuming that your future performance will be superior or at least equal.

This is a useful reference because it helps you to get to grips with seasonality and the outside factors that affect your sales. You might find, for instance, that the holidays are a particularly slow time for your business, and looking at historical data can help you to prepare.

With that said, historical forecasting has its issues. It assumes that buyer demand will be constant, which is no longer a given. This could mean you overestimate your sales statistics and use an accurate sales forecast.

This forecasting method is ideal for a business that needs a quick and easy way to project how much it will sell over a given period. That said, historical data should be used as a benchmark instead of the foundation of a sales forecast.

Lead Pipeline Forecasting

This time-consuming sales forecasting method involves reviewing each lead within your pipeline and determining how likely the deal will be closed. That likelihood is determined by exploring factors like the value of the opportunity, the performance of your salespeople, seasonality, and more.

This is a time-consuming method, and it often makes sense for businesses with fewer high-value leads – it wouldn’t necessarily be efficient or make much sense for a SaaS business, for instance.

The big benefit of this method is its accuracy. If you have reliable and rigid data to base your analysis on, you will find that this method can give you a deeper insight into each lead.

This method makes sense for those businesses that have a lower number of leads. Inside salespeople, for instance, will want to get a clearer picture of every lead within their pipeline. This method isn’t appropriate for SaaS businesses that operate according to volume.

Test Market Analysis Forecasting

Businesses often launch exciting new products and services. But it can be difficult to get accurate sales forecasts without historical data . Test Market Analysis forecasting is the process of developing a product or service and introducing it to a test market to forecast sales and get an approximation of future sales.

This limited rollout allows businesses to track the performance of the new offering and monitor things like consumer awareness, repeat purchase patterns, and more. This is a data-gathering exercise, and it feeds businesses with the information they need to create accurate sales forecasts.

This approach is perfect for those businesses that need to perform real-world experiments to gather useful information. A new business can use sales forecasting to use its sales data to predict where future sales can come from. This can limit the cost since it’s an effective way of having a busy sales pipeline. The limited rollout of the product is also useful from a product perspective, given that adjustments can be made according to feedback.

A big issue with this form of forecasting is that one test market may not be like the others. Your data might not reflect the wider reality, so you must make prudent choices that provide you with accurate information.

Multivariable Analysis

As the name suggests, this method calls upon analyzing a range of variables to get the clearest picture possible. This means that if the method is performed well, it can often provide the most accurate forecast.

If you use this technique, you will want to bring together factors like the average length of your sales cycle, the performance of your salespeople, historical forecasting, and more.

The success of this method hinges upon two key factors within your business: 

• the accuracy of your salespeople and their reporting
• the quality of the forecasting tools that you use.

Both of these factors must be in place to make sure this forecasting method has the best chance of success.

Multivariable forecasting is most appropriate for larger and well-organized businesses, as it uses the data and tools necessary to blend various forecasting methods into one. This could be it if you need the most accurate forecast method possible.

Intuitive Forecasting

Your salespeople are on the front; their experience is very valuable. They often have a good idea of how likely they are to close a particular deal and can use educated guesses to assess the situation.

Experienced salespeople can take emotion out of the equation and rely on their experience and knowledge to make accurate predictions. Some businesses decide to incorporate those gut instincts into the way that they forecast a particular sale.

Some businesses, for instance, will add a score to the conversion probability of their various prospects according to the gut feeling of their salespeople.

This intuitive forecasting method is particularly useful for businesses that lack historical data. Without the quantifiable data to provide the basis for your sales forecasting, you might have to turn to more qualitative assessments from your salespeople.

The downside of this sales forecasting method is clear, though. These assessments are highly subjective, and you might find that your salespeople are often more optimistic in their projections. This means those projections should be taken with a pinch of salt, but they are better than nothing.

Sales Forecast Examples

We know the theory, but how about the practice? In these awesome examples, let’s take a closer look at what those sales forecast methods look like.

Standard Business Plan Financials

This example from Tim Berry (chairman and founder of Palo Alto Software) looks at what a startup sales forecast might look like .

Tim sets the scene and describes Magda’s situation – she wants to open a small café in an office park.

He goes on to show how Magda would establish a base case, estimate her monthly capacity, and what type of sales she could expect. To wrap up, she goes through her month-by-month estimates for her first year and estimates her direct cost.

This is a great exercise and unmissable reading for new entrepreneurs dreaming up a new venture.

Sales Forecast Guide by Toptal Research

This simple sales forecasting guide from Toptal Research also includes a simple example that forms the basis of the guide. These simple visuals and data will give you a good idea of how you can put your sales forecasting efforts together and what it will look like.

This example also shows that you can attractively forecast sales and inform the sales teams. Sales forecasting doesn’t have to be boring columns of data, but you can bring your sales forecast to life with colorful visuals.

Detailed Sales Forecast by Microsoft

This detailed sales forecast template from Microsoft makes it simple for you to estimate your monthly sales projections.

The formula comes with pre-built formulas and worksheet features that result in an attractive and clear template. The template also relies on a weighted sales forecasting method based on the probability of closing each opportunity.

Even if you do not use this exact template, it’s a great file to use. It can give you a great idea of the information you need to include and how it might come together in a spreadsheet format.

Sales Forecast Templates

Looking for your own sales forecast templates to get a running start? Here’s a look at some of the most practical and useful templates.

Sales Forecast Template for Excel by Vertex42

This free sales forecast template helps you keep a handle on key information like unit sales, growth rate, profit margins, and gross profit.

The template is already set up to help you compare and analyze a range of products and services on a monthly basis. The chart also includes a range of sample charts that can be used to effectively and accurately communicate the contents of your sales forecast.

The same worksheet can be used to create monthly and yearly forecasts. You can play with the template to find your desired view and information. 

Sales Forecast Template by Freshworks

This simple forecasting template helps you to put together an effective sales forecast. This finished product can then be used to grow your revenues and hit your quotas.

This template is particularly effective for small businesses and startups that need to project sales and prioritize deals at the early stages of their business. Freshworks also explains that the template can help businesses achieve a higher rate of on-time delivery and accurate hiring projections.

The free sales forecast template is very intuitive to use. Again, it’s great to flick through the spreadsheet to understand what you need in a sales forecast and how it can be put together.

Free Sales Forecast Template by Fit Small Business

This sales forecast template is perfect if your CRM doesn’t currently offer built-in sales forecasting. This template can help you create a forecast from scratch that is adjusted to your own particular needs much quicker.

The template is available in various formats, including PDF, Excel, and Google Sheets. This is great news if you create your small business on your own terms and have limited software access .

Again, this template is clear and simple to use. All of the fields are explained within the spreadsheet – you don’t have to worry about going elsewhere to find definitions.

Sales Forecasting Tools

Looking for sales forecasting tools to take your activities to the next level? Here’s a look at some of the standout options.

Pipedrive is a sales CRM that is designed for salespeople by salespeople. It is a robust CRM that includes all of the features a sales team needs to achieve sales success and grow their business.

The tool also includes a forecasting tool. This tool acts as a personal sales manager that helps salespeople to choose the right deals and activities at the right time. This helps salespeople to become better closers.

By all accounts, this function is very useful for salespeople and managers alike. The forecasting tool can also be customized to match the specific needs of salespeople.

Smart Demand Planner

Smart Demand Planner is a consensus demand planning and statistical forecasting solution that understands how accurate critical forecasts are to a business.

The tool was built on the premise that forecasts are often inaccurate and can cause various issues. Moreover, the traditional sales forecast often resides within a complex spreadsheet that is difficult to use, share, and scale.

The tool aims to fix those issues by aligning strategic business forecasting at all levels of your hierarchy. Smart Demand Planner offers a statistically sound objective foundation for your sales activities.

amoCRM is an easy and smart sales solution that focuses on the world of messenger-based sales. The platform understands the popularity and potential of messenger apps, so it offers a whole new way of using the channel to create valuable relationships.

The tool also includes visual, real-time reports that give salespeople and managers powerful insights. These analytics can be used to set targets and also forecast future sales. What’s more, they can measure performance and identify target areas.

The visual look and feel of the platform make this a very intuitive option. It can drive value through accurate forecasting in businesses where messenger-based selling is critical.

As we have seen, forecasts are critical to the success of your business. They can be cost-effective for a new business, keep sales teams and reps informed, and more. However, every business also needs the leads to make those forecasts a reality. Learn more about UpLead today and how our platform can help you to find, connect, and engage with qualified prospects.

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Sales forecasting: How to create a sales forecast template (with examples)

A strong sales team is the key to success for most companies. They say a good salesperson can sell sand at the beach, but whether you’re selling products in the Caribbean or Antarctica, it all comes down to strategy. When you’re unsure if your current strategy is working, a sales forecast can help.

What is a sales forecast?

A sales forecast predicts future sales revenue using past business data. Your sales forecast can predict a number of different things, including the number of new sales for an existing product, the new customers you’ll gain, or the memberships you’ll sell in a given time period. These forecasts are then used during project planning to determine how much you should allocate towards new products and services. 

Why is sales forecasting important?

Sales forecasting helps you keep a finger on your business’s pulse. It sets the ground rules for a variety of business operations, including your sales strategy and project planning. Once you calculate your sales projections, you can use the results to assess your business health, predict cash flow, and adjust your plans accordingly.

An effective sales forecasting plan:

Predicts demand: When you have an idea of how many units you may sell, you can get a head start on production.

Helps you make smart investments: If you have future goals of expanding your business with new locations or products, knowing when you’ll have the income to do so is important. 

Contributes to goal setting: Your sales forecast can help you set goals outside of investments as well, like outshining competitors or hiring new team members.

Guides spending: Your sales forecast may be the wake-up call you need to set a budget and use cost control to reduce expenses.

Improves the sales process: You can change your current sales process based on the sales projections you’re unhappy with.

Highlights financial problems: Your sales forecast template will open your eyes to problem areas you may not have noticed otherwise. 

Helps with resource management: Do you have the resources you need to fill orders if it’s an accurate sales forecast? Your sales forecast can guide how you allocate and manage resources to hit targets.

When you have an accurate prediction of your future sales, you can use your projections to adjust your current sales process.

Sales forecasting methods

Sales forecasting is an important part of strategic business planning because it enables sales managers and teams to predict future sales and make informed decisions. But why are there multiple sales forecasting methods? Simply put, businesses vary in size, industry, and market dynamics, so no single methodology suits all.

Choosing the right sales forecasting method is more of an art than a science. It involves:

Analyzing your business size and industry

Assessing the available data and tools

Understanding your sales cycle's complexity

A few telltale signs that you've picked the correct approach include:

Improved accuracy in sales target predictions

Enhanced understanding of market trends

Better alignment with your business goals

Opportunity stage forecasting

Opportunity stage forecasting is a dynamic approach ideal for businesses using CRM systems like Salesforce. It assesses the likelihood of sales closing based on the stages of the sales pipeline. This method is particularly beneficial for sales organizations with a clearly defined sales process.

For example, a software company might use this method to forecast sales by examining the number of prospects in each stage of their funnel, from initial contact to final negotiation.

Pipeline forecasting method

The pipeline forecasting method is similar to opportunity stage forecasting but focuses more on the volume and quality of leads at each pipeline stage. It's particularly useful for businesses that rely heavily on sales forecasting tools and dashboards for decision-making.

A real estate agency could use it by examining the number of properties listed, the stage of negotiations, and the number of closings forecasted in the pipeline.

Length of sales cycle forecasting

Small businesses often prefer the length of sales cycle forecasting. It's straightforward and involves analyzing the duration of past sales cycles to predict future ones. This method is effective for businesses with consistent sales cycle lengths.

A furniture manufacturer, for instance, might use this method by analyzing the average time taken from initial customer contact to closing a sale in the past year.

Intuitive forecasting

Intuitive forecasting relies on the expertise and intuition of sales managers and their teams. It's less about spreadsheets and more about market research and understanding customer behavior. This method is often used with other, more data-driven approaches.

A boutique fashion store, for example, might use this method, relying on the owner's deep understanding of fashion trends and customer preferences.

Historical forecasting

Historical forecasting uses past performance data to predict future sales. This method is advantageous for businesses with ample historical sales data. It's less effective for new markets or rapidly changing industries.

An established book retailer could use historical data from previous years, considering seasonal trends and past marketing campaigns, to forecast next quarter's sales.

Multivariable analysis forecasting

Multivariable analysis forecasting is a more sophisticated method that's ideal for larger sales organizations. It analyzes factors like market trends, economic conditions, and marketing efforts to provide a holistic view of potential sales outcomes.

An automotive company, for example, could analyze factors like economic conditions, competitor activity, and past sales data to forecast future car sales.

How to calculate sales forecast

Sales forecasts determine how much you expect to do in sales for a given time frame. For example, let’s say you expect to sell 100 units in Q1 of fiscal year 2024. To calculate sales forecasts, you’ll use past data to predict future trends. 

When you’re first creating a forecast, it’s important to establish benchmarks that determine how much you normally sell of any given product to how many people. Compare historical sales data against sales quotas—i.e., how much you sold vs. how much you expected to sell. This type of analysis can help you set a baseline for what you expect to achieve every week, month, quarter, and so on.

For many companies, this means establishing a formula. The exact inputs will vary based on your products or services, but generally, you can use the following:

Sales forecast = Number of products you expect to sell x The value of each product

For example, if you sell SaaS products, your sales forecast might look something like this: 

SaaS FY24 Sales forecast = Number of expected subscribers x Subscription price

Ultimately, the sales forecasting process is a guess—but it’s an educated one. You’ll use the information you already have to create a data-driven forecasting model. How accurate your forecast is depends on your sales team. The sales team uses facts such as their prospects, current market conditions, and their sales pipeline. But they will also use their experience in the field to decide on final numbers for what they think will sell. Because of this, sales leaders are more likely to have better forecasting accuracy than new members of the sales team.

Sales forecast vs. sales goal

Your sales forecast is based on historical data and current market conditions. While you always hope your sales goals are attainable—and you can use data to estimate what your team is capable of—your goals might not line up directly with your forecast. This can be for a number of reasons, including wanting to create stretch goals that push your sales team beyond what they’ve done in the past or big, pie-in-the-sky goals that boost investor confidence.

How to create a sales forecast

There are different sales forecasting methods, and some are simpler than others. With the steps below, you’ll have a basic understanding of how to create a sales forecast template that you can customize to the method of your choice. 

1. Track your business data

Without details from your past sales, you won’t have anything to base your predictions on. If you don’t have past sales data, you can begin tracking sales now to create a sales forecast in the future. The data you’ll need to track includes:

Number of units sold per month

Revenue of each product by month

Number of units returned or canceled (so you can get an accurate sales calculation)

Other items you can track to make your predictions more accurate include:

Growth percentage

Number of sales representatives

Average sales cycle length

There are different ways to use these data points when forecasting sales. If you want to calculate your sales run rate, which is your projected revenue for the next year, use your revenue from the past month and multiply it by 12. Then, adjust this number based on other relevant data points, like seasonality.

Tip: The best way to track historical data is to use customer relationship management (CRM) software. When you have a CRM strategy in place, you can easily pull data into your sales forecast template and make quick projections.

2. Set your metrics

Before you perform the calculations in your sales forecast template, you need to decide what you’re measuring. The basic questions you should ask are:

What is the product or service you’re selling and forecasting for? Answering this question helps you decide what exactly you’re evaluating. For example, you can investigate future trends for a long-standing product to decide whether it’s worth continuing, or you can predict future sales for a new product. 

How far in the future do you want to make projections? You can decide to make projections for as little as six months or as much as five years in the future. The complexity of your sales forecast is up to you.

How much will you sell each product for, and how do you measure your products? Set your product’s metrics, whether they be units, hours, memberships, or something else. That way, you can calculate revenue on a price-per-unit basis.

How long is your sales cycle? Your sales cycle—also called a sales funnel—is how long it takes for you to make the average sale from beginning to end. Sales cycles are often monthly, quarterly, or yearly. Depending on the product you’re selling, your sales cycle may be unique. Steps in the sales cycle typically include:

Lead generation

Lead qualification

Initial contact

Making an offer

Negotiation

Closing the deal

Tip: You can still project customer growth versus revenue even if your company is in its early phases. If you don’t have enough historical data to use for your sales forecast template, you can use data from a company similar to yours in the market. 

3. Choose a forecasting method

While there are many forecasting methods to choose from, we’ll concentrate on two straightforward approaches to provide a clear understanding of how sales forecasting can be implemented efficiently. The top-down method starts with the total size of the market and works down, while the bottom-up method starts with your business and expands out.

Top-down method: To use the top-down method, start with the total size of the market—or total addressable market (TAM). Then, estimate how much of the market you think your business can capture. For example, if you’re in a large, oversaturated market, you may only capture 3% of the TAM. If the total addressable market is $1 billion, your projected annual sales would be $30 million. 

Bottom-up method: With the bottom-up method, you’ll estimate the total units your company will sell in a sales cycle, then multiply that number by your average cost per unit. You can expand out by adding other variables, like the number of sales reps, department expenses, or website views. The bottom-up forecasting method uses company data to project more specific results. 

You’ll need to choose one method to fill in your sales forecast template, but you can also try both methods to compare results.

Tip: The best forecasting method for you may depend on what type of business you’re running. If your company experiences little fluctuation in revenue, then the top-down forecasting method should work well. The top-down model can also work for new businesses that have little business data to work with. Bottom-up forecasting may be better for seasonal businesses or startups looking to make future budget and staffing decisions.

4. Calculate your sales forecast

You’ve already learned a basic way to calculate revenue using the top-down method. Below, you’ll see another way to estimate your projected sales revenue on an annual scale.

Divide your sales revenue for the year so far by the number of months so far to calculate your average monthly sales rate.

Multiply your average monthly sales rate by the number of months left in the year to calculate your projected sales revenue for the rest of the year.

Add your total sales revenue so far to your projected sales revenue for the rest of the year to calculate your annual sales forecast.

A more generalized way to estimate your future sales revenue for the year is to multiply your total sales revenue from the previous year.

Example: Let’s say your company sells a software application for $300 per unit and you sold 500 units from January to March. Your sales revenue so far is $150,000 ($300 per unit x 500 units sold). You’re three months into the calendar year, so your average monthly sales rate is $50,000 ($150,000 / 3 months). That means your projected sales revenue for the rest of the year is $450,000 ($50,000 x 9 months).

5. Adjust for external factors

A sales forecast predicts future revenue by making assumptions about your growth rate based on past success. But your past success is only one component of your growth rate. There are external factors outside of your control that can affect sales growth—and you should consider them if you want to make accurate projections. 

Some external factors you can adjust your calculations around include:

Inflation rate: Inflation is how much prices increase over a specific time period, and it usually fluctuates based on a country’s overall economic state. You can take your annual sales forecast and factor in inflation rate to ensure you’re not projecting a higher or lower number of sales than the economy will permit.

The competition: Is your market becoming more competitive as time goes on? For example, are you selling software during a tech boom? If so, assess whether your market share will shrink because of rising competition in the coming year(s).

Market changes: The market can shift as people change their behavior. Your audience may spend an average of six hours per day on their phones in one year. In the next year, mental health awareness may cause phone usage to drop. These changes are hard to predict, so you must stay on top of market news.

Industry changes: Industry changes happen when new products and technologies come on the market and make other products obsolete. One instance of this is the invention of AI technology.

Legislation: Although not as common, changes in legislation can affect the way companies sell their products. For example, vaping was a multi-million dollar industry until laws banned the sale of vape products to people under the age of 21. 

Seasonality: Many industries experience seasonality based on how human behavior and human needs change with the seasons. For example, people spend more time inside during the winter, so they may be on their computers more. Retail stores may also experience a jump in sales around Christmas time.

Tip: You can create a comprehensive sales plan to set goals for team members. Aside from revenue targets and training milestones, consider assigning each of these external factors to your team members so they can keep track of essential information. That way, you’ll have your bases covered on anything that may affect future sales growth. 

Sales forecast template

Below you’ll see an example of a software company’s six-month sales forecast template for two products. Product one is a software application, and product two is a software accessory. 

In this sales forecast template, the company used past sales data to fill in each month. They projected their sales would increase by 10% each month because of a 5% increase in inflation and because they gained 5% more of the market. They kept their price per unit the same as the previous year.

Putting both products in the same chart can help the company see that their lower-cost product—the software accessory—brings in more revenue than their higher-cost product. The company can then use this insight to create more low-cost products in the future.

Sales forecast examples

Sales forecasting is not a one-size-fits-all process. It varies significantly across industries and business sizes. Understanding this through practical examples can help businesses identify the most suitable forecasting method for their unique needs.

Sales forecasting example 1: E-commerce

In the e-commerce sector, where trends can shift rapidly, intuitive forecasting is often useful for making quick, informed decisions.

Scenario: An e-commerce retailer specializing in fashion accessories is planning for the upcoming festive season.

Trend analysis phase: The team spends the first week analyzing customer feedback and current fashion trends on social media, using intuitive forecasting to predict which products will be popular.

Inventory planning phase: Based on these insights, the next three weeks are dedicated to selecting and ordering inventory, focusing on products predicted to be in high demand.

Sales monitoring and adjustment: As the holiday season approaches, the team closely monitors early sales data, ready to adjust their inventory and marketing strategies based on real-time sales performance.

This approach allows the e-commerce retailer to stay agile , adapting quickly to market trends and customer preferences.

