Sales forecasting is the process of estimating what your business’s sales are going to be in the future. In addition, sales forecasting is an integral part of business management. Without a solid idea of what your future sales are going to be, you can’t manage your inventory or your cash flow or plan for growth. The purpose of sales forecasting is to provide information that you can use to make intelligent business decisions.
Sales forecasting for an established business is easier than sales forecasting for a new business; the established business already has a sales forecast baseline of past sales. A business’s sales revenues from the same month in a previous year, combined with knowledge of general economic and industry trends, work well for predicting a business’s sales in a particular future month.