Sales form the backbone of every business. Irrespective of the nature and size of any business, sales always play a vital role towards its growth and success. Therefore, it’s very essential for every organization to know about their future sales.

Based on certain facts and after a long, & detailed research and analysis, sales prediction is done. This is called sales forecasting. So, sales forecasting can be defined as a way of estimating sales figure of an organization for the coming months or years on the basis of various factors like past performances, market pattern, techniques adopted, present knowledge and experiences.

Every organization big or small includes sales forecasting in their business plan. In fact, it’s the sales figures, which decides the business plan. Directly or indirectly all the marketing plans and their strategy involved in a business plan of an organization are linked to sales.

Sales forecast is formed on the basis of past sales statistics, current sales statistics; present sales trends and various market governing factors etc.This holds true for an already established business organization. However, for setting the sales forecast of a new business, marketing factors like present market trend, certain research based assumptions and its competitor’s sales and growth rate are taken into consideration. The detailed research for new organization is performed keeping in mind the common factors like geographical location, nature of business, similar customer base, buying and purchasing power of their end users etc.

Sales contribution towards any organization is indispensable. That is, its contribution towards organizational growth cannot be ignored. Business plan without sales forecast is incomplete. So, sales forecasting must be an essential part of every business plan. Sales forecasting has numerous benefits. In other words, sales forecast defines an organization.

Revenue is important for every business. Sales is the only source of generating revenues which helps the organization in fulfilling its expenses like salary of their employees, purchasing of raw material , infrastructure expense and various other operation related costs. Sales forecast helps in predicting the probable future sales and thus helps in determining the profit. It helps in keeping a check on its expenses. Thus, sales forecast form the part of financial planning of every organization.

Sales forecasting is an essential management tool which helps the organization to take its decision based on its investment and probable return. It provides a balance in meeting the demand and supply of the consumers. Based on its sales forecast, if the organization can foresee an increase or decrease in its demand then it can act accordingly to avoid loss.

So, if there is a probability of decline in sales a smart organization would cut down on its expenses for the coming months or would look for other alternatives to increase its sales. On the other hand, if the organization can foresee an increase in sales, it should accordingly increase its inputs to increase the production volume .Thus, sales forecast helps an organization to run its business smoothly and efficiently.

Every organization aims at climbing the ladder of success. Sales forecasting, provides a platform to organizations to achieve their sales target. This in return, determines the success of the organization.

Sales forecasting helps an organization to estimate its growth and success. It helps them to analyze and compare its growth. Sales forecast thus helps in determining its profitability. Beside this, sales forecast also helps the organizations to calculate its growth rate, market share, its market position as well as its competitor’s growth rate and success. All these finally motivate an organization to perform better and lead the market.

Thus we see that, sales forecasting forms the base for self-assessment. With the help of past records and other present market trends, sales forecasting helps the organization to know exactly where it stands and what will be its future. This in return helps the management to take corrective action and plan a more efficient and effective marketing strategy.

Every new business involves lot of investment. Here, all the things need to be started from scratch .So, it’s very essential to keep a track of all the expenses along with the future sales prospects in the business plan. This helps in deciding upon the growth or failure of the business. Thus, sales forecast helps in predicting the potential return on investment.

Whether it is a new business or a well established business, sales forecast helps in taking various management decisions which are accountable for the viability of the business. A successful sales forecast is responsible for a successful business plan. In other words, sales forecast helps in planning and achieving the desired amount of profit. This in return, helps in running an organization smoothly and efficiently.

Sales forecast helps to predict return on investment and hence it’s used as a management tool to attract new investors. To start a new business or expand an existing business, finance is needed. No bank provides loan until they are assured that the money they are lending to an organization will be returned back. Even in such situations, sales forecast figures are used in convincing the banks to give loans. After all, it’s figures that matter and sales forecast provide those figures to convince the bankers.

Sales forecast helps in determining the demands of the consumers. This in return helps in extracting details like –

• Knowledge about the consumers
• Their buying behavior
• Their buying trend
• Sales trend of the market

All these help an organization to provide satisfaction to its customers by meeting their needs and demands. This further helps in building – Loyal consumers & Brand Name of the organization

Sales forecast helps an organization to know about the pattern and sales trend. With the help of this information, organization plan and increase its production capacity to meet the demand. This increases the productivity and hence efficiency of an organization.

Sales forecast helps an organization to keep a control over its expenses. Thus, it contributes towards incurring low cost and increased revenue . Thus, sales forecast helps in getting high profit for an organization.