Sales forecasting example 2: Software development

For a software development company, especially one working with B2B clients, opportunity stage forecasting can help predict sales and manage the sales pipeline effectively.

Scenario: A software development company is launching a new project management tool.

Lead generation and qualification phase: In the initial month, the sales team focuses on generating leads, qualifying them, and categorizing potential clients based on their progress through the sales pipeline.

Proposal and negotiation phase: For the next two months, the team works on creating tailored proposals for high-potential leads and enters negotiation stages, using opportunity stage forecasting to predict the likelihood of deal closures.

Closure and review: In the final phase, the team aims to close deals, review the accuracy of their initial forecasts, and refine their approach based on the outcomes.

Opportunity stage forecasting enables the software company to efficiently manage its sales pipeline , focusing resources on the most promising leads and improving their chances of successful deal closures.

Pair your sales forecast with a strong sales process

A sales forecast is only one part of the larger sales picture. As your team members acquire leads and close deals, you can track them through the sales pipeline. A solid sales plan is the foundation of future success.  

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The Guide to Sales Projection in 2024

Benjamin Franklin once said, “If you fail to plan, you plan to fail.” 200+ years later, it still rings equally true when trying to grow your business.

You have something to reference when you have a plan. You can see if you’re headed in the right direction and at the right speed. 

But vague plans alone won’t help you estimate your growth rate. That’s what makes sales projections so important. They can help you set clear sales goals, explore different potentialities, and grow your customer base consistently.

Below, we’ll define a sales projection and why you need one. Then, we’ll show you a few different ways to make sales projections and cover some of the challenges you may run into.

What is a sales projection?

A sales projection is a document in which you estimate future sales figures over a specific period. You can create them for various theoretical scenarios to better plan your actions.

For example, you could predict that you will sell 1,000 packages in 2022, compared to the 800 from last year, since you’ve hired an additional sales team.

Sales projection vs. sales forecast: What’s the difference?

The terms sales projection and sales forecast are often used interchangeably. They aren’t too different, but they have varying levels of “optimism” and realism.

An accurate sales forecast estimates your likely sales figures based on historical data within your business and the current sales trend. It’s the more realistic of the two. Because of this, forecasts tend to have shorter timeframes.

On the other hand, a sales projection is slightly more theoretical and “what-if.” It looks at your desired sales numbers based on different potential scenarios, making them useful for decision-making.

For example, you might make a sales projection if you’re considering targeting a new type of customer. You’d want to estimate how that could impact sales figures before you invest in targeting this new market.

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Eight reasons to make sales projections

Sales projections can be great tools for making decisions about future actions in your business. Here are some reasons to start making them:

1. Estimate demand and inventory needed

Accurately estimating demand is necessary to purchase the right amount of inventory. 

Too little inventory, and you can’t meet that demand. You run out and end up with unhappy customers. The last thing you want is to lose out on a big sales opportunity because you don’t have the product.

But buy too much inventory, and you tie up tons of money in stock that doesn’t sell fast enough. That leaves you less cash to invest in other things. Or worse — you have to dispose of that unsold inventory and take a loss.

This is where sales projections help most. Getting some ideas of your sales figures in the future shows you how much inventory you should buy — usually, projections skew slightly on the side of “too much” so you don’t run out. This is especially true if you sell consumer products, as you should always maintain a sizable stock surplus.

2. Make funding your business easier

Business lenders risk not getting their money back by lending to a business that eventually defaults on its debt or goes under. This is different than working with a debt factoring provider . Amplifying this strategic approach further, the utilization of a business loan calculator solidifies your preparedness. By providing a detailed sales projection and a calculated loan payback scheme, you effectively reiterate to potential lenders that thoughtful planning has ensured the firm’s growth and capacity to successfully manage financial obligations.

Investors also want to make sure they earn a return on their investment — making accurate sales projections even more critical.

The more evidence you have of strong potential business growth , the more investors you could persuade—every potential sale matters.

3. Plan out marketing and sales efforts

Projecting your sales revenue numbers helps you plan your sales and marketing goals and campaigns.

This is especially true for businesses with predictable sales fluctuations throughout the year. You can note times where sales might be weak and offer limited-time discounts or invest more in your marketing.

On the other hand, you can potentially raise your prices during times of stronger sales, take your foot off the marketing and sales gas pedal, and reinvest that surplus into other areas. If your sales are lagging in a quarter, try to educate your team on effective sales skills to close more deals. 

4. Make smart decisions about product development

Sales projections are great tools for making decisions about your products and services. Imagine that you’re considering a new product or service line. Projecting its sales revenues gives you a more concrete picture of whether the new offer will help you grow. 

On the other side of the coin, projections can help you look at your worst-performing offers and see if you’re better off ending them.

Put these together, and you could cut out the offers that don’t sell and reinvest the resources you free up into the offers that do sell.

5. Improve budgeting accuracy

Each product you make costs something. Usually, the cost-per-unit is fairly predictable — at least, for expenses associated with your product. So by projecting your sales, you can increase your budgeting accuracy when it comes to these costs.

6. Improve financial planning

Once you project your sales, you can estimate your revenue by multiplying your sales figures by your price per product.

Then, calculate your total cost of goods sold — the cost of producing those goods.

Subtract the cost of goods sold and other expenses from your revenues to get a rough profit projection. With this info, you can plan out potential business investments and your personal finances. You can even estimate your taxes.

7. Make hiring decisions

Sales are a key indicator of growth potential. With fast growth often comes the need to hire people — such as a sales team to keep up with those growing sales.

By projecting your sales and estimating your total revenue, you can begin planning to recruit team members ahead of time. This gives you more space to define what types of roles you need to hire for and what you’re looking for in candidates.

8. Benchmark and assess sales performance

Projections serve as a measuring tool for your sales performance, especially if you make pessimistic, realistic, and optimistic projections. 

Each one serves as a different benchmark. Your pessimistic projection is your worst-case scenario, your realistic projection is what you expect to achieve, and your optimistic projection is your “stretch” goal. You can measure performance against each one and reevaluate your goals during and at the end of each projection period.

Assumptions that can impact sales projections

Sales projections estimate future revenues, so there’s plenty of uncertainty. Several variables can impact what kind of sales performance you project, including the following:

Your products or services

Launching new products and services and changing or removing existing offers will affect your total sales. Your new products or improvements could bring in more customers, whereas cutting out product lines could decrease sales.

Production costs are another part of your products and services. Increasing production costs means you may have to raise prices or cut necessary costs elsewhere, ultimately reducing your potential sales.

Your marketing

Marketing plays a direct role in your sales. This includes how effective your marketing efforts are and how much you invest in them.

For example, if you’re scaling up a wildly successful marketing campaign or retargeting ads to a market that fits better, you could project much higher sales figures.

Time of year/seasonality

Various factors dealing with the seasons and time of year can impact your sales projections. It could be because of weather, holidays, or other reasons.

Take an electronics retailer, for example. They’ll project far more sales during the fall and winter. Customers are out doing their holiday shopping, and many video games release during the holiday season.

They might then project fewer sales in the early months of the following year as the holiday season ends.

Economic conditions

The economy at large is an important factor to consider when creating accurate sales projections.

For instance, you may have to raise your prices in times of higher inflation. This could decrease your project sales figures as fewer customers are willing or able to pay those higher prices. 

On the other hand, in a booming economy, your projections might increase.

Legal or regulatory changes

Changes in laws and industry regulations could impact your projections, especially if they’re targeted toward your industry.

Of course, it’s hard to predict when new regulations will come and how exactly they’ll impact your operation. This is why it’s essential to monitor for these changes regularly.

How to create a sales projection: Top-down vs. bottom-up

Broadly speaking, creating a sales projection involves a few steps:

• Reviewing and analyzing past sales and financial data
• Assessing market trends, price changes, and other assumptions
• Using this information to estimate total sales revenue

Once you’ve done that, you can go a step further by subtracting overall projected expenses to estimate your gross profit margin.

That said, there are two ways to make projections, top-down and bottom-up. Below, we’ll briefly explain each one, then discuss which type you should use.

Top-down projection

A top-down projection looks at the total size of the market you’re in. This is called the Total Addressable Market, or TAM. The projection then predicts how much market share a sales organization could capture.

For example, a market might be $100 million. A small business estimates it could get about 5% of that, so it would project a total of $5 million in revenue per year.

This projection is relatively simple, but it’s much more theoretical. You’re working with a few big, abstract numbers without drilling down into what’s behind your sales.

Bottom-up projection

A bottom-up projection starts with the number of units you expect to sell. It then multiplies that by your price per unit to get your total projection. 

These projections can factor in many other details, such as the number of sales reps or locations. As a result, bottom-up numbers tend to be more grounded and better suited for established businesses with existing products and customers.

Which one should you use?

As you can see, the bottom-up projection is usually more accurate, but it relies on having real data, like the number of stores, sales reps, and historical data to go on. So if you’re starting a business or launching a new product, you might want to use a top-down projection.

Otherwise, the bottom-up projection is the way to go — except it can be a lot of work.

The shortcut to an accurate bottom-up projection — use a CRM report

If you’re currently using a customer relationship management platform to manage your sales pipeline , it probably offers some sort of report or dashboard you can use to project sales.

For example, in the ActiveCampaign CRM , you have the Deal Forecast report that forecasts the number of deals and the likely revenue that they’ll generate based on historical data.

Beyond the dashboard, it also offers state-of-the-art sales automation features to help drive more sales and keep your customers happy.

Common challenges with making accurate sales projections

Sales projections aren’t perfect — 100% accurate forecasts are impossible to make. Keeping the following limitations in mind will temper your expectations — preventing you from becoming disappointed and disillusioned if your business performance strays far from your expectations.

Subjectivity

You’ll always deal with human subjectivity when attempting to predict the future, even if you have historical data to work with.

That said, predictive analytics tools can go a long way in cutting out human bias from the equation. They can analyze data and scenarios without subjectivity getting in the way. 

For example, if you sell B2B products or services , you probably have a long sales process with a large number of leads in the pipeline. A different business model with lower-cost items, like B2C, may have much shorter sales cycles.

Unreliability of past data

Projections do use past data to help estimate future revenues, but that data may not always be reliable — especially if you’re a new business.

At that point, you don’t have much data to work off of at all. It’s hard to picture various theoretical future scenarios when you barely know what an average year looks like.

Similarly, your business might be crawling at a snail’s pace for its early existence, causing you to make relatively unimpressive projections — even if you predict your business to grow. 

However, you might strike gold one year and hit massive business growth, rendering even your optimistic projection unhelpful.

Time investment

The most tangible drawback to making sales projections is that they simply take resources away from the activities that move the needle — like actual lead nurturing and selling. Small businesses and solopreneurs will feel this pain the most since they may not have experts on hand to crank out accurate sales projections.

You don’t want to take away valuable time from a key sales rep or sales manager — or worse, crunch the numbers yourself. Instead, invest in software that helps you make these projections automatically based on data.

Plan the future of your business with sales projections

Business success doesn’t happen by accident. You have to plan, set goals, and measure your progress to know if you’re getting anywhere.

That’s what makes sales projections so helpful. Your projections will rarely be right on the money, but they provide you direction, give you realistic numbers to strive for, and help you make decisions in all areas of your business. If you don’t want to create projections from scratch, that’s something ActiveCampaign’s Deals CRM can help you with. You can quickly generate custom projections based on historical data.

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The Last Guide to Sales Forecasting You’ll Ever Need: How-To Guides and Examples

By Kate Eby | January 26, 2020 (updated August 26, 2021)

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Sales forecasts are a critical part of your business planning. In this comprehensive guide, you’ll learn how to do them correctly, including explanations of different forecasting methods, step-by-step tutorials, and advice from experienced finance and sales leaders.

Included on this page, you'll find details on more than 20 sales forecasting techniques , information regarding how to forecast sales for new businesses and products , a step-by-step guide on how to forecast sales , and a free sales forecast template .

What Is Sales Forecasting?

When you produce a sales forecast , you are predicting what your sales or revenue will be in the future. An accurate sales forecast helps your firm make better decisions and is arguably the most important piece of your business plan. 

A sales forecast contrasts with a sales goal . The former is the realistic representation of what you believe will occur, while the latter is what you want to occur. Forecasts are never perfectly accurate, but you should be as objective as possible when creating a sales forecast. Goals, on the other hand, can be based on optimistic or motivational targets.

Because the sales forecast is critical to business planning, many different stakeholders in a company (beyond sales managers and representatives) rely on these estimates, including human resources planners, finance directors, and C-level executives. 

In this article, you’ll learn about different sales forecasting methods with varying levels of sophistication. The most basic method is called naive forecasting , which uses the prior period’s actual sales for the new period’s forecast and does not apply any adjustments for growth or inflation. Naive forecasts are used as comparative figures for more robust methods.

What Is Sales Planning?

A sales plan describes the goals, strategies, target customers, and likely hurdles for your sales effort. The sales plan defines your sales strategy and the method of execution you will use to achieve the numbers in your sales forecast.

Overview of Sales Forecasting Steps

Your sales forecasting model can ultimately become very sophisticated, but to grasp the basics, you should first gain a high-level understanding of what is involved. There are three primary steps to getting started:

• Decide which forecasting method or technique you will use. Also, determine the time period for your forecast. Later in this guide, we will review different methods of forecasting sales, including how to know which is best for your business.  
• Gather the data to plug into your forecast model. The data points will vary by method, but will almost always include your actual past sales and current growth rate.
• Pick a tool to support your forecasting effort. For learning purposes, you can start with pencil and paper, but soon after, you’ll want to take advantage of digital solutions. Common tools include spreadsheets, accounting software, and customer relationship management (CRM) or sales management solutions.

As you get going, remember not to be overly focused on complex formulas. Do regular reality checks to make sure your sales forecasts accord with common sense. Bounce forecasts off sales reps to get realistic feedback, and revise.

You will likely achieve greater accuracy if you build your forecasts based on unit sales wherever possible, because pricing can move independently from unit sales. Use data if you have it.

Benefits and Importance of Sales Forecasting

Sales forecasting helps your business by giving you data to make decisions concerning allocating resources, assigning staff, and managing cash flow and overhead. Using this data reduces your risk and supports your growth. 

Your sales forecast enables you to predict both short and long-term performance and customer demand for your product. In the short term, having a sales forecast makes it easy for you to spot when actual sales are not meeting estimates and gives you an opportunity to make corrections early in the period.

The forecast guides how much you spend on marketing and administration, and the projections generate your sales reps’ objectives. In this way, sales forecasts are an important benchmark for gauging the performance of your sales reps. 

Sales forecasts also lead to better management of inventory levels. With a good idea of how much product you will sell, you can stock enough to meet customer demand without missing any sales and without carrying more than you need. Excess inventory ties up capital and reduces profit margins. 

In the long term, sales forecasts can help you prepare for changes in your business. For example, you might see that within a few years, your company will require more manufacturing capacity to meet growing sales. To expand capacity, you may need to build a new factory, so now you can start planning how you will pay for it. Predictive sales forecasting is a critical part of your presentation if you are seeking equity capital from investors or commercial loans for expansion. 

In short, sales forecasting helps your business avoid surprises, so you aren’t making decisions in a crisis environment. Companies with trustworthy sales forecasts see a 10 percentage point  greater increase in annual revenues compared to counterparts without, according to research from the Aberdeen Group .

What Makes a Good Sales Forecast?

The most important quality for a sales forecast is accuracy. But, the benefits of accuracy must be weighed against the time, effort, and expense of the forecasting technique.

Useful sales forecasts are also easily understood and often include visual elements, such as charts, graphs, and tables, to make important trends visible. 

Ideally, you can quickly build a highly reliable sales forecast with simple, economical methods. The ultimate forecast method would automatically (i.e., without manual intervention) fetch the relevant data and make predictions using an algorithm finely tuned to your business. 

In reality, the forecasting process is more time consuming and subjective. Sales forecasts often depend on reps’ assessments of how likely their prospects are to close, and perceptions vary widely. (A conservative rep’s 60 percent probability may be understated, while another rep’s 60 percent may be overly optimistic.) 

Sales managers, who are usually responsible for forecasting, spend a lot of time factoring in these nuances and other market factors when calculating forecasts. 

Surprisingly, spending more time on forecasting does not always improve accuracy. According to research from CSO Insights, sales managers who spend 15 to 20 percent of their time producing their forecast had win rates for approximately 46.5 percent of deals. But, when they spend more than 20 percent of their time on forecasting, the win rate declined by more than two percentage points. 

An axiom of forecasting is that accuracy is highest during time periods that are close at hand and lowest during those that are far into the future. Short-term forecasts draw upon the following: deals that are already in the sales pipeline, the current economic environment, and actual market trends. So, the data underlying short-term forecasts is more reliable.

Forecasting for distant time periods requires bigger guesses about opportunities, demand, competitor activity, and product trends, so it makes sense that the forecast becomes less accurate the further into the future you go. (This concept applies to many companies, especially those that are young and growing; the concept becomes more relevant for all businesses at three years and beyond.) Bear this thought in mind when you look at your sales forecast in order to make long-term decisions.

Sales Forecasting Methods: Qualitative and Quantitative

Sales forecasting methods break down broadly into qualitative and quantitative techniques. Qualitative forecasts depend on opinions and subjective judgment, while quantitative methods use historical data and statistical modeling.

Qualitative Methods for Sales Forecasting

Sales forecasting often uses five qualitative methods. These are based on different ways of generating informed opinions about sales prospects. Creating and conducting these kinds of surveys is often expensive and time intensive. These five qualitative methods include the following: 

• Jury of Executive Opinion or Panel Method: In this method, an executive group meets, discusses sales predictions, and reaches a consensus. The advantage of this method is that the result represents the collective wisdom of your most informed people. The disadvantage is that the result may be skewed by dominant personalities or the group may spend less time reflecting.
• Delphi Method: Here, you question or survey each expert separately, then analyze and compile the results. The output is then returned to the experts, who can reconsider their responses in light of others’ views and answers. You may repeat this process multiple times to reach a consensus or a narrow range of forecasts. This process avoids the influence of groupthink and may generate a helpful diversity of viewpoints. Unfortunately, it can be time consuming.  
• Sales Force Composite Method: With this technique, you ask sales representatives to forecast sales for their territory or accounts. Sales managers and the head of sales then review these forecasts, along with the product owners. This method progressively refines the views of those closest to the customers and market, but may be distorted by any overly optimistic forecasts by sales reps. The composite method also does not take into account larger trends, such as the political or regulatory climate and product innovation. 
• Customer Surveys: With this approach, you survey your customers (or a representative sample of your customers) about their purchase plans. For mass-market consumer products, you may use market research techniques to get an idea about demand trends for your product.  
• Scenario Planning: Sales forecasters use this technique most often when they face a lot of uncertainty, such as when they are estimating sales for more than three years in the future or when a market or industry is in great flux. Under scenario planning, you brainstorm different circumstances and how they impact sales. For example, these scenarios might include what would happen to your sales if there were a recession or if new duties on your subcomponents increased prices dramatically. The goal of scenario planning is not to arrive at a single accepted forecast, but to give you the opportunity to counter-plan for the worst-case scenarios.

Quantitative Methods for Sales Forecasting

Quantitative sales forecasting methods use data and statistical formulas or models to project future sales. Here are some of the most popular quantitative methods:

• Time Series: This method uses historical data and assumes history will repeat itself, including seasonality or sales cycles. To arrive at future sales, you multiply historical sales by the growth rate. This method requires chronologically ordered data. Popular time-series techniques include moving average, exponential smoothing, ARIMA, and X11. 
• Causal: This method looks at the historical cause and effect between different variables and sales. Causal techniques allow you to factor in multiple influences, while time series models look only at past results. With causal methods, you usually try to take account of all the possible factors that could impact your sales, so the data may include internal sales results, consumer sentiment, macroeconomic trends, third-party surveys, and more. Some popular causal models are linear or multiple regression, econometric, and leading indicators.

Sales Forecasting Techniques with Examples

In reality, most businesses use a combination of qualitative and quantitative methods to produce sales forecasts. Let’s look at the common ways that companies put sales forecasting into action with examples.

Intuitive Method

This forecasting method draws on sales reps’ and sales managers’ opinions about how likely an opportunity is to close, so the technique is highly subjective. Estimates from reps with a lot of experience are likely to be more accurate, and the reliability of the forecast requires reps and managers to be realistic and honest.

This method can be especially helpful if you do not have historical data or if you are assessing  new prospects early in your funnel. In these cases, a rep’s gut feeling after initial contact can be a good indicator. If you are a manager, you will review reps’ estimates with an eye for any outliers and work with those reps to make any necessary adjustments. 

Here is an example of the intuitive method in action: You manage a team of four sales reps. You go to each one and inquire about the leads they are nurturing. You ask each rep which opportunities they believe they will win in the next quarter and how much those sales will be worth. John, your strongest rep, tells you $175,000. Alice, another strong performer, says $115,000. Bob, who is in his second year at your company, reports $85,000. Jennifer, a recent college graduate, projects $100,000. You calculate the total of those forecasts and arrive at an intuitive forecast of $450,000. However, you suspect Jennifer’s forecast is unrealistic, because she is inexperienced, so you ask her more questions. Based on what you learn, you decide that only half of Jennifer’s deals are likely to close, so you reduce her contribution to $50,000 and revise your total quarterly forecast to $400,000.

Scenarios Method

Scenario forecasts are qualitative and involve you projecting sales outcomes based on a variety of assumptions. This process can also be a helpful business planning exercise, because once you identify major risks or uncertainty for your company, you can develop action plans to deal with these circumstances if they arise.

Scenario forecasts require an in-depth knowledge of your business and industry, and the quality of the forecast will vary with the expertise of the person or group who prepares the estimate.

To create a scenario forecast, think about the key factors that affect sales, external forces that could influence the outcome, and major uncertainties. Then, write a narrative and numerical description of how the scenario would play out under various combinations of these key factors, external forces, and uncertainties.

Here is an example of the scenarios method in action: Your company sells components for military vehicles. You notice that the most impactful things your sales reps do are meeting with procurement officers in the defense departments of major nations and holding factory tours and product demonstrations for them. These are your key factors. 

The external forces are the number of tenders or requests for proposals that military procurement departments announce, and the value of those items. The risk of conflict in various parts of the world, scarcity of your raw materials, and trends in budget authorizations for defense by major countries are your critical uncertainties. 

You look at how your key factors, external factors, and major uncertainties might combine. One scenario might entail the outcome if your reps increased the number of meetings and product events by 20 percent, the value of U.S. tenders launched rose by six percent, and France decreased defense spending by two percent. 

Under this scenario, you might forecast a six percent increase in unit sales resulting from the following: 

• Having more in-person sales contacts should boost sales by five percent based on past performance.
• You can increase revenue by three percent due to greater U.S. tender opportunities and your current market share.
• Major customer France will not purchase anything, reducing sales by two percent.

Sales Category Method

The category forecasting method looks at the probability that an opportunity will close and divides opportunities into groups based on this probability. The technique relies somewhat on intuition, as does the intuitive method, but the sales category method brings more structure and discipline to the process.

The categories that each company uses vary widely, but they correspond broadly to stages in the sales pipeline. These are some typical labels and definitions:

• Omitted: The deal has been lost or the prospect is no longer engaging. 
• Pipeline: The opportunity will not realistically close during the quarter.
• Possible, Best Case, Upside, or Longshot: There is a realistic possibility that the deal could close at the projected value in the quarter if everything falls into place, but this is not certain. Overall, fewer than half of the opportunities in this group end up closing in the quarter at the planned value.
• Probable or Forecast: The sales rep is confident that the deal will close at the planned value in the quarter. Most of these opportunities will come to fruition as expected.
• Commit or Confident: The salesperson is highly confident that the deal will close as expected in this quarter, and only something extraordinary and unpredictable could derail it. The probability in this category is 80 to 90 percent. Any deal that does not close as forecast should generally experience only a short, unanticipated delay, rather than a total loss.
• Closed: The deal has been completed; payment and delivery have been processed; and the sale is already counted in the quarter’s revenue. 

To compile your forecast, look at the combined value of the potential deals in the categories under three scenarios:

• Worst Case: This is the minimum value you can anticipate, based on the closed and committed deals. If you have very good historical data for your sales reps and categories and feel confident making adjustments, such as counting a portion of probable deals, you may do so, but it is important to be consistent and objective.
• Most Likely: This scenario is your most realistic forecast and looks at closed, committed, and probable deal values, again with possible adjustments based on historical results. For example, if you have tracked that only 60 percent of your probable deals tend to close in the quarter, adjust their contribution downward by 40 percent.
• Best Case: This is your most optimistic forecast and hinges on executing your sales process perfectly. You count deals in the closed, commit, probable, and possible categories, with adjustments based on past performance. The possible category, in particular, requires a downward adjustment.  

As the quarter or period progresses, you revise the forecast based on updated information. This method can quickly get cumbersome and time consuming without an analytics solution.

Here is an example of the sales category method in action: You interview your sales team and get details from the reps on each deal they are working on. You assign the opportunities to a category, then make adjustments for each scenario based on past results. For example, you see that over the past three years, only half the deals in the possible category each quarter came to fruition. Here’s what the forecast looks like:

Top-Down Sales Forecasting

In top-down sales forecasting, you start by looking at the size of your entire market, called the total addressable market (TAM), and then estimate what percentage of the market you can capture. 

This method requires access to industry and geographic market data, and sales experts say top-down forecasting is vulnerable to unrealistic objectives, because expectations of future market share are often largely conjecture.

Here is an example of top-down sales forecasting in action: You operate a new car dealership in San Diego County, California. From industry and government statistics, you learn that in 2018, 112 dealers sold approximately 36,000 new cars and light trucks in the county. You represent the top-selling brand in the market, you have a large sales force, and your dealership is located in the most populous part of the county. You estimate that you can capture eight percent of the market (2,880 vehicles). The average selling price per vehicle in the county last year was $36,000, so you forecast gross annual sales of $103.7 million. From there, you determine how many vehicles each rep must sell each month to meet that mark.

Bottom-Up Sales Forecasting

Bottom-up sales forecasting works the opposite way, by starting with your individual business and its attributes and then moving outward. This method takes account of your production capacity, the potential sales for specific products, and actual trends in your customer base. Staff throughout your business participates in this kind of forecasting, and it tends to be more realistic and accurate. 

Begin by estimating how many potential customers you could have contact with in the period. This potential quantity of customers is called your share of market (SOM) or your target market . Then, think about how many of those potential customers will interact with you. Then, make an actual purchase.

Of those who do purchase, factor in how many units of your product they will buy on average and then how much revenue that represents. If you aren’t sure how much your customers will spend, you can interview a few. 

Here is an example of bottom-up sales forecasting in action: Your firm sells IT implementation services to mid-sized manufacturers in the Midwest. You have a booth at a regional trade show, and 3,000 potential customers stop by and give you their contact information. You estimate that you can engage 10 percent of those people in a sales call after the trade show and convert 10 percent of those calls into deals. That represents 30 sales. Your service packages cost an average of $250,000. So, you forecast sales of $7.5 million.

Market Build-Up Method

In the market build-up method, based on data about the industry, you estimate how many buyers there are for your product in each market or territory and how much they could potentially purchase. 

Here is an example of the market build-up method in action: Your company makes safety devices for subways and other rail transit systems. You divide the United States into markets and look at how many cities in each region have subways or rail. In the West Coast territory, you count nine. To implement your product, you need a device for each mile of rail track, so you tally how many miles of track each of those cities have. In the West Coast market, there are a total of 454 miles of track. Each device sells for $25,000, so the West Coast market would be worth a total $11.4 million. From there, you would estimate how much of that total you could realistically capture.

Historical Method

The historical sales forecasting technique is a classic example of the time-series forecasting that we discussed under quantitative methods. 

With historical models, you use past sales to forecast the future. To account for growth, inflation, or a drop in demand, you multiply past sales by your average growth rate in order to compile your forecast. 

This method has the advantage of being simple and quick, but it doesn’t account for common variables, such as an increase in the number of products you sell, growth in your sales force, or the hot, new product your competitor has introduced that is drawing away your customers.

Here is an example of the historical method in action: You are forecasting sales for March, and you see that last year your sales for the month were $48,000. Your growth rate runs about eight percent year over year. So, you arrive at a forecast of $51,840 for this March.

Opportunity Stage Method

The opportunity stage technique is popular, especially for high-value enterprise sales that require a lot of nurturing. This method entails looking at deals in your pipeline and multiplying the value of each potential sale by its probability of closing. 

To estimate the probability of closing, you look at your sales funnel and historical conversion rates from top to bottom. The further a deal progresses through the stages in your funnel or pipeline, the higher likelihood it has of closing.

The strong points of this method are that it is straightforward to calculate and easy to do with most CRM systems. 

But, opportunity-stage forecasting can be time consuming. 

Moreover, this method doesn’t account for the unique characteristics of each deal (such as a longtime repeat customer vs. a new prospect). In addition, the deal value, stage, and projected close date have to be accurate and updated. And, the age of the potential deal is not reflected. This method treats a deal progressing quickly through the stages of your pipeline the same as one that has stalled for months. 

If your sales process, products, or marketing have changed, the use of historical data may make this method unreliable.

Here is an example of the opportunity stage method in action: Say your sales pipeline comprises six stages. Based on historical data, you calculate the close probability at each stage. Then, to arrive at a forecast, you look at the potential value of the deals at each stage and multiply them by the probability.

Length-of-Sales-Cycle Method

This is another quantitative method that shares some similarities with the deal stage method. However, this model looks at the length of your average sales cycle. 

First, determine the average length in days of your sales process. This figure is also known as time to purchase or sales velocity . Add the total number of days it took to close all of the past year’s deals and divide by the number of deals. Then, calculate the probability of new deals closing in a certain period of time as a percentage of the average sales cycle length. 

With this method, the biases of individual reps are less of a factor than with the deal stage model. Also, with this technique, you can fine-tune the probabilities for different lead types. (For example, prospects referred by current customers may close in an average of 27 days, while prospects who make contact after an online search need an average of 62 days.) But, this technique requires you to know and record how and when prospects enter your pipeline, which can be time intensive.

Here is an example of the length-of-sales-cycle method in action: You review the 37 deals your company won last year and see that they took a total of 2,997 days to close. To calculate the average length of the sales cycle, you divide 2,997 by 37 and see that the average sales cycle lasted 81 days. You then look at the five deals currently in your pipeline.

Lead Scoring Method

This technique requires you to have lead scoring in place. With lead scoring, you profile your ideal customers based on attributes (like industry, size, and location) as well as behavior (such as whether they have recently raised capital or whether the contact person has requested a demonstration of your product). 

You then classify future leads based on how closely they match your ideal customer. You can label the categories with distinctions such as A, B, or C or hot, warm, or cold, or you can assign numbers up to one hundred using formulas that add and subtract points for different attributes and behaviors. (For example, “They requested a demo, which adds 15 points, but they are not in your ideal industry, which subtracts 10 points.”)  

To create your forecast, you then look at the historical close rate for leads in each category and multiply that by the value of the opportunities currently in the group. 

Here is an example of the lead scoring method in action: Your company sells textbooks for advanced math and science. Your ideal customer is a university with at least 25,0000 students that has an engineering school and is located on the east coast. These are your A prospects. B prospects have at least 10,000 students. C prospects have at least 10,000 students, but are located elsewhere in the country.

You then look at the close rates and potential deal values for each lead score. Finally, you multiply the close rate by the potential value of the deals in the category or by your average sales value.

Lead Source Method

This model forecasts future sales based on how you acquired the lead, using the behavior of previous leads as a benchmark.

For example, say your company sells a software application. Some leads come from search traffic to your website; some originate with demonstration requests at conferences, and some are referrals from existing customers. 

Look at your historical data to track the percentage of leads who converted to sales for each lead source. In addition, calculate the average value of a sale for each source. Then, by using the conversion probability and sales values, you can forecast the sales that the leads at the top of your funnel are likely to generate. 

Here is an example of the lead source method in action: Based on source, you compile your historical data and discover the following conversion rates and sales value for leads.

One advantage of this sales forecasting method is that you can project how many leads of each type you would need to generate in order to hit a target. Suppose you have a conference coming up where participants will be able to request demonstrations of your product, and you would like to win an additional $30,000 in sales from the demo leads. Based on the average lead value of $600, you know you will want to generate 50 leads who request demos at the conference. 

One drawback to lead source forecasting is that the method does not account for potential differences in the length of the sales cycle for the lead types. That makes it difficult to pinpoint the period in which the revenue will occur. Therefore, you should do a separate analysis of time to purchase in order to allocate sales to the right period.

Another challenge is that sometimes you may not be sure of the lead source. For example, suppose that another customer has recommended your product to a contact and that that contact decides to first check you out on your website. You might very well assign a lower lead value to this prospect, assuming they will behave like our web-originated leads, when, in reality, they will probably behave more like the customer referral leads. 

Lastly, remember that this method won’t account for changes in your marketing or pricing that influence conversion rates and customer behavior.

Sales by Row Method

This method is a good fit for small businesses that sell different products or services. Rather than forecasting sales for each individual product type, you project sales for categories. 

Each row in your forecast will cover different physical products (such as pick-up trucks, heavy trucks, and delivery vans) and service units (such as hours of labor or service types like replacing a faucet, unclogging a drain, or installing a toilet). 

You can employ this method to forecast units and then factor them by average prices to arrive at revenue. Or, you can look exclusively at revenue. If you sell a subscription service, you can calculate recurring revenue for each product type.

For each row, you would look at how much you sold in the same period a year earlier and then adjust for factors such as inflation, organic growth, new products, increased workforce, or special circumstances.

Here is an example of the sales by row method: You operate a combination fuel station and mini-market. Your forecast would cover the broad categories of your business, such as sales of gasoline, diesel, food, beverages, and sundries.

For March’s forecast, you take into account that the new housing development near your business, which was under construction last year, is now almost completely sold and that there are many more commuters filling up. Your gas sales have been growing by almost 15 percent year over year. Also, in March, there will be a special event at the nearby fairgrounds that could draw thousands of additional vehicles to your area. 

On the downside, a new retail complex with a full-service grocery store has opened nearby, so your sales of food and drinks have slipped. Also, increased congestion in the neighborhood has caused some long-haul truckers who used to stop for fuel to reroute.

Regression or Multivariable Analysis Method

Regression or multivariable analysis is one of the most sophisticated forecasting methods, and allows you to build a custom model combining any factors that you feel are relevant to your sales.

For regression analysis, you need accurate historical data on all the variables under consideration, expertise in statistics, and, for practical purposes, an analytics solution or application that can perform the analysis. 

Because this method incorporates a multitude of influences on your sales, the resulting forecast is the most accurate. But, the costs tend to be high because of the data collection, expertise, and technology requirements.  

Regression analysis looks at the dependent variable (the factor that you are trying to predict, in this case, the amount of future sales) and independent variables (the factors that you believe affect sales results, such as opportunity stage or lead score). 

In a simple example, you would create a chart, plotting the sales results on the Y axis and the independent variable on the X axis. This chart will reveal correlations. If you draw a line through the middle of the data points, you can calculate the degree to which the independent variable affects sales. 

This line is called the regression line , and, by calculating the slope of the line, you can use numbers to represent the relationship between the variable and sales. The equation for this is Y = a + bX. Excel and other software will perform this analysis and calculate a and b for you. In more sophisticated applications, the formula will also include a factor for error to account for the reality that other variables are also at work.

Going further, you can look at how multiple variables interplay, such as individual rep close rate, customer size, and deal stage. Making these kinds of calculations becomes increasingly difficult with simple charts and demands more advanced math knowledge. 

Remember that correlation is not the same as causation. Bear in mind that while two variables may seem closely related to each other, the reality may be more subtle. 

Here is an example of the regression method in action: You want to look at the relationship between the amount of time a prospect has progressed in your sales cycle and the probability of the deal closing. 

So, plot on a chart the probability of close for past deals when they were at various stages of your sales cycle, which lasts an average of 100 days. Deals early in the sales cycle have a low probability of closing compared to those that occur in the later stages of negotiation and contract signing on day 85 and up. (Be sure to eliminate any prospects that stall or disengage at any stage.)

By drawing a line through those points (i.e., the intersection between the sales close probability and the percentage of the average sales cycle), you can see that there is a nearly one-to-one relationship between percentage point increases in time elapsed relative to the average sales cycle and percentage point increases in the probability of closing.

This calculation becomes more complex when you consider multiple variables. Let’s say you have two sales reps working with prospects. Gloria, your best closer, is giving a product demonstration to a new Fortune 500 account. Leonard, a strong performer, whose close rate is a little lower than Gloria’s, is negotiating with a repeat customer, a mid-sized company. 

Your multivariable analysis of these situations could take into account each rep’s average close rate for an opportunity, given the following factors: the specific stage; deal size; time left in the period; probability of close for a repeat customer versus a new customer; and time to close for an enterprise customer with more than 10 people involved in decision making versus a mid-sized business with a single decision maker.

Time Horizons in Sales Forecasting

Choosing the time period for your sales forecast is an important step. Depending on your business, the purpose of your forecast, and the resources you can devote to making forecasts, the time frame you target will vary. 

A short-term forecast will help set sales rep bonus levels for next quarter, but you need a long-term forecast to decide whether you should plan to build a new factory. A startup that has been doubling revenue every year will have more difficulty making a 20-year forecast than a century-old concern in a mature industry. Here are the three time frames for forecasts: 

• Short-Term Forecasts: These cover up to a year and can include monthly or quarterly forecasts. They help set production levels, sales targets, and overhead costs.
• Medium-Term Forecasts: These range from one to four years and guide product development, workforce planning, and real estate needs.
• Long-Term Forecasts: These extend from five to 20 years and inform capital investment, capacity planning, long-range financing programs, succession planning, and workforce skill and training requirements.

Getting Started with Sales Forecasting: What You Need to Know

Regardless of the sales forecast method you use, you generally need to have certain pieces of information and conditions in place. These include the following:

• Well-Documented and Defined Sales Process: You need to understand your customer journey and have an established sequence for nurturing each prospect. Without this, you cannot predict which opportunities are getting closer to purchasing. This structure creates accountability. 
• Consensus on Pipeline Stages: Your sales team needs to have a clear and shared understanding of what you mean by lead, prospect, qualified, possible, probable, committed, and other relevant terms. 
• Definition of Success: Communicate clearly what your sales team is striving for in terms of sales quotas or goals; include these quotas and goals for each individual rep, for the team as a whole, and for conversion through each stage of your pipeline.
• Historical Data: You require benchmarks for data points, such as average time to close, conversion rates, average deal size, lifetime customer value, win-loss ratio, and seasonal sales trends. These sales metrics and KPIs are often critical pieces of your forecast.
• Current Status: Up-to-date knowledge of your pipeline is essential, including how many opportunities are at each stage and the potential value of these sales.
• Forecasting Tools: This will almost always include a CRM application and may also include financial management or accounting software, analytics solutions, and spreadsheets.

Influences and Assumptions in Sales Forecasting

Sales forecasting should not happen in a vacuum. Take into account changes in the business environment and question assumptions, such as that past growth will continue. Also, be sure to factor in your ideas about global economic trends and competitor behavior.

Here are some common factors to consider regarding your sales forecast. Many of these can have either a positive or negative influence on sales. For example, changing reps’ account assignments may reduce sales, because members of your team will have to familiarize themselves with customers that are new to them. However, sales could increase if your new hotshot gets your biggest opportunity.

• Economic Trends: Inflation, growth, consumer sentiment, risk appetite, and purchasing power
• Regulation: Trade policies such as tariffs, duties, and quotas; health, safety, and environmental rulings on products or processes; court decisions; intellectual property disputes; and competition policy
• Seasonal Trends: Cyclical demand fluctuation, production patterns, and variation in raw material availability 
• Competitor Behavior: New product innovations, pricing changes, and market entries and exits
• Business Economics: Selling prices, direct prices, unit costs, gross margins, and the impact of accrual versus cash accounting on when you can book a sale
• Staffing and Compensation: Hiring or firing new reps, changes in leadership, policies on commissions and bonuses, and training
• Territory Management: Redrawing of territories and changes in account assignments
• Products and Services: Product lifecycle, new products and services, user experience, defects, ticket resolution, changes in distribution, and market entries and exits
• Marketing: Demand generation, advertising, pricing, special campaigns, social media activity, and prospecting

Sales Forecasting for New Businesses and Products

If you are starting a new business or launching a new product, your sales forecasts are crucial because they will determine how much you can spend in order to break even. However, when dealing with a new entity, you lack the advantage of historical data, which you need for almost every forecasting technique. 

If you don’t have historical data, you can use industry benchmarks from trade publications, industry associations, and consultants. For example, if you are launching a new recipe app, look at market research on how other cooking apps have performed. 

Dining establishments can look at number of tables, hours of service, and menu prices to estimate average order amounts and table turnover. Retail outlets use square feet, foot traffic, and average selling prices to forecast sales.

If you are adding a new product to your line, you can forecast sales by looking at how your most similar existing product performed at launch. Then, you can make tweaks based on other relevant information, such as that the new product is harder to master than its predecessor, that it is a later entrant into a crowded space, or that it already has a backlog of orders before launch.

New service businesses can base forecasts on capacity, such as number of staff and service hours and how much to charge for the most popular services. Once you have this data, you can make adjustments accordingly.

Michael Barbarita, President of Next Step CFO , works as a contracted CFO to produce sales forecasts for companies. He likes to tie the sales forecast for service businesses to a metric called sales per direct labor hour , which you can calculate this by dividing sales by the working hours of people in the field performing customer work. For example, an electrical contractor would calculate the sales per direct labor hour of its electricians and multiply that figure by the number of electricians and the hours they work.  

For instance, you may decide that operating at half capacity is a good estimate for your first six months in business. Then, you may operate at three-quarters capacity for the second six months. Therefore, you would multiply maximum capacity by average revenue and then multiply that resulting figure by 0.50 and 0.75, respectively.

Quick-Start: Sales Forecasting Formulas

If you are eager to dive in and want to generate some simple sales forecasts, you can make use of basic equations. Here are a few easy ones:

• Simple Forecast with No Organic Growth: This formula assumes that this period will duplicate the prior period, except for the impact of inflation.  Revenue Prior Period) + (Revenue Prior Period x Inflation Rate) = Sales Forecast  
• Historical Plus Growth: This formula helps you reflect current trends.You look at the prior year and then factor it by your recent growth rate. (Last Year Revenue x Percentage Growth Rate) + Last Year Revenue = Sales Forecast
• Partial Year: In this method, you project the rest of the year based on historical patterns and early results. Imagine that you know your sales for the first two months of the year and that last year these months represented seven and nine percent of your sales respectively and totaled $100,000. Using the formula below, you would forecast sales of $625,00 for the year: ($100,000 x 100) ÷ 16 = $625,000. (Current Period Revenue x 100) ÷ Percent That Equivalent Period Represented Last Year = Forecast Sales
• Pipeline Formula: This formula replicates the opportunity stage method that we discussed earlier. You calculate the value of deals at each stage of your pipeline by multiplying the potential deal value by the close probability and adding up the result for each stage. (Deal Amount x Close Probability) + (Deal Amount x Close Probability) etc. = Sales Forecast

How to Make a Basic Sales Forecast Step by Step

Here are step-by-step instructions for a manually generated sales forecast:

• Pick Your Time Period: The way in which you will use your forecast determines the most appropriate time interval, whether that be monthly, quarterly, annually, or on an even longer timeline. If you are making your first forecast, estimating on a monthly or quarterly basis for the upcoming year is a good starting point. Experts suggest doing monthly estimates for the first year and then doing annual forecasts for years two through five. 
• List Products or Services: Write down the items or services that you sell. If you have a lot of them, group them into categories. For example, if you sell clothing, your rows might include shirts, pants, and shoes. Match these revenue streams to the way you organize your accounting. So, if your books look at women’s and men’s clothing separately, do the same for your sales forecast. That way, you can pair your sales forecast with information on your cost of goods sold and overhead to project profit.  
• Estimate Unit Sales: Predict how many units you will sell in the selected time period. If you have historical data, use that and then factor in assumptions about demand for the upcoming period. For example, is your business growing? Is the economy in recession? Did you launch a big promotion? Use the answers to these questions to make downward or upward adjustments to the historical figure. You can also interview some customers to get insights into their likely purchasing plans. Lastly, don’t forget to factor in seasonal fluctuations. 
• Multiply by the Selling Price: Multiply the unit sales numbers by the average selling price (ASP). Determine the ASP by analyzing historical sales and adjusting for inflation and other factors. To obtain this figure, you also need to consider discounts, free trials, and unsold inventory. 
• Repeat for Each Forecast Period: Go through the same calculation for each category and time interval. As you forecast more distant periods, your estimates are likely to be less accurate, so you may want to make a range of forecasts, such as for best, worst, and average scenarios. As time passes, add the actual values and fine-tune your forecast. For instance, you may see that for the first few months of the year, you underestimated sales by 12 percent. Therefore, you decide to increase your forecasted sales amounts in the upcoming months.

How to Forecast Sales in Excel

Here is a step-by-step guide to building your own sales forecast in Excel:

• Enter Historical Data: Open a worksheet and enter your past date data in the first column. Then, in the second column, enter the corresponding sales values. If possible, make sure you space the dates consistently (e.g., the first day of every month). 
• Create Forecast: In the date column, fill out the next date cell with the future date you are forecasting. Select the corresponding sales value cell and in the function field, type: =(FORECAST( A10, B2:B9, A2:A9)), where A10 is the future date cell, B2 to B9 are the historical sales amounts, and A2 to A9 are the historical dates. Hit enter and the forecast sales amount will appear.
• Repeat: Continue the pattern for your remaining future dates. Remember that the formula uses only known variables, so do not add forecasted amounts to the cell ranges. This function is a linear forecasting method.
• Power Up: If you have Excel 2016, you can use the forecast sheet function, which automates forecasting and adds a chart. To use this function, select both data columns, and, on the data tab, click the forecast sheet. In the create forecast worksheet box, select whether you want a line or bar chart. In the forecast end field, choose an ending date and then click create. Excel will create a new worksheet that contains both historical and forecast sales data as well as a visual representation. 

For a pre-made basic sales forecast, download this template that projects product sales with both units and sales amount.

Basic Sales Forecast Sample Template

Excel | Google Sheets | Smartsheet

For a wide range of pre-built sales forecast templates in a variety of formats, see this comprehensive collection .

How to Choose the Right Sales Forecasting Methodology

Your goal is to build the most reliable forecast possible, with the minimum amount of resources you need to be effective. To choose the method that fits best, consider these seven questions:

• Is the Time Frame Short, Medium, or Long Term? Qualitative methods are a good choice for short-term horizons, but they generally underperform quantitative methods for periods beyond a few months. Similarly, consider where you are in your business or product lifecycle. If you are ramping up or in a high-growth phase, you may be making costly investment decisions, so you need a method with a high degree of accuracy, but also relatively quick production time. When you are in a mature phase of your business, decisions about production and marketing are more routine. 
• How Much Data Do You Have? The less data you have, the more likely you will be to select a qualitative technique. If you have limited data, you will turn toward more simplistic models. A company that has collected a lot of data and has great confidence in its reliability can choose sophisticated quantitative models. 
• How Relevant Will History Be in Predicting the Future?  If your business has undergone big changes, such as launching major new products, experiencing large growth in the sales force, or introducing a different pricing structure, your past results will have less value as a guide to future performance. So, methods that diminish the weight put on historical data and qualitative techniques are a better choice.  
• In Terms of Time and Money, How Much Does It Cost to Produce the Forecast? How Does This Cost Compare to the Value of the Potential Benefits?You will need to make tradeoffs between the time and cost to build your forecast and the potential benefits, such as cost savings. Also, consider the potential cost of error. For example, suppose you are contemplating a high-cost sales-forecasting technique (one that takes a lot of data gathering, the creation of a custom model, and expensive staff and technology to produce). The forecast could allow your company to reduce the amount of inventory it holds. Weigh the value of inventory savings against the forecasting cost. If you reduce inventory and the forecast proves inaccurate, what are the potential costs of lost sales — because you did not stock adequately or because you did not cut back enough?  
• What Degree of Accuracy Do You Need?  Forecast accuracy rises with the cost and complexity of the methodology. Depending on how you will use the forecast, the size of your company, and the variability of your business, you may feel that it’s not cost effective to produce a maximum-accuracy forecast. If you are a giant global company, a fraction of a percentage point error in your sales forecast could represent many millions. So, the bigger the dollar values, the more meaningful every degree of enhanced accuracy becomes.
• How Complex Are the Factors That Will Drive the Forecast?   If your sales dynamic is straightforward — the more sunny days there are, the more beach umbrellas you sell at your beach kiosk — then building a sophisticated, AI-driven forecasting model will be overkill. “It's important not to spend time and energy developing a complex model, when a much simpler one will do the job,” says Nicholas. But when you are facing a subtle and complex interplay of variables, you need a technique that accounts for them. Suppose you have new products, changes in your marketing, and additional sales reps. A sophisticated model would allow you to forecast the net effects and also try out different scenarios in which the variables fluctuated.

Why Accuracy Is Important in Sales Forecasts

According to CSO Insights, 60 percent of forecasted deals do not close and 25 percent of sales managers are unhappy with the accuracy of their forecasts. Inaccuracy in sales forecasts causes problems for businesses and impacts performance. 

People throughout your company depend on your forecasts to make a multitude of decisions — from pay raises to real estate acquisitions. Let’s look at some of the important reasons to strive for accuracy:

• Early Warning: Your sales forecast helps you spot trouble early, like when revenues are not materializing as expected; the forecast also allows you to intervene and problem solve before this underperformance becomes a crisis.
• Decision Making: The forecast gives leaders confidence and a sound basis for deciding how much and where to spend or invest. Production planners, HR, and others will use the forecast.
• Goal Setting: You set achievable targets for sales reps when you have an accurate forecast. Goal setting prevents sales reps from getting discouraged by unrealistic expectations. Following this strategy also ensures that your commission and bonus scale are calibrated appropriately. 
• Customer Satisfaction: When you are prepared for the right level of demand, your company can improve its record of fulfilling orders on time and in full.
• Inventory Management: You will be more likely to have the right level of inventory if your sales forecasts are accurate. Making accurate predictions allows you to better manage your supply chain and order raw materials or parts in a timely fashion. You also gain more control over your pricing if you have the right amount of inventory. When you have to resort to discounting to get rid of excess inventory, your profitability suffers.

How to Improve Sales Forecast Accuracy and More Best Practices from Experts

Producing high-quality forecasts takes organizational commitment and long-term effort, and best practices will help improve accuracy.

”Sales forecasting is both an art and a science. Where companies tend to go wrong is relying too heavily on one or the other. You need a consistent process and reliable data,” says Charlene DeCesare, CEO of sales training and advisory firm Charlene Ignites .

She emphasizes five best practices:

• Ensure that the pipeline feeding the forecast is accurate. You don't need historical data to predict the future when you have a well-defined sales process.
• Everyone must use the CRM, and should enter notes and coding opportunities in a clear, consistent way. 
• Buyer behavior is a much more reliable predictor of future sales than gut feel. Challenge optimism that doesn't align with the applicable stage in the sales cycle or isn't supported by clear, mutually agreed-upon next steps.
• In general, buyer/seller behavior is the leading indicator to rely upon. Too many companies rely on results, which is actually the lagging indicator.
• Sales leadership can have a huge impact. Sales reps must be rewarded for both honesty and accuracy. Sales forecasting must be an individual, team, and company priority. 

Rob Stephens, a CPA whose firm CFO Perspective advises businesses on forecasts, adds: “A big planning mistake is spending too much of your precious time trying to find the one right scenario… Start with a range of reasonable forecasts based on solid fundamentals. For example, you may project from historical growth rates, customer indications of future sales, or projections of market growth. A company with a new product may need to extrapolate from existing products or early indications from potential customers. Use a higher-probability scenario as a beginning base scenario, but identify why the future may deviate from it.”

Common Mistakes and Pitfalls in Sales Forecasts

Sales pros say they see the same sales forecasting errors on a regular basis and that these often relate to letting the discipline of the forecasting process lapse. 

“The most common operational mistakes are basing forecasts on hope rather than evidence, ignoring repeated close date slippage, failing to take into account the historic forecast accuracy (or inaccuracy) of the salesperson concerned, and failing to hold salespeople accountable for the relative accuracy of their forecasts,” notes Bob Apollo, Founder of Inflexion-Point Strategy Partners, a sales training firm.  

“The most common cultural mistake is when sales leaders press salespeople to forecast a target number without any evidence or confidence that it will actually be achieved," he notes.

Evan Lorendo , Director of Revenue Accelerator, which advises service companies on revenue strategies, says he sees companies with monthly recurring revenue (MRR), such as software as a service (SaaS), frequently make mistakes in sales forecasting.

He gives the example of a company with an MRR product that wants to generate $120,000 in revenue a year. How much in new sales do they need each month? “Most of my clients say $10,000/month, but that is wrong. Because a client is paying on a monthly basis, a client that signs up in January is actually paying 12 times during the year. On the flip side, a client signing up in July will make six payments during the year,” he explains. 

That means there are a total of 78 potential payment configurations per year, not 12. The customer who buys in January will make 12 payments, but November’s buyer will make two. (12 + 11 + 10 + 9 + 8 + 7+ 6 + 5 + 4 + 3 + 2 + 1 = 78.)

“If you want to know how much you need to sell in new sales each month to hit that $120,000 goal, the answer is $1,539 ($120,000/78). That actually seems much more manageable, doesn't it? Based on poor forecasting, a miscalculation can turn off good salespeople who can't hit their quota,” he says.

KPIs for Sales Forecasting

As your sales forecasting improves, you reap bigger benefits, such as better planning and higher profits. So, you will want to assess and monitor your forecasting effort by using key performance indicators (KPIs).

Below are the main KPIs for sales forecasting. Some of them draw from statistics concepts, such as standard deviation, and computer applications and statistics guides can help you calculate them.

• Bias or Variance: This KPI tells how much the actual results deviated from the forecast over a given period of time. Calculate bias as an absolute number of dollars or units or as a percent of sales. A positive number means sales exceeded projections and a negative number indicates underperformance. Actual Units - Forecast Units = Bias
• Mean Absolute Deviation (MAD): This metric describes the size of your forecast error in total units or dollars. You calculate how much the actual results deviated from the forecast average, add the deviations, and divide the result by the total number of data points.   
• Mean Absolute Percentage Error (MAPE): This is similar to MAD, but gives the forecast error as a percent of sales volume. 
• Tracking Signal: This is another expression of forecast error and looks at how the error rate varies among forecast values. Normally, you expect all forecast amounts to be wrong by about the same degree. If, from one data point to another, there is a large variation in the error rate, you need to rework your model.  Tracking Signal = Accumulated Forecast Errors ÷ Mean Absolute Deviation
• Forecast Value Added: This metric measures how much better the forecast was than simply using unadjusted historical data. If your forecasting effort got you closer to actual than the so-called naive forecast (i.e., using historical figures as your forecast), you have added positive value. You calculate this metric by comparing the MAPE of your forecast to the naive forecast.
• Linearity: This looks at how sales are paced over the course of the period. As your reps seek to meet quota, you might see a flurry of deals at the end of the quarter. Or, deals might be spread evenly across the time period. The most stable situation is a deal cadence or velocity that is constant. If expressed as a trend line, this stable situation would appear visually as a flat line. This pattern is called highly linear .

Application of Sales Forecasting

Your sales forecast obviously gives you an idea of how much you will sell in the future, but sales forecasting has other important use cases. Here are five ways you can apply your forecast to business questions:

• Sales Planning: As noted earlier, your sales plan encompasses your goals, tactics, and processes for achieving your sales forecast. As part of this plan, your sales forecast helps you decide if you need to hire more sales reps to achieve your forecast and if you need to put more energy and resources into marketing.
• Demand Planning: Demand planning is the process of forecasting how much product your customers will want to buy and making sure inventory aligns with that forecast. In ideal conditions, forecast demand and sales would be virtually the same. But, consider a scenario in which your new product becomes the hot gift of the holiday season. You forecast demand of 100,000 units (the number consumers will want to buy). A large shipment turns out to be defective, and the product is unsellable. So, you forecast sales of just 75,000 units (how much you will actually sell.)   
• Financial Planning: Your sales forecast is vital to the work of your finance department. The finance team will rely on the forecast to build a budget, manage overhead, and figure out long-term capital needs. 
• Operations Planning: The unit-sales numbers in your forecast are also important for operations planners. They will look at the production required to meet those sales and confirm that manufacturing capacity can accommodate them. They will want to know when sales are likely to rise or fall, so they can avoid excess inventory. A big increase in sales will also require operations managers to make changes in warehousing and distribution. Retailers may change the product mix at individual stores based on your sales forecast.
• Product Planning: The trends you foresee in sales will have big implications for product managers too. They will look at products that you forecast as top sellers for ideas about new products or product modifications they should introduce. A forecast of declining sales may signal it is time to discontinue or revamp a product.

Levels of Maturity in Sales Forecasting

Sales forecasts can be simply scribbled-down estimates, or they can be statistical masterpieces produced with the aid of the most sophisticated technology. The style you pursue relates in large part to your level of forecasting maturity (as well as the size and history of your business). 

Below is a description of the four levels of the sales forecasting maturity model:

• Level One: In the beginning stages of sales forecasting, the estimates are usually not very accurate and take a lot of time to produce. The forecasting process depends on reps’ best guesses, and sales managers spend a lot of time gathering these guesses by interviewing each rep. Then, they roll them up into a consolidated forecast. Inconsistent data collection and personal bias can skew the results. Sales managers use spreadsheets, which quickly become outdated, and the forecasts often reflect little more than intuition.
• Level Two: As your forecasting culture grows, you are probably still inputting data by hand, and the forecast is often inaccurate or outdated. But, a CRM solution is enabling your team to have a shared repository for contacts, sales activity, and deal status. Reps don’t see value in spending time contributing to the forecast, and quality is weak. Your CRM automatically aggregates those results, so you can start to examine trends and anomalies. But, your system is not very flexible, and forecasting remains unwieldy and resource intensive.
• Level Three: At this point, automation starts to offer radical improvements in sales forecasting. Solutions backed by artificial intelligence automatically bring together data from a multitude of sources, including email, CRM, marketing platforms, chat logs, and calendars. There is no more manual data entry, and sales managers gain increased visibility into the sales pipeline. KPIs become reliable and an important tool for monitoring performance.
• Level Four: Technology ensures sales that data is accurate and timely. AI and machine learning find patterns and correlations in your historical data, and predictive analytics offer robust forecasting. The forecasting model is continually refined. Forecast accuracy rises, and sales managers can focus more of their time on supporting reps and developing opportunities. These tools make it apparent when reps are sandbagging or being too optimistic, and accountability increases.

Advances in Sales Forecasting Methodologies

While sales forecasting has been around as long as private enterprise, the field continues to evolve, and researchers are looking at ways to improve sales forecasting methodologies. 

Indiana University Professor Douglas J. Dalrymple performed an influential study in 1987 that surveyed how businesses prepared sales forecasts. He found that qualitative and naive techniques predominated, but that early adopters were reducing errors by using computer analysis. At this time, PCs were starting to proliferate and come down in price. 

By 2008, Zhan-Li Sun and his researchers at the Institute of Textiles and Clothing at Hong Kong Polytechnic University were experimenting with an advanced AI-driven technique called extreme learning machine to see if they could improve forecasts for the volatile retail fashion industry by quantifying the influence of factors such as design on sales.  

Scholars F.L. Chen and T.Y. Ou at the National Tsing Hua University in Taiwan took this further with a 2011 study. The study documented sales forecasting advances when combining extreme learning-machine, so-called Taguchi statistical methods for manufacturing quality with novel analysis theories that work on variables with imperfect information.

Features to Look for in a Sales Forecasting Tool

Paper forecasts and Excel spreadsheets quickly become cumbersome. Sales forecasting capability is available in CRM software, sales analytics and automation platforms, and AI-driven sales technology. These capabilities often overlap among these applications.

Here are some of the features to look for when evaluating a sales forecasting tool:

• Integrations with other software, such as ERP, CRM, marketing suites, contact management, calendars, and more
• Automated collection of data and sales rep activity
• Real-time reporting
• Robust data security
• Analytics and automated scoring of deals
• Insights on most promising deals
• Scenario modeling
• Lead scoring
• Automated forecast roll-ups or summaries by category and team
• Dashboards and graphic displays of KPIs
• Benchmarking
• Customizable forecasting algorithms
• Forecast auditing and error analysis

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How To Create Financial Projections for Your Business Plan

Building a financial projection as you write out your business plan can help you forecast how much money your business will bring in.

Planning for the future, whether it’s with growth in mind or just staying the course, is central to being a business owner. Part of this planning effort is making financial projections of sales, expenses, and—if all goes well—profits.

Even if your business is a startup that has yet to open its doors, you can still make projections. Here’s how to prepare your business plan financial projections, so your company will thrive.

What are business plan financial projections?

Business plan financial projections are a company’s estimates, or forecasts, of its financial performance at some point in the future. For existing businesses, draw on historical data to detail how your company expects metrics like revenue, expenses, profit, and cash flow to change over time.

Companies can create financial projections for any span of time, but typically they’re for between one and five years. Many companies revisit and amend these projections at least annually. 

Creating financial projections is an important part of building a business plan . That’s because realistic estimates help company leaders set business goals, execute financial decisions, manage cash flow , identify areas for operational improvement, seek funding from investors, and more.

What are financial projections used for? 

Financial forecasting serves as a useful tool for key stakeholders, both within and outside of the business. They often are used for:

Business planning

Accurate financial projections can help a company establish growth targets and other goals . They’re also used to determine whether ideas like a new product line are financially feasible. Future financial estimates are helpful tools for business contingency planning, which involves considering the monetary impact of adverse events and worst-case scenarios. They also provide a benchmark: If revenue is falling short of projections, for example, the company may need changes to keep business operations on track.

Projections may reveal potential problems—say, unexpected operating expenses that exceed cash inflows. A negative cash flow projection may suggest the business needs to secure funding through outside investments or bank loans, increase sales, improve margins, or cut costs.

When potential investors consider putting their money into a venture, they want a return on that investment. Business projections are a key tool they will use to make that decision. The projections can figure in establishing the valuation of your business, equity stakes, plans for an exit, and more. Investors may also use your projections to ensure that the business is meeting goals and benchmarks.

Loans or lines of credit 

Lenders rely on financial projections to determine whether to extend a business loan to your company. They’ll want to see historical financial data like cash flow statements, your balance sheet , and other financial statements—but they’ll also look very closely at your multi-year financial projections. Good candidates can receive higher loan amounts with lower interest rates or more flexible payment plans.

Lenders may also use the estimated value of company assets to determine the collateral to secure the loan. Like investors, lenders typically refer to your projections over time to monitor progress and financial health.

What information is included in financial projections for a business?

Before sitting down to create projections, you’ll need to collect some data. Owners of an existing business can leverage three financial statements they likely already have: a balance sheet, an annual income statement , and a cash flow statement .

A new business, however, won’t have this historical data. So market research is crucial: Review competitors’ pricing strategies, scour research reports and market analysis , and scrutinize any other publicly available data that can help inform your projections. Beginning with conservative estimates and simple calculations can help you get started, and you can always add to the projections over time.

One business’s financial projections may be more detailed than another’s, but the forecasts typically rely on and include the following:

True to its name, a cash flow statement shows the money coming into and going out of the business over time: cash outflows and inflows. Cash flows fall into three main categories:

Income statement

Projected income statements, also known as projected profit and loss statements (P&Ls), forecast the company’s revenue and expenses for a given period.

Generally, this is a table with several line items for each category. Sales projections can include the sales forecast for each individual product or service (many companies break this down by month). Expenses are a similar setup: List your expected costs by category, including recurring expenses such as salaries and rent, as well as variable expenses for raw materials and transportation.

This exercise will also provide you with a net income projection, which is the difference between your revenue and expenses, including any taxes or interest payments. That number is a forecast of your profit or loss, hence why this document is often called a P&L.

Balance sheet

A balance sheet shows a snapshot of your company’s financial position at a specific point in time. Three important elements are included as balance sheet items:

• Assets. Assets are any tangible item of value that the company currently has on hand or will in the future, like cash, inventory, equipment, and accounts receivable. Intangible assets include copyrights, trademarks, patents and other intellectual property .
• Liabilities. Liabilities are anything that the company owes, including taxes, wages, accounts payable, dividends, and unearned revenue, such as customer payments for goods you haven’t yet delivered.
• Shareholder equity. The shareholder equity figure is derived by subtracting total liabilities from total assets. It reflects how much money, or capital, the company would have left over if the business paid all its liabilities at once or liquidated (this figure can be a negative number if liabilities exceed assets). Equity in business is the amount of capital that the owners and any other shareholders have tied up in the company.

They’re called balance sheets because assets always equal liabilities plus shareholder equity. 

5 steps for creating financial projections for your business

• Identify the purpose and timeframe for your projections
• Collect relevant historical financial data and market analysis
• Forecast expenses
• Forecast sales
• Build financial projections

The following five steps can help you break down the process of developing financial projections for your company:

1. Identify the purpose and timeframe for your projections

The details of your projections may vary depending on their purpose. Are they for internal planning, pitching investors, or monitoring performance over time? Setting the time frame—monthly, quarterly, annually, or multi-year—will also inform the rest of the steps.

2. Collect relevant historical financial data and market analysis

If available, gather historical financial statements, including balance sheets, cash flow statements, and annual income statements. New companies without this historical data may have to rely on market research, analyst reports, and industry benchmarks—all things that established companies also should use to support their assumptions.

3. Forecast expenses

Identify future spending based on direct costs of producing your goods and services ( cost of goods sold, or COGS) as well as operating expenses, including any recurring and one-time costs. Factor in expected changes in expenses, because this can evolve based on business growth, time in the market, and the launch of new products.

4. Forecast sales

Project sales for each revenue stream, broken down by month. These projections may be based on historical data or market research, and they should account for anticipated or likely changes in market demand and pricing.

5. Build financial projections

Now that you have projected expenses and revenue, you can plug that information into Shopify’s cash flow calculator and cash flow statement template . This information can also be used to forecast your income statement. In turn, these steps inform your calculations on the balance sheet, on which you’ll also account for any assets and liabilities .

Business plan financial projections FAQ

What are the main components of a financial projection in a business plan.

Generally speaking, most financial forecasts include projections for income, balance sheet, and cash flow.

What’s the difference between financial projection and financial forecast?

These two terms are often used interchangeably. Depending on the context, a financial forecast may refer to a more formal and detailed document—one that might include analysis and context for several financial metrics in a more complex financial model.

Do I need accounting or planning software for financial projections?

Not necessarily. Depending on factors like the age and size of your business, you may be able to prepare financial projections using a simple spreadsheet program. Large complicated businesses, however, usually use accounting software and other types of advanced data-management systems.

What are some limitations of financial projections?

Projections are by nature based on human assumptions and, of course, humans can’t truly predict the future—even with the aid of computers and software programs. Financial projections are, at best, estimates based on the information available at the time—not ironclad guarantees of future performance.

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22 Sales Projection Templates for 2021 Forecasts

Casey O'Connor

What Is Sales Forecasting?

Types of sales forecast templates, forecasting templates for startups, forecasting templates for businesses with multiple products, forecasting templates for b2b companies.

Sales projection templates can help you quickly and easily create an accurate, data-driven sales forecast for your team.

Sales forecasting is an important exercise for any sales team that wants to see significant year-over-year growth and the ability to fine-tune their sales process in specific, targeted ways. 

In this article, we’ll go over the basics of sales forecasting, as well as provide various forecast templates to help you streamline the process. 

Here’s what we’ll cover:

• Top Forecasting Templates for Startups

A sales forecast is a data-driven prediction of the financial outcomes a business will most likely see at the end of a given time period. A sales forecast can provide insight into the performance of individual sales reps, full sales teams, or even entire organizations. 

For overworked salespeople, making financial projections about future sales that may or may not come to fruition can seem like an exercise in futility. But a thorough, carefully considered sales forecast can be a huge asset to your business .

In order to create an accurate sales forecast, consider how the following factors currently impact your bottom line:

Your business goals are a very important benchmark for your sales team to keep in mind as you create your sales forecast. While your goals may not directly factor into the actual template, they will help steer your decision-making processes. Both short-term and long-term SMART goals will help give structure to your forecast.

Sales Process

Your sales process map will be another helpful tool in creating your sales forecast (if you don’t have one yet, check out our tips on creating one here ). Use your sales process map to pull data points and determine areas of strength and growth.

Company Standards

Chances are that your sales team is made up of salespeople from all different backgrounds and experiences — what one sales rep considers a “qualified lead” may be entirely different from the next. The same goes for things like follow-up communication — how much is too much? Should the follow-up process start on LinkedIn , or via email? 

While it may feel laborious, it’s worth your time to standardize and define these kinds of terms with your team. Use your sales process map to guide this exercise. Having consistency in your metrics will go a long way in pinpointing your sales projections.

In business, every penny counts (this is particularly true for small businesses and start-ups). If you’re not tracking every single penny that goes into and out of your business ( many businesses aren’t ), you need to start ASAP. Your sales projections will only be as accurate as your accounting, and the devil here is in the details. 

Don’t worry — you don’t need to go and cut funds from every department. Sometimes knowing the numbers is just as powerful as trimming them. But you’ll only reap the benefits of sales forecasting if you take a good hard look at the dollars you’re currently spending — all of them. 

Befriend Your CRM

If your company utilizes any CRM software, now’s the time to start maximizing it. Your CRM can be a great way to track the many moving pieces that make up a sales forecast. Make sure you understand its full functionality , as many companies tend to only stick to the surface-level features.

When executed correctly, sales forecasts can give you very valuable insight into various aspects of your sales performance over a period of time. It also gives investors a really compelling reason to inject money into your business — if your forecasted sales are promising, they’ll be much more likely to invest.

Different businesses have different needs for sales forecasting templates. These templates may include things like multiple products, multiple time frames, seasonality considerations, and other variables. It’s important to make sure the template you choose captures the full financial picture without overcomplicating it. 

In general, there are seven main types of forecast templates. Some of these standardized templates may work for your business, but you should also feel free to use these as a starting point, and customize as needed

(Don’t be intimidated by this process — you can do most of this with Microsoft Excel or Google Sheets!)

1. Lead Driven Forecasting

With this lead-driven forecasting template , you’ll be relying on extensive knowledge of your leads. Each lead source gets a value assigned, and projections are calculated accordingly.

Because this template requires a lot of data about leads and their behaviors, it may not work well for businesses that are just starting out and still researching their customer base. 

2. Length of Sales Cycle Forecasting

Length of sales cycle forecasting  predicts the probability of a deal closing based on where they are in your sales cycle. It then assigns each deal a value based on how far along they are in the process. 

This template works well for companies who have robust CRM or other automation tools.

3. Opportunity Stage Forecasting

Opportunity stage forecasting is similar to the previous two templates, though it doesn’t account for source of leads or exact length of sales cycle. Instead, it assigns a probability to each prospect based on what stage of the sales process they’re in. 

This template will take these probabilities, assign them a value, and add those values into your sales projection as your leads move through the sales process. 

4. Intuitive Forecasting

Intuitive forecasting is pretty self-explanatory, and the least objective approach to sales forecasting . It relies on a sales rep’s experience to make judgments about how much  value each deal will bring to the company. 

Sales reps might consider any of the following as they make their forecast:

This method is difficult to scale, but it also doesn’t require a ton of historical sales data — it’s a good fit for many startups as they gather sales data. 

5. Test-Market Analysis Forecasting

Test-market analysis forecast templates are used when launching new products. This method requires that you perform and collect data on a small test launch, and apply those results to your overall forecast.

6. Historical Forecasting

This is a very data-driven approach — it uses your historical sales data to predict future  growth. It’s relatively quick and easy, but it has its downfalls. 

Historical forecasting  does not take any external factors into account, like market conditions or sales team changes. It simply looks at your history of sales. It also assumes year-over-year growth, which isn’t always the case. For most companies, historical sales data is a hugely beneficial piece of the sales forecast, but not the entire basis.

7. Multivariable Analysis

This multivariable analysis example spits out forecasts for gross profit and growth rate, but you could also formulate to predict things like profit margin or total revenue.

Without long-term historical sales data, it can be hard for many startups to create detailed projected sales reports. This is also true for older businesses who are launching a new product. In cases like these, it’s best to start with a simple projections template. 

Here are some of the most basic, easiest-to-use templates we found for businesses that are just starting out. Click on the template’s header to download each one. 

8. One-year Sales Forecast

One-year Sales Forecast (Google Sheets):

This template has very few inputs for historical sales data. All you need to include are the year, product, unit type, and the number of units sold. The spreadsheet has built-in formulas that will calculate the remaining rows automatically.

9. Best & Worst Case Scenario

Best & Worst Case Scenario (Excel):

This template works well for companies who have only minimal data, and can give new businesses a target forecast range rather than precise numbers. For startups, this can allow for flexibility while still pursuing aggressive growth.

10. Expense-Focused

Expense-Focused (Excel):

This template does a really nice job of breaking down all the various expenses that go into running a business. It could work really well for startups who are still learning how their cash flows in and out. 

11. Monthly Sales

Monthly Sales (Microsoft):

This template is great for startups that want to cut out the extra noise and simply determine whether their efforts are paying off month-to-month while they’re starting out.

12. Simple Monthly Reporting

Simple Monthly Reporting (PDF):

Businesses with multiple products (many e-commerce businesses fit this description, for example) sometimes struggle to create a sales forecasting template that’s fluid enough to capture the performance of many different profit streams. 

Take a look at some of the best templates we found that are flexible enough to meet those needs. 

13. 12-Month Forecast for Multiple Products

12-Month Forecast for Multiple Products (Excel):

This template is detailed enough to see how each product fits into the bigger picture, but also simple and intuitive enough that a fledgling business could use it effectively.

14. Color-Coded Outputs

Color-Coded Outputs (Excel):

This template does a really nice job of streamlining the data from multiple product sales and arranging them in an aesthetically pleasing and easy-to-read manner. 

15. Opportunity-Based

Opportunity-Based :

This template  allows you to input sales based on deal stage, size, and probability. It’s best suited for companies who have a more developed understanding of their leads and sales process.

16. New Product Launch

New Product Launch (Excel):

This template is great for companies who are launching a new product and want to look at projections for that product in isolation. Because new products sometimes take longer to get off the ground and aren’t necessarily representative of sales projections as a whole, it can be good to look at their performance removed from the bigger picture — at least in the beginning.  

17. Individual Growth Rates by Product

Individual Growth Rates by Product (Excel):

This template does the dirty work for you by breaking down growth rates by individual products, so you can pinpoint the ones that are making the biggest impact.

Here are a few examples of sales forecasting templates for B2B companies.

18. Lead-Driven B2B

Lead-Driven B2B (Excel):

This template allows salespeople to enter data following a lead-driven approach. It assigns a projected value based on what stage the lead is in.

19. Projected Volume

Projected Volume (Excel):

20. Site Traffic Projections

Site Traffic Projections (Google Sheets):

This template download has wonderful step-by-step instructions for inputting your data and analyzing the results. The template uses site traffic as one of its metrics, so it would work best for e-commerce or other heavily web-based businesses.

21. Multivariable Analysis

Multivariable Analysis (Google Sheets):

This template allows for projections based on a number of different variables, including seasonality. The template is great for businesses that have many external variables to consider. 

22. Historical Growth Rate

Historical Growth Rate (Excel):

This template uses your historical sales data to predict future growth. Because the only inputs are past sales, it’s important to make sure that this data is very robust — we recommend at least two years of historical sales figures for this template.

Hopefully, one of many of these templates will be a good fit for your sales forecasts. They can be used as a guide to creating your own custom template in Excel or Google Sheets. Make sure to include the constants — things like unit sold and cost of goods sold — but tweaking the templates can go a long way in making them a more powerful tool for your business.

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How to Create a Sales Forecast

11 min. read

Updated October 27, 2023

Business owners are often afraid to forecast sales. But, you shouldn’t be. Because you can successfully forecast your own business’s sales.

You don’t have to be an MBA or CPA. It’s not about some magic right answer that you don’t know. It’s not about training you don’t have. It doesn’t take spreadsheet modeling (much less econometric modeling) to estimate units and price per unit for future sales. You just have to know your own business. 

Forecasting isn’t about seeing into the future

Sales forecasting is much easier than you think and much more useful than you imagine.

I was a vice president of a market research firm for several years, doing expensive forecasts, and I saw many times that there’s nothing better than the educated guess of somebody who knows the business well. All those sophisticated techniques depend on data from the past — and the past, by itself, isn’t the best predictor of the future. You are.

It’s not about guessing the future correctly. We’re human; we don’t do that well. Instead, it’s about setting down assumptions, expectations, drivers, tracking, and management. It’s about doing your job, not having precognitive powers. 

• Successful forecasting is driven by regular reviews

What really matters is that you review and revise your forecast regularly. Spending should be tied to sales, so the forecast helps you budget and manage. You measure the value of a sales forecast like you do anything in business, by its measurable business results.

That also means you should not back off from forecasting because you have a new product, or new business, without past data. Lay out the sales drivers and interdependencies, to connect the dots, so that as you review plan-versus-actual results every month, you can easily make course corrections.

If you think sales forecasting is hard, try running a business without a forecast. That’s much harder.

Your sales forecast is also the backbone of your business plan . People measure a business and its growth by sales, and your sales forecast sets the standard for  expenses , profits, and growth. The sales forecast is almost always going to be the first set of numbers you’ll track for plan versus actual use, even if you do no other numbers.

If nothing else, just forecast your sales, track plan-versus-actual results, and make corrections — that process alone, just the sales forecast and tracking is in itself already business planning. To get started on building your forecast follow these steps.

And if you run a subscription-based business, we have a guide dedicated to building a sales forecast for that business model.

• Step 1: Set up your lines of sales

Most forecasts show several distinct lines of sales. Ideally, your sales lines match your accounting, but not necessarily in the same level of detail.   

For example, a restaurant ought not to forecast sales for each item on the menu. Instead, it forecasts breakfasts, lunches, dinners, and drinks, summarized. And a bookstore ought not to forecast sales by book, and not even by topic or author, but rather by lines of sales such as hardcover, softcover, magazines, and maybe categories (such as fiction, non-fiction, travel, etc.) if that works.

Always try to set your streams to match your accounting, so you can look at the difference between the forecast and actual sales later. This is excellent for real business planning. It makes the heart of the process, the regular review, and revision, much easier. The point is better management.

For instance, in a bicycle retail store business plan, the owner works with five lines of sales, as shown in the illustration here.  

In this sample case, the revenue includes new bikes, repair, clothing, accessories, and a service contract. The bookkeeping for this retail store tracks sales in those same five categories.

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• Step 2: Forecast line by line

There are many ways to forecast a line of sales.

The method for each row depends on the business model

Among the main methods are:.

• Unit sales : My personal favorite. Sales = units times price. You set an average price and forecast the units. And of course, you can change projected pricing over time. This is my favorite for most businesses because it gives you two factors to act on with course corrections: unit sales, or price.
• Service units : Even though services don’t sell physical units, most sell billable units, such as billable hours for lawyers and accountants, or trips for transportations services, engagements for consultants, and so forth.
• Recurring charges : Subscriptions. For each month or year, it has to forecast new signups, existing monthly charges, and cancellations. Estimates depend on both new signups and cancellations, which is often called “churn.”
• Revenue only : For those who prefer to forecast revenue by the stream as just the money, without the extra information of breaking it into units and prices.

Most sales forecast rows are simple math

For a business plan, I recommend you make your sales forecast a detailed look at the next 12 months and then broadly cover two years after that. Here’s how to approach each method of line-by-line forecasting.

Start with units if you can

For unit sales, start by forecasting units month by month, as shown here below for the new bike’s line of sales in the bicycle shop plan:

I recommend looking at the visual as you forecast the units because most of us can see trends easier when we look at the line, as shown in the illustration, rather than just the numbers. You can also see the numbers in the forecast near the bottom. The first year, fiscal 2021 in this forecast, is the sum of those months.

Estimate price assumptions

With a simple revenue-only assumption, you do one row of units as shown in the above illustration, and you are done. The units are dollars, or whatever other currency you are using in your forecast. In this example, the new bicycle product will be sold for an average of $550.00. 

That’s a simplifying assumption, taking the average price, not the detailed price for each brand or line. Garrett, the shop owner, uses his past results to determine his actual average price for the most recent year. Then he rounds that estimate and adds his own judgment and educated guess on how that will change. 

Multiply price times units

Multiplying units times the revenue per unit generates the sales forecast for this row. So for example the $18,150 shown for October of 2020 is the product of 33 units times $550 each. And the $21,450 shown for the next month is the product of 39 units times $550 each. 

Subscription models are more complicated

Lately, a lot of businesses offer their buyers subscriptions, such as monthly packages, traditional or online newspapers, software, and even streaming services. All of these give a business recurring revenues, which is a big advantage. 

For subscriptions, you normally estimate new subscriptions per month and canceled subscriptions per month, and leave a calculation for the actual subscriptions charged. That’s a more complicated method, which demands more details. 

For that, you can refer to detailed discussions on subscription forecasting in How to Forecast Sales for a Subscription Business .

• But how do you know what numbers to put into your sales forecast?

The math may be simple, yes, but this is predicting the future, and humans don’t do that well. So, don’t try to guess the future accurately for months in advance.

Instead, aim for making clear assumptions and understanding what drives your sales, such as web traffic and conversions, in one example, or the direct sales pipeline and leads, in another. Review results every month, and revise your forecast. Your educated guesses become more accurate over time.

Experience in the field is a huge advantage

In a normal ongoing business, the business owner has ample experience with past sales. They may not know accounting or technical forecasting, but they know their business. They are aware of changes in the market, their own business’s promotions, and other factors that business owners should know. They are comfortable making educated guesses.

If you don’t personally have the experience, try to find information and make guesses based on the experience of an employee,  your mentor , or others you’ve spoken within your field.

Use past results as a guide

Use results from the recent past if your business has them. Start a forecast by putting last year’s numbers into next year’s forecast, and then focus on what might be different this year from next.

Do you have new opportunities that will make sales grow? New marketing activities, promotions? Then increase the forecast. New competition, and new problems? Nobody wants to forecast decreasing sales, but if that’s likely, you need to deal with it by cutting costs or changing your focus.

Look for drivers

To forecast sales for a new restaurant, first, draw a map of tables and chairs and then estimate how many meals per mealtime at capacity, and in the beginning. It’s not a random number; it’s a matter of how many people come in.

To forecast sales for a new mobile app, you might get data from the Apple and Android mobile app stores about average downloads for different apps. A good web search might also reveal some anecdotal evidence, blog posts, and news stories, about the ramp-up of existing apps that were successful.

Get those numbers and think about how your case might be different. Maybe you drive downloads with a website, so you can predict traffic from past experience and then assume a percentage of web visitors who will download the app.

• Estimate direct costs

Direct costs are also called the cost of goods sold (COGS) and per-unit costs. Direct costs are important because they help calculate gross margin, which is used as a basis for comparison in financial benchmarks, and are an instant measure (sales less direct costs) of your underlying profitability.

For example, I know from benchmarks that an average sporting goods store makes a 34 percent gross margin. That means that they spend $66 on average to buy the goods they sell for $100.

Not all businesses have direct costs. Service businesses supposedly don’t have direct costs, so they have a gross margin of 100 percent. That may be true for some professionals like accountants and lawyers, but a lot of services do have direct costs. For example, taxis have gasoline and maintenance. So do airlines.

A normal sales forecast includes units, price per unit, sales, direct cost per unit, and direct costs. The math is simple, with the direct costs per unit related to total direct costs the same way price per unit relates to total sales.

Multiply the units projected for any time period by the unit direct costs, and that gives you total direct costs. And here too, assume this view is just a cut-out, it flows to the right. In this example, Garrett the shop owner projected the direct costs of new bikes based on the assumption of 49 percent of sales.

Given the unit forecast estimate, the calculation of units times direct costs produces the forecast shown in the illustration below for direct costs for that product. So therefore the projected direct costs for new bikes in October is $8,894, which is 49% of the projected sales for that month, $18,150.

• Never forecast in a vacuum

Never think of your sales forecast in a vacuum. It flows from the strategic action plans with their assumptions,  milestones , and metrics. Your marketing milestones affect your sales. Your business offering milestones affect your sales.

When you change milestones—and you will, because all business plans change—you should change your sales forecast to match.

• Timing matters

Your sales are supposed to refer to when the ownership changes hands (for products) or when the service is performed (for services). It isn’t a sale when it’s ordered, or promised, or even when it’s contracted.

With proper  accrual accounting , it is a sale even if it hasn’t been paid for. With so-called cash-based accounting, by the way, it isn’t a sale until it’s paid for. Accrual is better because it gives you a more accurate picture, unless you’re very small and do all your business, both buying and selling, with cash only.

I know that seems simple, but it’s surprising how many people decide to do something different. The penalty for doing things differently is that then you don’t match the standard, and the bankers, analysts, and investors can’t tell what you meant.

This goes for direct costs, too. The direct costs in your monthly  profit and loss statement  are supposed to be just the costs associated with that month’s sales. Please notice how, in the examples above, the direct costs for the sample bicycle store are linked to the actual unit sales.

• Live with your assumptions

Sales forecasting is not about accurately guessing the future. It’s about laying out your assumptions so you can manage changes effectively as sales and direct costs come out different from what you expected. Use this to adjust your sales forecast and improve your business by making course corrections to deal with what is working and what isn’t.

I believe that even if you do nothing else, by the time you use a sales forecast and review plan versus actual results every month, you are already managing with a business plan . You can’t review actual results without looking at what happened, why, and what to do next.

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• Forecasting isn’t about seeing into the future

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How to calculate a sales forecast for a new business

Table of Contents

Definition of a sales forecast

The uses of a sales forecast, how to calculate sales forecast for a new business, calculate a sales forecast using the accounts of your competition , calculate a sales forecast using a target market, manage your finances with countingup.

When you’re running a business, you should always keep one eye on the future. If you don’t have a rough idea of what the next week, month, or year might bring, you’ll be at a disadvantage when making business decisions. This means that calculating a sales forecast is essential, especially when you’re just starting a business or beginning to write a business plan . 

Sales forecasting can be tough if you don’t have much business experience, but we’re here to help. This article will cover a range of different topics related to sales forecasting, including:

Creating a sales forecast is the first step in managing your company’s cash flow . Your cash flow is the movement of money in and out of your business. By forecasting your sales, you’ll be able to predict your gro s s profit and net profit , which means you can start anticipating what money you’ll have to spend on running your business for the next month. 

Put simply, a sales forecast is a prediction of how much you’re going to sell in the coming month. This forecast doesn’t need to be a guess — it’s possible to calculate a fairly accurate forecast with some thorough research. The focus of your research will differ depending on which sales forecast method you pick.

Firstly, your sales forecast is important because it helps you set sales goals . Measuring the success of your business is a vital part of deciding its future, and setting sales goals is one of the simplest ways to measure success. 

If you have an accurate sales forecast, you’ll be able to set realistic sales goals. You’ll want your goals to be realistic, as this will give the clearest picture of how well your company is doing and if significant changes are needed.

Similarly, sales forecasts can also help create an accurate budget for your business. As a sales forecast is essential for predicting the money your business will make, it also plays an important part in working out how much money you’ll have to spend. 

Finally, sales forecasts help with finding investors for your business . If you’re looking for financial support to start your business, any investor you approach will likely be interested in the amount of money you expect the business to make. If you’ve created a sales forecast, you’ll be able to provide this information.

Large, well-established businesses rely on the sales figures of previous months to calculate their sales forecasts for the future. While having previous sales figures helps create more accurate forecasts, it’s not essential. There are a couple of methods new businesses can use to calculate their sales forecasts, even if they don’t have a sales history to look back at.

It’s always a good idea to research the competition when you’re setting up a new business. This is also true when calculating a sales forecast, but it depends on the type of businesses that make up your competition.

If any of your competitors are registered with the government as limited companies , they will have to make their accounts publicly available. These accounts will contain things like their monthly expenses, total profits, and (most importantly) the money they’ve made from sales. 

Using this last figure, you can work out how much your competitors are making from sales each month, and get a reasonable estimate of your own sales. You can find these accounts by searching for your competitor’s business on Companies House .

Please note that this method isn’t effective if your competitors are sole traders , as this means they won’t need to publish their accounts publicly. In this instance, you should use the forecasting method below. 

This method is known as ‘bottom-up’ forecasting, as you start at the bottom — your potential market of customers — and then work up to a forecast — the percentage of those customers that make a purchase.

The first step of this method is identifying your target market . This is the section of the population that you think will be interested in your product. With a little market research — things like sending out surveys, or posting polls on social media — you can work out how many people are in your target market. 

Once you have the size of your target market, you need to make realistic estimates of how many people will make a purchase. For example, if 1000 people in the local area are potential customers, you should expect 10% to visit your store or website, and 1% to actually make a purchase.

This method of calculating a sales forecast is good because it’s very adaptable. If you get many more or far fewer sales than you originally calculated, then you can adjust your figures accordingly and record the new forecast. 

It’s also a good idea to categorise this sort of sales forecast. Instead of estimating your overall sales, estimate the sales of each type of product you sell. That way, you can use the forecast to work out how many of each product to make or order each month. 

Creating a sales forecast is a great start, but it’s only the first part of managing your sales revenue. Once you start making sales and money starts coming in, you’ll need to track that cash so you can work out where to spend it. If you think you might have trouble with this, try using a financial software tool like Countingup.

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward!  Find out more here .

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How to create a sales plan in 7 Steps

A sales plan is the first step toward defining your sales strategy , sales goals and how you’ll reach them.

A refined sales plan is a go-to resource for your reps. It helps them better understand their role, responsibilities, targets, tactics and methods. When done right, it gives your reps all the information they need to perform at their highest level.

In this article, we outline what a sales plan is and why it’s important to create one. We also offer a step-by-step guide on how to make a sales plan with examples of each step.

What is a sales plan and why create one?

Your sales plan is a roadmap that outlines how you’ll hit your revenue targets, who your target market is, the activities needed to achieve your goals and any roadblocks you may need to overcome.

Many business leaders see their sales plan as an extension of the traditional business plan. The business plan contains strategic and revenue goals across the organization, while the sales plan lays out how to achieve them.

The benefits of a sales plan

A successful sales plan will keep all your reps focused on the right activities and ensure they’re working toward the same outcome. It will also address your company's specific needs. For example, you might choose to write a 30- , 60- or 90-day sales plan depending on your current goals and the nature of your business.

Say your ultimate goal for the next quarter is $250,000 in new business. A sales plan will outline the objective, the strategies that will help you get there and how you’ll execute and measure those strategies. It will allow your whole team to collaborate and ensure you achieve it together.

Many salespeople are driven by action and sometimes long-term sales planning gets neglected in favor of short-term results.

While this may help them hit their quota, the downside is the lack of systems in place. Instead, treat sales processes as a system with steps you can improve. If reps are doing wildly different things, it’s hard to uncover what’s working and what’s not. A strategic sales plan can optimize your team’s performance and keep them on track using repeatable systems.

With this in mind, let’s explore the seven components of an effective sales plan

1. Company mission and positioning

To work toward the same company goals, everyone in your organization must understand what your organization is trying to achieve and where in the market you position yourself.

To help define your mission and positioning, involve your sales leaders in all areas of the business strategy. Collaborating and working toward the same goals is impossible if those goals are determined by only a select group of stakeholders.

Recommended reading

How to set sales goals that improve team performance (with examples)

To get a handle on the company’s mission and positioning, take the following steps:

Collaborate with marketing: Your marketing teams live and breathe the positioning of your company. Take the time to talk to each function within the department, from demand generation to performance marketing to learn what they know.

Interview customer success teams: Customer support reps speak with your existing customers every day. Interview them to find common questions and pain points.

Talk to your customers: Customer insights are a foundational part of any positioning strategy. Speak directly with existing and new customers to find out what they love about your product or service.

Read your company blog: Those in charge of content production have a strong understanding of customer needs. Check out blog articles and ebooks to familiarize yourself with customer language and common themes.

Look for mentions around the web: How are other people talking about your organization? Look for press mentions, social media posts, articles and features that mention your products and services.

These insights can provide context around how your company is currently positioned in the market.

Finally, speak with the team in charge of defining the company’s positioning. Have a list of questions and use the time to find out why they made certain decisions. Here are some examples:

What important insights from the original target audience research made you create our positioning statement?

What competitor research led us to position ourselves in this way? Does this significantly differentiate us from the crowd? How?

What core ideals and values drove us to make these promises in our positioning statement? Have they shifted in any way since we launched? If so, what motivates these promises now?

How to communicate mission and positioning

In this section of the sales plan, include the following information:

Company mission : Why your company exists and the value you’re determined to bring to the market.

Competition: Who your direct competitors (those who offer similar products and services) and indirect competitors (brands who solve the same problem in different ways) are.

Value propositions: The features, benefits and solutions your product delivers.

What is brand positioning: The ultimate guide with 4 examples

2. Goals and targets

Define your revenue goals and the other targets sales are responsible for.

As mentioned earlier, sales goals are usually aligned with business goals. Your boardroom members typically establish the company’s revenue goals and it’s your job to achieve them.

Revenue goals will shape your sales strategy. Use them to reverse engineer quotas, sales activity and the staff you need to execute them.

Break your big-picture revenue goal down further into sales targets and activity targets for your team. Activities are the specific actions you and your reps can control, while sales targets are the results provided by those activities.

9 steps to creating the perfect sales strategy (with free template)

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10 predictable revenue hacks to grow your sales

Use data on sales activity and performance from previous years to calculate sales targets. You should break this down by pipeline stage and activity conducted by reps across all functions.

For example, how many cold emails does it take to generate a deal? What is the average lifetime value (LTV) of your customer?

Breaking down these numbers allows you to accurately forecast what it will take to achieve your new revenue goal.

This part of your sales plan might include setting goals like the following:

200 total cold emails sent per day

200 total cold calls made per day

25 demos conducted per day

5 new sales appointments made a day

100 follow-up emails sent per day

Breaking down your goals into specific activities will also reveal the expertise needed for each activity and any required changes to your organizational structure, which will come into play in the next step.

How to communicate goals and targets

Within this section of the sales plan, include the following information:

Revenue goals : Reverse engineer the boardroom revenue goals to identify achievable sales goals and the number of staff needed to reach them. Sales targets : Use data on sales activity and past performance to define quotas and metrics for each stage of the sales pipeline.

Expertise needed for each activity: What qualities and attributes do your staff need to achieve these predefined activities? How much experience do they need vs. what can be learned on the job?

3. Sales organization and team structure

Identify the talent and expertise you need to achieve your goals.

For example, a marketing agency that depends on strong relationships will benefit more from a business development executive than a sales development representative (SDR) .

Use the targets established in the previous section to identify who you need to hire for your team. For example, if the average sales development rep can send 20 cold emails a day and you need to send 200 to achieve your goals, you’ll need around ten reps to hit your targets.

Include the information for each team member in a table in your sales plan. Here is an example.

Visualizing each role helps all stakeholders understand who they’re hiring and the people they’re responsible for. It allows them to collaborate on the plan and identify the critical responsibilities and qualities of their ideal candidates.

You want to avoid micromanaging , but now is a good time to ask your existing teams to report on the time spent on certain activities. Keeping a timesheet will give you an accurate forecast of how long certain activities take and the capacity of each rep.

How to communicate your sales organization and team structure

Team structure: These are the functions that make up your overall sales organization. The roles of SDR, business development and account teams must be well-defined.

Roles and responsibilities: These are the roles you need to hire, along with the tasks they’re responsible for. This will help you produce job descriptions that attract great talent.

Salary and compensation: How will the company remunerate your teams? Having competitive salaries, compensation schemes and sales incentives will attract top performers and keep them motivated.

Timeline: Attempting to hire dozens of people at once is tough. Prioritize hiring based on how critical each role is for executing your plan. Take a phased hiring approach to onboard new reps with the attention they deserve.

Building a sales team: How to set your group up for success

4. Target audience and customer segments

A sales plan is useless without knowing who to sell to. Having clearly defined customer personas and ideal customer profiles will help you tailor your selling techniques to companies and buyers.

Whether you’re looking to break into a new market or expand your reach in your current one, start by clearly defining which companies you’re looking to attract. Include the following criteria:

Industries: Which markets and niches do you serve? Are there certain sub-segments of those industries that you specialize in?

Headcount: How many employees do your best accounts have within their organization?

Funding: Have they secured one or several rounds of funding?

Find out as much as you can about their organizational challenges. This may include growth hurdles, hiring bottlenecks and even barriers created by legislation.

Learn about your buyers within those target accounts, learn about your buyers. Understanding your buyers and personalizing your sales tactics for them will help you strengthen your customer relationships.

These insights will change as your business grows. Enterprise companies may wish to revisit their personas as they move upmarket. For small businesses and startups, your target audience will evolve as you find product-market fit.

It’s important to constantly revisit this part of your sales plan. Even if your goals and methodologies are the same, always have your finger on the pulse of your customer’s priorities.

How to communicate target audience and customer segments

Profile: Include basic information about their role, what their career journey looks like and the common priorities within their personal lives.

Demographics : Add more information about their age, income and living situation. Demographic information can help tailor your message to align with the language used across different generations.

Attributes: Assess their personality. Are they calm or assertive? Do they handle direct communication themselves or have an assistant? Use these identifying attributes to communicate effectively.

Challenges: Think about the hurdles this persona is trying to overcome. How does it affect their work and what’s the impact on them personally?

Goals: Analyze how these challenges are preventing them from achieving their goals. Why are these goals important to them?

Support: Use this insight to define how your product or service will help these people overcome challenges and achieve their goals.

Behavioral segmentation: What is it and how can it drive engagement and loyalty

5. Sales strategies and methodologies

Define your sales approach. This includes the strategies, techniques and methodologies you’ll use to get your offering out to market.

This part of your sales plan may end up being the largest. It will outline every practical area of your sales strategy: your sales stages, methodologies and playbooks.

Start by mapping out each stage of your sales process. What are the steps needed to guide a prospect through your deal flow?

9 essential sales stages

Traditionally, a sales process has nine sales stages :

Prospecting and lead generation : Your marketing strategy should deliver leads, but sales reps should boost this volume with their own prospecting efforts.

Qualification: Measure those leads against your target account criteria and customer personas. Ensure they’re a good fit, prioritizing your time on high-value relationships.

Reaching out to new leads : Initiate emails to your target customers to guide new leads into the sales funnel. This outreach activity includes cold calling and direct mail.

Appointment setting: Schedule a demo, discovery call or consultation.

Defining needs: After the initial meeting, you’ll understand your prospect’s problems and how your product or service can solve them.

Presentation: Reveal the solution. This can be in the form of a proposal, custom service packages or a face-to-face sales pitch .

Negotiation: Dedicate this stage to overcoming any objections your prospect may have.

Winning the deal: Turn your prospects into customers by closing deals and signing contracts.

Referrals : Fostering loyalty is an organization-wide activity. Delight your customers and encourage them to refer their friends.

Not all of these stages will be relevant to your organization. For example, a SaaS company that relies on inbound leads may do much of the heavy lifting during the initial meeting and sales demo . On the other hand, an exclusive club whose members must meet certain criteria (say, a minimum net worth) would focus much of their sales activity on referrals.

Map out your sales process to identify the stages you use. Your sales process should look something like this:

To determine your sales methodologies, break each sales stage down into separate activities, along with the stakeholder responsible for them.

With your sales activities laid out, you can do in-depth research into the techniques and methodologies you need to execute them. For example, if you sell a complex product with lengthy sales cycles , you could adopt a SPIN selling methodology to identify pain points and craft the best solution for leads.

Finally, use these stages and methodologies to form your sales playbooks . This will help you structure your sales training plan and create playbooks your reps can go back to for guidance.

How to communicate sales strategies and methodologies

Within this section of the sales plan, include the following:

Sales stages: The different steps required to convert prospects into paying customers.

Sales methodologies: The different practices and approaches you’ll adopt to shape your sales strategy.

Sales playbooks: The tactics, techniques and sales strategy templates needed to guide contacts throughout each stage of the sales process.

6. Sales action plan

You have the “who” and the “what”. Now you must figure out “when” to execute your sales plan.

A well-structured sales action plan communicates when the team will achieve key milestones. It outlines timeframes for when they’ll complete certain projects and activities, as well as the recruitment timelines for each quarter.

The order in which you implement your sales action plan depends on your priorities. Many sales organizations prefer to front-load the activity that will make a bigger impact on the bottom line.

For example, when analyzing your current sales process and strategy, you may find your existing customers are a rich source of qualified leads . Therefore, it would make sense to nurture more of these relationships using a structured referral program.

You must also consider how recruitment will affect the workload in your team. Hire too quickly and you may end up spending more time training new reps and neglecting your existing team. However, taking too long to recruit could overload your existing team. Either can make a big impact on culture and deal flow.

To complete your sales action plan, get all stakeholders involved in deciding timelines. When applying this to your sales plan, use GANTT charts and tables to visualize projects and key milestones.

A GANTT chart shows you the main activities, their completion dates and if there are any overlaps. Here is an example:

By prioritizing each activity and goal, you can create a plan that balances short-term results with long-term investment.

How to communicate your sales action plan

Key milestones : When do you aim to complete your projects, activities and recruitment efforts? You can map them out by week, month, quarter or all of the above. Let your revenue goals and priorities lead your schedule.

Short- and long-term goal schedules: With a high-level schedule mapped out, you can see when you will achieve your goals. From here, you can shape your schedule so that it balances both short- and long-term goals.

7. Performance and results measurement

Finally, your plan must detail how you measure performance. Outline your most important sales metrics and activities, how you’ll track them and what technology you’ll need to track them.

Structure this part of your plan by breaking down each sales stage. Within these sections, list out the metrics you’ll need to ensure you’re running a healthy sales pipeline.

Performance metrics can indicate the effectiveness of your entire sales process. Your chosen metrics typically fall into two categories:

Primary metrics act as your “true north” guide. This is commonly new business revenue generated.

Secondary metrics are those that indicate how well specific areas of your sales process are performing. These include lead response time and average purchase value.

The metrics you select must closely align with your goals and sales activities. For example, at the appointment setting stage, you might measure the number of demos conducted.

Each team also needs its own sales dashboard to ensure reps are hitting their targets. Sales development reps will have different priorities from account executives, so it’s critical they have the sales tools to focus on what’s important to them.

Finally, research and evaluate the technology you’ll need to accurately measure these metrics. Good CRM software is the best system to use for bringing your data together.

How to communicate sales performance metrics

Sales stage metrics : Identify the metrics for each specific sales stage and make sure they align with your KPIs.

Chosen sales dashboard: Explain why you chose your sales dashboard technology and exactly how it works.

Performance measurement: Outline exactly how and what tech you will use to measure your team’s activities and metrics.

How to track, measure and improve your team’s sales performance

Developing a sales plan involves conducting market research, assessing current sales performance , identifying sales opportunities and challenges, setting measurable goals, creating a sales strategy, allocating resources and establishing a monitoring and evaluation framework.

To write a sales business plan, include:

An executive summary

A company overview

A market analysis

A target market description

Sales strategies and tactics

Financial projections

A budget and timeline

Make sure that you clearly articulate your value proposition, competitive advantage and growth strategies.

Final thoughts

An effective sales plan is an invaluable asset for your sales team . Although you now know how to create a sales plan, you should remember to make one that works for your team. Writing one helps with your sales strategy planning and aids you in defining targets, metrics and processes. Distributing the sales plan helps your reps understand what you expect of them and how they can reach their goals.

Providing supportive, comprehensive resources is the best way to motivate your team and inspire hard work. When you do the work to build a solid foundation, you equip your reps with everything they need to succeed.

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Sales Projection

A sales projection for your business plan.

A sales projection of your product or service is the starting point and the key to preparing financial projections, so it is important to use a realistic estimate.

Most businesses have different types of sales e.g. product lines, departments, customer groups etc. so you’ll eventually need an estimate for each main type for your sales projection. We would suggest no more than seven types and perhaps a final one for sundry sales. If you can’t breakdown into types at this stage of your sales projection then work with the total sales figure.

How do you get the Estimate for the Sales projection?

• If you have historical annual sales information for your business use that as your starting point. If you have a number of years then average them, but try and take into account unusual fluctuations e.g. particularly bad weather, economic climate, new products coming on line etc.
• Use information from companies in the same or similar type of business, trade associations, company accounts of similar businesses to give you an idea of the level of sales for your industry and location.
• Use market data and statistics, if you’re in retailing for example its usually possible to get an idea of the typical sales volume per square foot of space for shops in similar locations and sizes. This sales volume multiplied by your average price should give you an estimate of sales.
• Use national government demographic data and average spend data to estimate the total market for the product in your area and then calculate your market share by dividing this estimate by the number of competitors plus one in your area. You’ll need to use your own judgment and adjust this figure (probably downwards, for the first year)
• If you are in a business with a fixed capacity use a bottom up method by calculating your available capacity (e.g. in a restaurant use the available seating and multiply this by the average meal price), and then estimate a likely usage, say 50% to give a sales estimate for the year.

The important thing is to get a best estimate and start the sales projection; it can always be adjusted later as the plan takes shape.

Finally a few words of warning, avoid wishful thinking, (take 20-30% off the figure you first thought of), avoid too much detail in analysing the types of sale you have, and make sure the sales are within your businesses capacity, for example if you are manufacturing widgets with a given capacity, there’s no point in a sales projection well above this unless you have plans to expand.

Our free revenue projection template can be used to help estimate sales for up to 5 years.

About the Author

Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.

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• Business Planning

Business Plan Financial Projections

Written by Dave Lavinsky

Financial projections are forecasted analyses of your business’ future that include income statements, balance sheets and cash flow statements. We have found them to be an crucial part of your business plan for the following reasons:

• They can help prove or disprove the viability of your business idea. For example, if your initial projections show your company will never make a sizable profit, your venture might not be feasible. Or, in such a case, you might figure out ways to raise prices, enter new markets, or streamline operations to make it profitable. 
• Financial projections give investors and lenders an idea of how well your business is likely to do in the future. They can give lenders the confidence that you’ll be able to comfortably repay their loan with interest. And for equity investors, your projections can give them faith that you’ll earn them a solid return on investment. In both cases, your projections can help you secure the funding you need to launch or grow your business.
• Financial projections help you track your progress over time and ensure your business is on track to meet its goals. For example, if your financial projections show you should generate $500,000 in sales during the year, but you are not on track to accomplish that, you’ll know you need to take corrective action to achieve your goal.

Below you’ll learn more about the key components of financial projections and how to complete and include them in your business plan.

What Are Business Plan Financial Projections?

Financial projections are an estimate of your company’s future financial performance through financial forecasting. They are typically used by businesses to secure funding, but can also be useful for internal decision-making and planning purposes. There are three main financial statements that you will need to include in your business plan financial projections:

1. Income Statement Projection

The income statement projection is a forecast of your company’s future revenues and expenses. It should include line items for each type of income and expense, as well as a total at the end.

There are a few key items you will need to include in your projection:

• Revenue: Your revenue projection should break down your expected sales by product or service, as well as by month. It is important to be realistic in your projections, so make sure to account for any seasonal variations in your business.
• Expenses: Your expense projection should include a breakdown of your expected costs by category, such as marketing, salaries, and rent. Again, it is important to be realistic in your estimates.
• Net Income: The net income projection is the difference between your revenue and expenses. This number tells you how much profit your company is expected to make.

Sample Income Statement

2. Cash Flow Statement & Projection

The cash flow statement and projection are a forecast of your company’s future cash inflows and outflows. It is important to include a cash flow projection in your business plan, as it will give investors and lenders an idea of your company’s ability to generate cash.

There are a few key items you will need to include in your cash flow projection:

• The cash flow statement shows a breakdown of your expected cash inflows and outflows by month. It is important to be realistic in your projections, so make sure to account for any seasonal variations in your business.
• Cash inflows should include items such as sales revenue, interest income, and capital gains. Cash outflows should include items such as salaries, rent, and marketing expenses.
• It is important to track your company’s cash flow over time to ensure that it is healthy. A healthy cash flow is necessary for a successful business.

Sample Cash Flow Statements

3. Balance Sheet Projection

The balance sheet projection is a forecast of your company’s future financial position. It should include line items for each type of asset and liability, as well as a total at the end.

A projection should include a breakdown of your company’s assets and liabilities by category. It is important to be realistic in your projections, so make sure to account for any seasonal variations in your business.

It is important to track your company’s financial position over time to ensure that it is healthy. A healthy balance is necessary for a successful business.

Sample Balance Sheet

How to Create Financial Projections

Creating financial projections for your business plan can be a daunting task, but it’s important to put together accurate and realistic financial projections in order to give your business the best chance for success.  

Cost Assumptions

When you create financial projections, it is important to be realistic about the costs your business will incur, using historical financial data can help with this. You will need to make assumptions about the cost of goods sold, operational costs, and capital expenditures.

It is important to track your company’s expenses over time to ensure that it is staying within its budget. A healthy bottom line is necessary for a successful business.

Capital Expenditures, Funding, Tax, and Balance Sheet Items

You will also need to make assumptions about capital expenditures, funding, tax, and balance sheet items. These assumptions will help you to create a realistic financial picture of your business.

Capital Expenditures

When projecting your company’s capital expenditures, you will need to make a number of assumptions about the type of equipment or property your business will purchase. You will also need to estimate the cost of the purchase.

When projecting your company’s funding needs, you will need to make a number of assumptions about where the money will come from. This might include assumptions about bank loans, venture capital, or angel investors.

When projecting your company’s tax liability, you will need to make a number of assumptions about the tax rates that will apply to your business. You will also need to estimate the amount of taxes your company will owe.

Balance Sheet Items

When projecting your company’s balance, you will need to make a number of assumptions about the type and amount of debt your business will have. You will also need to estimate the value of your company’s assets and liabilities.

Financial Projection Scenarios

Write two financial scenarios when creating your financial projections, a best-case scenario, and a worst-case scenario. Use your list of assumptions to come up with realistic numbers for each scenario.

Presuming that you have already generated a list of assumptions, the creation of best and worst-case scenarios should be relatively simple. For each assumption, generate a high and low estimate. For example, if you are assuming that your company will have $100,000 in revenue, your high estimate might be $120,000 and your low estimate might be $80,000.

Once you have generated high and low estimates for all of your assumptions, you can create two scenarios: a best case scenario and a worst-case scenario. Simply plug the high estimates into your financial projections for the best-case scenario and the low estimates into your financial projections for the worst-case scenario.

Conduct a Ratio Analysis

A ratio analysis is a useful tool that can be used to evaluate a company’s financial health. Ratios can be used to compare a company’s performance to its industry average or to its own historical performance.

There are a number of different ratios that can be used in ratio analysis. Some of the more popular ones include the following:

• Gross margin ratio
• Operating margin ratio
• Return on assets (ROA)
• Return on equity (ROE)

To conduct a ratio analysis, you will need financial statements for your company and for its competitors. You will also need industry average ratios. These can be found in industry reports or on financial websites.

Once you have the necessary information, you can calculate the ratios for your company and compare them to the industry averages or to your own historical performance. If your company’s ratios are significantly different from the industry averages, it might be indicative of a problem.

Be Realistic

When creating your financial projections, it is important to be realistic. Your projections should be based on your list of assumptions and should reflect your best estimate of what your company’s future financial performance will be. This includes projected operating income, a projected income statement, and a profit and loss statement.

Your goal should be to create a realistic set of financial projections that can be used to guide your company’s future decision-making.

Sales Forecast

One of the most important aspects of your financial projections is your sales forecast. Your sales forecast should be based on your list of assumptions and should reflect your best estimate of what your company’s future sales will be.

Your sales forecast should be realistic and achievable. Do not try to “game” the system by creating an overly optimistic or pessimistic forecast. Your goal should be to create a realistic sales forecast that can be used to guide your company’s future decision-making.

Creating a sales forecast is not an exact science, but there are a number of methods that can be used to generate realistic estimates. Some common methods include market analysis, competitor analysis, and customer surveys.

Create Multi-Year Financial Projections

When creating financial projections, it is important to generate projections for multiple years. This will give you a better sense of how your company’s financial performance is likely to change over time.

It is also important to remember that your financial projections are just that: projections. They are based on a number of assumptions and are not guaranteed to be accurate. As such, you should review and update your projections on a regular basis to ensure that they remain relevant.

Creating financial projections is an important part of any business plan. However, it’s important to remember that these projections are just estimates. They are not guarantees of future success.

Business Plan Financial Projections FAQs

What is a business plan financial projection.

A business plan financial projection is a forecast of your company's future financial performance. It should include line items for each type of asset and liability, as well as a total at the end.

What are annual income statements? 

The Annual income statement is a financial document and a financial model that summarize a company's revenues and expenses over the course of a fiscal year. They provide a snapshot of a company's financial health and performance and can be used to track trends and make comparisons with other businesses.

What are the necessary financial statements?

The necessary financial statements for a business plan are an income statement, cash flow statement, and balance sheet.

How do I create financial projections?

You can create financial projections by making a list of assumptions, creating two scenarios (best case and worst case), conducting a ratio analysis, and being realistic.

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Sales Projection

Table of Contents

What is sales projection.

Sales projection estimates future sales revenue by analyzing historical sales data and using it to predict future sales patterns. Businesses use sales projections for both short-term and long-term planning.

Sales projections are a critical part of any business plan . They allow businesses to set realistic goals and track their progress over time. Without accurate sales projections, companies may find themselves under- or over-performing against their targets.

Sales projections are also vital for businesses to make informed decisions about their operations and investments. For example, if a company is projecting strong sales growth, it may need to hire more staff or expand its facilities. 

On the other hand, if sales are expected to slow down, they may need to cut costs to stay profitable.

Making accurate sales projections is an essential skill for anyone leading an organization’s sales management . While there is no guaranteed way to perfectly forecast future sales, careful analysis and planning can help companies make the best estimate possible.

• sales forecast
• sales prediction
• projected sales

The Difference Between Sales Projections and Sales Forecasts

Sales projections and sales forecasts are often used interchangeably, but there is a subtle difference between the two terms.

A sales projection estimates future sales based on past performance and current trends. Sales projections, typically made at the beginning of a planning period, are a goal to strive for during that time.

A sales forecast is a more detailed estimate that takes into account specific factors that may impact future sales, such as seasonality or changes in the economy. Sales forecasts are updated regularly and give a more accurate picture of expected sales based on multiple factors that impact sales.

In general, businesses will use both projections and forecasts when planning for the future and making decisions about things like inventory levels or budgeting for marketing efforts.

Advantages of Sales Projections

Sales projections help company leaders informed decisions about various aspects of business operations . By estimating future sales, companies can also track their progress towards long-term goals and objectives.

There are many advantages to using sales projections:

• Improved decision-making – by estimating future sales, businesses can make informed decisions about product pricing, inventory levels, staffing needs, their sales process, and marketing strategy.
• Goal setting and tracking – sales projections can help businesses track their progress towards long-term goals and objectives.
• Better budgeting – knowing what will likely be sold in the future allows businesses to allocate their resources better.
• Reduced risks – businesses can identify and plan for potential risks in advance.
• Improved customer service – by understanding what customers are likely to purchase, businesses can stock the products they need and provide better customer service.
• Improved tracking – sales projections can help businesses track their progress and performance over time and make the necessary adjustments.
• Increased motivation – by setting goals and targets, sales managers can encourage their sales reps to meet their sales quotas and strive for success.

Sales projections are not without their challenges, however. Businesses need to have accurate data about past sales to create reliable projections. They also need to be aware of potential changes in the market that could impact future sales. Despite these challenges, sales projections can be a valuable tool for businesses of all sizes.

Sales Projection Optimization

There are several ways to optimize sales projections. The most important thing is for companies to clearly understand their products or services, target market, and competition. Sales leaders can more accurately forecast their product or service demand with this information.

Another way businesses can optimize sales projections is to use data from past sales cycles . This data provides insight into customer behavior and can help predict future trends. Finally, it’s essential to review projections regularly and make adjustments to ensure that the predictions are as accurate as possible.

Accurate Monthly Sales Projections

Estimates of projected sales are crucial for businesses to plan ahead and make informed decisions. However, making accurate sales predictions can be difficult, as many factors can be considered.

Here are some tips on how to create accurate monthly sales projections:

• Know your historical sales figures

This is the first and most crucial step in making accurate sales projections. In-depth sales analysis and knowing how much revenue the business has generated in the past months will give you a good starting point for estimating future sales.

• Understand your seasonality

If a company’s business is seasonal, then marketing and sales directors need to consider seasonal fluctuation when projecting future sales. 

• Look at industry trends

Keeping up with industry trends can help sales and marketing directors anticipate changes in consumer behavior. Several market analysis tools, such as Google Trends and Forrester, are available online to help revenue leaders understand their industry’s performance and identify potential opportunities.

• Use customer data

Customer data can help companies understand which groups of customers are most likely to purchase which products so they can forecast customer demand. For example, if a company sells products that are popular with families, it might want to focus its projections on this demographic.

• Speak to the sales team

The sales team will have a good idea of how the products sell and demand. They can also offer insights into how to improve sales projections.

• Make assumptions and adjust as needed

In any forecasting exercise, there will always be some uncertainty. Rather than agonizing over details, make assumptions and adjust as needed. This will help the business stay flexible and adapt as new information arises.

Calculating Annual Projected Sales

There are many factors to consider when creating annual sales projections. However, the most important is historical sales data which helps establish trends and patterns that can be used to predict future sales.

Other factors to consider are:

• The current economic climate
• Changes in the market
• Unique selling points
• New products or services the company will offer

Once the data has been collected, sales managers can start to put together the projections for the coming year using the methods described below.

Sales Projection Formula

Sales projections are vitally important for businesses to understand their revenue growth potential. A few formulas are used to calculate sales projections, depending on the available data. However, understanding a company’s past sales figures is the most critical factor in any sales projection. 

One method is to take your past sales figures and extrapolate them into the future. Another approach is to estimate the number of units of each product or service that will be sold and multiply by the price for each unit sold to project their annual sales for the coming year. This provides a rough idea of what annual sales might look like, but it doesn’t consider any changes that may have happened in the business or industry.

A more sophisticated approach is to use regression analysis to project future sales. This method uses historical data to identify relationships between different variables and then projects those relationships into the future. Regression analysis can give a more accurate idea of future sales, but it requires more data and is more complex to calculate.

No matter what projected sales formula is used, it’s important to remember that they are only estimates. Sales can fluctuate for a number of reasons, so it’s important to regularly review a business’s projections and adjust them as necessary.

People Also Ask

What is a sales projection plan.

A sales projection plan is a road map businesses use to estimate future sales and revenue. A sales projection plan aims to provide a framework for understanding past performance and using that data to predict future sales. Sales projection plans can be helpful in several ways. First, they can give business leaders a better understanding of past sales patterns to make more informed business decisions about pricing, inventory, and other factors that impact revenue. Additionally, sales projection plans can help sales managers set realistic goals for the future and track their sales performance over time. A few key elements should be included in any sales projection plan. First, use sales analysis to identify the company’s historical sales patterns. Additionally, consider the factors that impact sales, such as the economy, seasonality, and customer behavior. Finally, set realistic future goals and plan how to achieve them.

Why are sales projections important?

Sales projections are important for businesses because they provide a way to estimate future revenue and plan for growth. Without accurate sales forecasting, it would be challenging to set sales goals or make informed decisions about where to allocate resources. Sales projections can also help businesses track their progress and identify trends.

How do you make accurate sales projections?

The methods described above can help businesses make accurate sales projections. In addition, it may be worthwhile to invest in sales projection software, a business intelligence tool that can be used to generate sales projections. This software integrates with other marketing, sales, and revenue operations software like CRM and CPQ to track historical sales data and trends and extrapolate future sales figures based on this information. Sales projection software can be used by businesses and sales departments of all sizes to plan for future sales and growth.

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Here is a free business plan sample for a fruit and vegetable store.

Have you ever envisioned owning a bustling fruit and vegetable market that serves as a cornerstone of health in your community? Wondering where to start?

Look no further, as we're about to guide you through a comprehensive business plan tailored for a fruit and vegetable market.

Creating a solid business plan is crucial for any aspiring entrepreneur. It serves as a roadmap, outlining your vision, objectives, and the strategies you'll employ to turn your fresh produce venture into a thriving business.

To jumpstart your planning process with ease and precision, feel free to utilize our fruit and vegetable market business plan template. Our team of experts is also on standby to provide a free review and fine-tuning of your plan.

How to draft a great business plan for your fruit and vegetable store?

A good business plan for a fruit and vegetable market must cater to the unique aspects of this type of retail business.

Initially, it's crucial to provide a comprehensive overview of the market landscape. This includes up-to-date statistics and an exploration of emerging trends within the industry, similar to what we've incorporated in our fruit and vegetable market business plan template .

Your business plan should articulate your vision clearly. Define your target demographic (such as local residents, restaurants, or health-conscious consumers) and establish your market's distinctive features (like offering organic produce, exotic fruits, or locally-sourced vegetables).

Market analysis is the next critical component. This requires a thorough examination of local competitors, market dynamics, and consumer buying patterns.

For a fruit and vegetable market, it's imperative to detail the range of products you intend to sell. Describe your selection of fruits, vegetables, herbs, and any additional items you plan to offer, and discuss how these choices align with the preferences and needs of your customer base.

The operational plan is equally important. It should outline the location of your market, the layout of the retail space, your supply chain for fresh produce, and inventory management practices.

Given the nature of a fruit and vegetable market, it is vital to highlight the freshness and quality of your produce, your relationships with growers and suppliers, and adherence to health and safety standards.

Then, delve into your marketing and sales strategies. How do you plan to attract and keep customers coming back? Consider your approach to promotions, customer loyalty programs, and potential value-added services (like home delivery or a juice bar).

Incorporating digital strategies, such as an online ordering system or a robust social media presence, is also crucial in the modern marketplace.

The financial section is another cornerstone of your business plan. It should encompass the initial investment, projected sales, operating expenses, and the point at which you expect to break even.

With a fruit and vegetable market, managing waste and understanding the shelf life of products are critical, so precise planning and knowledge of your financials are essential. For assistance, consider using our financial forecast for a fruit and vegetable market .

Compared to other business plans, a fruit and vegetable market plan must pay closer attention to the perishability of inventory, the importance of a robust supply chain, and the potential for seasonal fluctuations.

A well-crafted business plan not only helps you to define your strategies and vision but also plays a pivotal role in attracting investors or securing loans.

Lenders and investors are keen on a solid market analysis, realistic financial projections, and a comprehensive understanding of the day-to-day operations of a fruit and vegetable market.

By presenting a thorough and substantiated plan, you showcase your dedication and readiness for the success of your venture.

To achieve these goals while saving time, you are welcome to fill out our fruit and vegetable market business plan template .

A free example of business plan for a fruit and vegetable store

Here, we will provide a concise and illustrative example of a business plan for a specific project.

This example aims to provide an overview of the essential components of a business plan. It is important to note that this version is only a summary. As it stands, this business plan is not sufficiently developed to support a profitability strategy or convince a bank to provide financing.

To be effective, the business plan should be significantly more detailed, including up-to-date market data, more persuasive arguments, a thorough market study, a three-year action plan, as well as detailed financial tables such as a projected income statement, projected balance sheet, cash flow budget, and break-even analysis.

All these elements have been thoroughly included by our experts in the business plan template they have designed for a fruit and vegetable market .

Here, we will follow the same structure as in our business plan template.

Market Opportunity

Market data and figures.

The fruit and vegetable market is an essential and robust component of the global food industry.

Recent estimates value the global fruit and vegetable trade at over 1 trillion dollars, with expectations for continued growth as consumers seek healthier eating options. In the United States, the fruit and vegetable industry contributes significantly to the economy, with thousands of markets and stores providing a wide range of produce to meet consumer demand.

These statistics underscore the critical role that fruit and vegetable markets play in not only providing nutritious food options but also in supporting local agriculture and economies.

Current trends in the fruit and vegetable industry indicate a shift towards organic and locally sourced produce, as consumers become more health-conscious and environmentally aware.

There is an increasing demand for organic fruits and vegetables, driven by the perception of better quality and concerns about pesticides and other chemicals. The local food movement is also gaining momentum, with consumers showing a preference for produce that is grown locally to support community farmers and reduce carbon emissions associated with transportation.

Technological advancements are influencing the industry as well, with innovations in vertical farming and hydroponics allowing for more sustainable and space-efficient growing methods.

Online grocery shopping and delivery services are expanding, making it easier for consumers to access fresh produce directly from their homes.

Additionally, the push for transparency in food sourcing continues to grow, with consumers wanting to know more about where their food comes from and how it is grown.

These trends are shaping the future of the fruit and vegetable market, as businesses strive to meet the evolving preferences and values of modern consumers.

Success Factors

Several key factors contribute to the success of a fruit and vegetable market.

Quality and freshness of produce are paramount. Markets that offer a wide variety of fresh, high-quality fruits and vegetables are more likely to build and maintain a dedicated customer base.

Diversity in product offerings, including exotic or hard-to-find produce, can differentiate a market from its competitors.

Location is also vital, as markets that are easily accessible to consumers will naturally attract more foot traffic.

Customer service is another important aspect, with knowledgeable and friendly staff enhancing the shopping experience and encouraging repeat visits.

Effective cost management and the ability to adapt to changing consumer trends, such as the demand for organic and locally grown produce, are crucial for the long-term viability of a fruit and vegetable market.

The Project

Project presentation.

Our fruit and vegetable market project is designed to cater to the increasing consumer demand for fresh, organic, and locally-sourced produce. Situated in a community-focused neighborhood, our market will offer a diverse selection of fruits and vegetables, emphasizing seasonal and organic options. We will partner with local farmers and suppliers to ensure that our customers have access to the freshest produce available, supporting sustainable agricultural practices and reducing our carbon footprint.

We aim to provide not just produce, but a holistic healthy eating experience by offering a range of complementary products such as herbs, spices, and artisanal condiments. Our market will be a hub for health-conscious consumers and those interested in cooking with the finest ingredients.

Our fruit and vegetable market is set to become a cornerstone in the community, promoting healthier lifestyles and fostering connections between local producers and consumers.

Value Proposition

The value proposition of our fruit and vegetable market lies in our commitment to providing the community with the highest quality fresh produce. We understand the importance of nutrition and the role that fruits and vegetables play in maintaining a healthy diet.

Our market will offer a unique shopping experience where customers can enjoy a wide variety of produce, learn about the benefits of incorporating more fruits and vegetables into their diets, and discover new and exotic varieties. We are dedicated to creating a welcoming environment where everyone can find something to enrich their meals and support their well-being.

By focusing on local and organic sourcing, we also contribute to the sustainability of our food systems and the prosperity of local farmers, aligning our business with the values of environmental stewardship and community support.

Project Owner

The project owner is an individual with a profound passion for healthy living and community engagement. With a background in agricultural studies and experience in the food retail industry, they are well-equipped to establish a market that prioritizes quality and freshness.

They bring a wealth of knowledge about the seasonality and sourcing of produce, and are committed to creating a marketplace that reflects the diversity and richness of nature's offerings. Their dedication to health, nutrition, and sustainability drives them to build a market that not only sells fruits and vegetables but also educates and inspires the community to embrace a healthier, more sustainable lifestyle.

Their vision is to create a space where the joy of fresh, wholesome food is accessible to all, and where the market serves as a vibrant gathering place for people to connect with their food and each other.

The Market Study

Market segments.

The market segments for this fruit and vegetable market are diverse and cater to a wide range of consumers.

Firstly, there are health-conscious individuals who prioritize fresh, organic produce in their diets for wellness and nutritional benefits.

Secondly, the market serves customers who are looking for locally-sourced and seasonal produce to support community farmers and reduce their carbon footprint.

Additionally, the market attracts individuals with specific dietary needs, such as vegans, vegetarians, and those with food sensitivities who require a variety of fresh produce options.

Culinary professionals, including chefs and caterers, represent another segment, seeking high-quality ingredients to enhance their dishes.

SWOT Analysis

A SWOT analysis of the fruit and vegetable market project highlights several key factors.

Strengths include a strong focus on fresh, high-quality produce, relationships with local farmers, and a commitment to sustainability and eco-friendly practices.

Weaknesses might involve the perishable nature of inventory, the need for constant supply chain management, and potential seasonal fluctuations in product availability.

Opportunities exist in expanding the market's reach through online sales and delivery services, as well as in educating consumers about the benefits of eating fresh and local produce.

Threats could include competition from larger grocery chains with more buying power, adverse weather affecting crop yields, and potential economic downturns reducing consumer spending on premium produce.

Competitor Analysis

Competitor analysis in the fruit and vegetable market sector indicates a varied landscape.

Direct competitors include other local markets, organic food stores, and large supermarkets with extensive produce sections.

These competitors vie for customers who value convenience, variety, and price.

Potential competitive advantages for our market include superior product freshness, strong community ties, exceptional customer service, and a focus on sustainable and ethical sourcing.

Understanding the strengths and weaknesses of these competitors is crucial for carving out a niche and ensuring customer loyalty.

Competitive Advantages

Our fruit and vegetable market's dedication to offering the freshest and highest quality produce sets us apart from the competition.

We provide a wide array of fruits and vegetables, including rare and exotic items, to cater to the diverse tastes and needs of our customers.

Our commitment to sustainability, through supporting local farmers and minimizing waste, resonates with environmentally conscious consumers.

We also emphasize transparency and education about the source and benefits of our produce, fostering a trusting relationship with our clientele.

You can also read our articles about: - how to open a fruit and vegetable store: a complete guide - the customer segments of a fruit and vegetable store - the competition study for a fruit and vegetable store

The Strategy

Development plan.

Our three-year development plan for the fresh fruit and vegetable market is designed to promote healthy living within the community.

In the first year, our goal is to establish a strong local presence by sourcing a wide variety of high-quality, seasonal produce and building relationships with local farmers and suppliers.

The second year will focus on expanding our reach by setting up additional market locations and possibly introducing mobile market services to access a broader customer base.

In the third year, we plan to diversify our offerings by including organic and exotic fruits and vegetables, as well as implementing educational programs on nutrition and sustainable agriculture.

Throughout this period, we will be committed to sustainability, community engagement, and providing exceptional service to ensure we become a staple in our customers' healthy lifestyles.

Business Model Canvas

The Business Model Canvas for our fruit and vegetable market targets health-conscious consumers and those looking for fresh, local produce.

Our value proposition is centered on offering the freshest, high-quality fruits and vegetables, with a focus on local and organic options, and providing exceptional customer service.

We will sell our products through our physical market locations and consider an online ordering system for customer convenience, utilizing our key resources such as our relationships with local farmers and our knowledgeable staff.

Key activities include sourcing and curating produce, maintaining quality control, and engaging with the community.

Our revenue streams will be generated from the sales of produce, while our costs will be associated with procurement, operations, and marketing efforts.

Access a complete and editable real Business Model Canvas in our business plan template .

Marketing Strategy

Our marketing strategy is centered on community engagement and education.

We aim to highlight the health benefits of fresh produce and the environmental advantages of buying locally. Our approach includes community events, cooking demonstrations, and partnerships with local health and wellness organizations.

We will also leverage social media to showcase our daily offerings, share tips on healthy eating, and feature stories from our partner farmers.

Additionally, we plan to offer loyalty programs and seasonal promotions to encourage repeat business and attract new customers.

Risk Policy

The risk policy for our fruit and vegetable market focuses on mitigating risks associated with perishable goods, supply chain management, and market fluctuations.

We will implement strict quality control measures and develop a robust inventory management system to minimize waste and ensure product freshness.

Building strong relationships with a diverse group of suppliers will help us manage supply risks and price volatility.

We will also maintain a conservative financial strategy to manage operational costs effectively and ensure business sustainability.

Insurance coverage will be in place to protect against unforeseen events that could impact our business operations.

Why Our Project is Viable

We believe in the viability of a fruit and vegetable market that prioritizes freshness, quality, and community health.

With a growing trend towards healthy eating and local sourcing, our market is well-positioned to meet consumer demand.

We are committed to creating a shopping experience that supports local agriculture and provides educational value to our customers.

Adaptable to market trends and customer feedback, we are excited about the potential of our fruit and vegetable market to become a cornerstone of healthy living in our community.

You can also read our articles about: - the Business Model Canvas of a fruit and vegetable store - the marketing strategy for a fruit and vegetable store

The Financial Plan

Of course, the text presented below is far from sufficient to serve as a solid and credible financial analysis for a bank or potential investor. They expect specific numbers, financial statements, and charts demonstrating the profitability of your project.

All these elements are available in our business plan template for a fruit and vegetable market and our financial plan for a fruit and vegetable market .

Initial expenses for our fruit and vegetable market include costs for securing a retail space in a high-traffic area, purchasing refrigeration units and display equipment to maintain and showcase fresh produce, obtaining necessary permits and licenses, investing in a robust inventory management system, and launching marketing initiatives to attract customers to our location.

Our revenue assumptions are based on an in-depth analysis of the local market demand for fresh, high-quality fruits and vegetables, taking into account the increasing trend towards healthy eating and organic produce.

We expect sales to grow steadily as we establish our market's reputation for offering a wide variety of fresh and locally sourced produce.

The projected income statement outlines expected revenues from the sale of fruits and vegetables, cost of goods sold (including procurement, transportation, and storage), and operating expenses (rent, marketing, salaries, utilities, etc.).

This results in a forecasted net profit that is essential for assessing the long-term viability of our fruit and vegetable market.

The projected balance sheet will reflect assets such as refrigeration and display equipment, inventory of fresh produce, and liabilities including any loans and operational expenses.

It will provide a snapshot of the financial condition of our market at the end of each fiscal period.

Our projected cash flow statement will detail all cash inflows from sales and outflows for expenses, helping us to predict our financial needs and ensure we have sufficient funds to operate smoothly.

The projected financing plan will outline the sources of funding we intend to tap into to cover our initial setup costs and any additional financing needs.

The working capital requirement for our market will be carefully managed to maintain adequate liquidity for day-to-day operations, such as purchasing fresh stock, managing inventory, and covering staff wages.

The break-even analysis will determine the volume of sales we need to achieve to cover all our costs and begin generating a profit, marking the point at which our market becomes financially sustainable.

Key performance indicators we will monitor include the turnover rate of our inventory, the gross margin on produce sales, the current ratio to evaluate our ability to meet short-term obligations, and the return on investment to gauge the profitability of the capital invested in our market.

These metrics will be instrumental in assessing the financial performance and overall success of our fruit and vegetable market.

If you want to know more about the financial analysis of this type of activity, please read our article about the financial plan for a fruit and vegetable store .

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SRQ Airport CEO: We have more than enough land to expand

Sarasota-bradenton international airport ceo rick piccolo says available land can support passenger terminal growth without the 31 acres it leases to new college of florida..

• By Andrew Warfield
• | 5:00 a.m. June 20, 2024
• | 2 Free Articles Remaining!

• Manatee-Sarasota

The wall-to-wall windows that surround Rick Piccolo's office on the third floor of the terminal building provide a bird's-eye view of the airfield activity at Sarasota-Bradenton International Airport.

Sitting at a window-side round meeting table, he points across the tarmac and says, “If we ever need to expand, we can always do it over there.”

“Over there” is the northeastern portion of property owned and managed by the Sarasota-Manatee Airport Authority, of which Piccolo is president and CEO. There, a collection of commercial businesses lease space from the airport.

Southwest of the terminal, the airport owns more than 100 acres with plans for future revenue-producing commercial development along University Parkway, shared rental car preparation and staging area plus additional parking, which will be needed when sometime in the future it goes vertical on the short-term lot with a four-level parking structure. 

There, plans are for the first two levels to house quick-turn car rental service below two levels each with about 500 parking spaces. That construction will include a new arrivals roadway, which will separate arrival and departure passenger traffic. Baggage claim will also be relocated there and the current luggage pick-up space repurposed.

If expanding “over there” ever were to become necessary it would be well beyond 2050 based on SMAA and the more conservative Federal Aviation Administration passenger count projections.

The SMAA forecast projects 4 million boardings will require 29 gates by 2050, four shy of the airport's complete build-out plan of 33 gates. Boardings, or enplanements, are departing passengers, meaning the total passenger count through the airport, under the call letters SRQ, is approximately doubled.

Projections by the FAA are lower. It forecasts growth rates of 1.2% per year from 2026 to 2030 with an aggregated 1.2% growth rate between 2024 and 2040 and also between 2024 and 2050. Both growth rate projections are low compared to SRQ's recent growth and the FAA's national forecast for domestic passenger enplanements.

The growth projections aren't merely academic talking points. The data is also relevant to a an ongoing conflict: the attempt by SMAA to sell 31 acres currently leased to New College of Florida, where its East Campus is immediately adjacent to the loop road around the airport’s parking lot. 

Piccolo has appealed the FAA’s rejection of the plan to sell the property to New College for $11.5 million. Former SRQ Director of Facilities John Schussler, who retired in 2017, has actively opposed the sale and as such has lobbied the FAA, insisting the airport will need that land for future expansion when the 99-year, well-below market-rate lease with New College expires in 2056.

More parking 

The airport's master plan at full buildout, Piccolo says, indicates the site occupied by New College is disposable. Parking is not a concern to him as a new 500-space remote lot opened at the corner of University Parkway and Old Bradenton Road late last year, and another lot just north of the terminal is under construction. More as-yet unpaved lots along Rental Car Road are also currently available for overflow vehicles.

In all, 1,100 spaces will have been added by the time the new five-gate ground boarding facility opens late this year, the first of a three-phase project that will eventually bring 15 new gates, a net of 14 gates with the loss of Gate B2 to the construction.

Piccolo says there is adequate parking included in the expansion plans, but wonders if even that will be necessary.

“Thirty years from now are people still driving their cars or using some other means of transportation?” Piccolo says. "A quarter of millennials don't even think they need a car, and so how does it affect your parking? When you build a parking structure, today it costs about somewhere between $40,000 and $50,000 per space, so you do a revenue bond and 25 years from now, how many of those people will be parking cars in order to pay off the bond?

"Those are the kinds of things we have to think about when planning for parking.”

The evolution of self-driving vehicles, he adds, that won’t need to park and wait for their owners to return, and the anticipation of vehicle sharing rather than individual ownership will require less parking demand even as the airport grows.

The airport’s current master plan shows $35 million in parking improvements and expansion that will take it to 2040 when, if passenger projections hold true, more will be needed. That is unless alternatives to personal vehicles abate parking requirements.

“If you go vertical you’re virtually unlimited,” Piccolo says.

If not parking, the New College land could be used to generate revenue, but not without considerable cost. Between now and 2056, the undervalued lease is anticipated to generate only about $3.5 million. Afterward, the costs to remove any structures there at that time would likely be even higher. 

“It would be 2056 before you'd have it available anyway, so you live with this tremendously undervalued lease for another 31 years. Even if we need it in 31 years when the lease expires, do you think they wouldn't fight us?" Piccolo says, transitioning his thoughts to the New College perspective. "It’s our 100-year anniversary and you want to kick us off because you need to put some parking here? Put your parking someplace else or let's work cooperatively.”

Cooperatively as in build a parking structure along General Spaatz Boulevard large enough to meet both airport and college needs. “There are many ways that this could be done,” he says.

Enough capacity

Between 2017 and 2023, boardings at SRQ, largely fueled by post-pandemic travel beginning in 202, experienced explosive growth, from 593,830 per year to 2.16 million. That's up 263.4%. The SMAA projections anticipate a slower annual growth rate of about 2.7% starting in 2026.

“We had this fantastic growth that was unprecedented, but it wasn't going to continue forever," Piccolo says. "We're projecting probably a 2% increase in passengers next year, because things are starting to bottom out a little bit because of a number of factors.”

Those include aircraft safety issues experienced by both Boeing and Airbus, impacting production and limiting the supply of new aircraft and reducing the number of total seats in the air. 

The five new ground boarding gates have already been leased to Allegiant, which has yet to announce routes and the number of flights per day. Piccolo says he anticipates the new gates to bring 2.2 million more passengers traveling through SRQ.

When, or for that matter if, an extension of the new Concourse A is built to connect with Concourse B, that brings a net gain of three gates, followed by a future expansion of another five ground boarding gates. Depending on travel trends at that time, SRQ's expansion could be done for several years.

Currently, gates at SRQ average about 166,000 passengers each per year. The projected future average is 140,000. The current expansion alone will take SRQ to about 3 million boardings per year, or about 6 million total passengers.

“The FAA forecast says that we will hit just under 3 million enplanements in 2050, so I can make a cogent argument right now that when we finish the Terminal A extension, we will have enough gate capacity to go another 25 years before we would even need to build Phase 2 of this terminal," Piccolo says. "Theoretically, this will be enough without adding Concourse C until 2050.”

This article originally appeared on sister site YourObserver.com.

Andrew Warfield

Andrew Warfield is the Sarasota Observer city reporter. He is a four-decade veteran of print media. A Florida native, he has spent most of his career in the Carolinas as a writer and editor, nearly a decade as co-founder and editor of a community newspaper in Mecklenburg County, North Carolina.

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My online business selling wellness products made $3.8 million last year. Here's how I did it using TikTok and how I'm prepping for a ban.

• Mason Kuhr, 25, launched an online business selling wellness products in 2021 after college.
• His business brought in $3.8 million in sales in 12 months, partly due to advertising on TikTok. 
• Kuhr predicts his sales could drop 50% if TikTok is banned in the US. He's preparing for the worst.

This as-told-to essay is based on a conversation with Mason Kuhr, a 25-year-old business owner living in the US, about the potential TikTok ban. The following has been edited for length and clarity.

I'm skeptical about a TikTok ban in the US. But if it were to happen, I estimate that my $3.8 million business would be cut by half. So, I choose to be prepared rather than caught off guard.

I launched my business, The Stampede Network , in 2021. I was 22, fresh out of college, and at the end of my athletics career. I moved into my parent's basement without knowing what I wanted to do, but I knew it wasn't working 9-to-5.

I lived with my parents with no income of my own. I had some savings. I used it all to experiment with dropshipping, but nothing took off.

My weight-loss journey was the beginning of my business

I started struggling with weight issues. After completing a self-transformation program and getting back in shape, I signed up for TikTok in March 2021 and started posting about my weight-loss journey.

Four months later, my TikTok account had 10,000 followers; by the end of 2021, I had 74,000 followers.

I unsuccessfully tried to monetize my following by selling ebooks, fitness programs, and merchandise.

Flipping through different wellness forums searching for new products to sell, I stumbled upon a discussion about a company making bee bread pastilles made of pollen. The company offered fulfillment services for third-party sellers, so I ordered a sample.

Bee bread is a natural superfood, and I loved the product. I added them to my Shopify store, connected with the manufacturer's order fulfillment service, and made a 60-second TikTok video about my new product. In a matter of minutes, people went crazy about it.

By the end of the day, the video had generated over 1.2 million views. And I had made over $25,000 in sales.

I've relied on the same sales tactic from day one

The pastilles sold well, but I realized one product wouldn't be enough for my business to grow. I've continually expanded my offering, introducing new wellness products to boost sales and brand recognition. I switched from third-party fulfillment services to ordering products in bulk and handling order fulfillment in-house. In the last 12 months, we made $3.8 million in sales.

Related stories

I regularly create and post content on my TikTok promoting my product. I experiment with messages, hooks, and angles.

I hire other TikTokers using Creators Corner to replicate my best-performing videos. These creators produce their videos, sticking to my script but adding a personal touch.

Later, I gather all the creators' stats to see which posts have generated the most traction. This data shows me which pain points and messages resonate most with the audience.

Finally, I produce a new video that embodies all the best-performing elements and scale it up with targeted ad spending to maximize sales. I can spend as much as $150,000 a month on TikTok ads.

Last year, I made $3.8 million in sales, with a third from TikTok

My company's revenue is evenly split between TikTok Shop, Amazon, and Shopify store sales. If TikTok were taken down, I'd lose one-third of my sales overnight.

However, many customers discover my products on TikTok and then purchase them on Amazon or Shopify. So, TikTok's impact on my business is greater than the direct sales it generates. In total, my revenue might drop by up to 50%.

The Stampede Network would be one of many businesses in the US that would suffer if TikTok was banned .

I understand why US officials are suspicious of TikTok . If the Chinese government owns and controls the platform, I see how it risks national security. Conversely, TikTok brings a lot of money into the American economy, so the government is cautious about hasty decisions regarding its ban.

I feel that TikTok doesn't believe the ban will happen. They've made enormous investments to launch their shop feature in the US, including the Fulfilled by TikTok services and fulfillment centers nationwide. I'm skeptical the ban will ever go through.

I have an action plan in place if TikTok gets taken down

In such a case, YouTube would become my business' primary social media platform. I'm getting familiar with the platform since its audience differs from TikTok's.

For example, TikTok users are highly spontaneous buyers. Whereas YouTube users make more informed buying decisions. I'm learning how to talk to a YouTube audience to succeed on this platform.

If you're freaking out about the TikTok ban, I'd suggest you choose a back-up platform and start to make yourself familiar with its users. Experiment with content and ads to learn what works and what doesn't.

I also suggest growing your email list. I regularly remind my TikTok followers to subscribe, allowing us to stay in touch, whatever happens. Email is a powerful tool for both community building and generating sales.

And while TikTok is still here, I'm just going to milk it as much as possible — I'm planning to spend on ads like there is no tomorrow. Because there might not be.

Watch: TikTok could be banned in US after House vote

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Carlyle creates new Med oil and gas company with $945 mln Energean deal

Carlyle will form a new Mediterranean-focused oil and gas company led by former BP CEO Tony Hayward after the private equity fund agreed to acquire Energean's assets in Egypt, Italy and Croatia for up to $945 million, the companies said on Thursday.

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Can Apple Rescue the Vision Pro?

The $3,500 “spatial computing” device has gathered dust on my shelf. Can tweaks and upgrades save it from obsolescence?

By Kevin Roose

Reporting from Cupertino, Calif.

When I first got my hands on an Apple Vision Pro early this year, it felt like magic.

I loved the $3,500 “spatial computing” headset, even though I couldn’t really figure out what it was for. For weeks, I took it everywhere, enduring judgmental glares (or were they jealous stares?) from colleagues at the office, strangers at coffee shops and fellow passengers on airplanes. I even used the Vision Pro in the back seat of a self-driving Waymo car, which I believe qualifies me for some kind of “Mr. San Francisco” award.

But novelty fades, and today I barely use the Vision Pro at all. Every few weeks, I strap it to my head to do some focused writing, or watch a movie in bed while my wife sleeps. Otherwise, it sits on a shelf collecting dust.

Apple hasn’t released sales figures, but analysts’ estimates suggest that the device has been a flop, selling fewer units than expected. Social media isn’t buzzing with videos of enthusiastic “Vision Bros” wearing their headsets in public, as it was in the days after the device’s release. Some early adopters returned their Vision Pros for refunds, and lightly used headsets are selling for as little as $2,500 on resale websites.

When I took a casual poll of other Vision Pro owners I know — mostly journalists and tech workers — I learned that few of them were using theirs, either.

“Haven’t touched mine in a month,” one friend texted. “It’s a shame, I was so bullish.”

At its annual developer conference on Monday, Apple announced a few new features for the Vision Pro, including a new version of its VisionOS operating system, new gesture controls and a way of turning old photos into 3-D “spatial photos” that can be viewed on the device. Apple also said it would soon begin selling the Vision Pro in countries including China, Japan and Britain.

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Microcity Sales Office by Mossine Partners, Moscow, Rusia

Mossine Partners have designed this futuristic bubbles structure as a temporary sales office. It is located in Moscow region, Russia.The initial design was created by Studio Mossine Partners and resembles the use of membrane as a structural elements. This temporary structure meets all requirements and apart from creating a very innovative facade system. The structure houses a showroom and office for the real estate company that’s developing the site. The internal program is organized into three zones: the largest central ‘bubble’ houses an exhibition area with 1:1 apartment models. Branching off this are two smaller ‘bubbles’ with a sales area for managers in one and a relax area, complete with café and playroom for children, in the other.

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