In recent years there has been a surge in the popularity of advanced business management software applications, including sales forecasting software. Powerful tools such as these have a proven, demonstrably positive effect on helping to grow successful businesses and as the readiness of availability increases so to do the number of organisations pushing to the next level through utilising such systems. But just how does sales forecasting software benefit today’s businesses and what will it actually achieve for your business?
Why is Sales Forecasting Important?
Any successful business owner will tell you that sales forecasting is essential in order to map out your business’ growth path and plan effectively for the future. After all, it is your sales that will ultimately determine whether you succeed or fail, and if you have nothing more than guesswork to work from, you’re going to be relying on sheer luck to achieve any level of success. It might happen, but it very well may not, and you don’t want to waste time and money on a venture doomed from the start thanks to poor planning. Some of the primary reasons for planning your sales forecasting are outlined below:
Whether you’re a fledgling start-up or a well established operation looking to reach the next level, achieving outside investment will be critical to your growth ambitions. But investors aren’t stupid and they’re going to want cold hard figures to back up your lofty ambitions. If you’ve not got sales predictions for year one, year two, year three and beyond, you’re basically asking investors to take a gamble on you. Investors don’t gamble. They may take calculate risks, but there’s nothing calculated by taking you at your word. You need statistics, figures and forecasts.
In many instances you can really get the edge on your competitors by benefitting from the expert coaching and advice of your wealthy and successful backers. But they won’t be backing you unless you’ve done the groundwork and shown what’s achievable.
With all the best will in the world you just can’t plan for every eventuality, but you can prepare yourself to deal with the unexpected. If you’re caught short by equipment failure, rising costs, loss of staff or even a force majeure you’re either going to be scrabbling around trying to find investors to help bail you out or you’re going to dip into the cash reserves your budget allowed for. If you’ve successfully determined your future sales figures you can far better gauge how to budget for peaks and troughs as well as for those situations which nobody can predict. It’s not rocket science, but budgets don’t write themselves and your budget needs forecast figures.
Assess Inventory Levels
If your business sells tangible products then you need to be able to predict with some confidence how much stock you’re going to need in order to meet demand. But similarly you don’t want to have a warehouse overflowing with goods you aren’t going to shift, costing you money for every day it takes up valuable space. Get the balance right and you’ll be running a streamlined tight ship operation.
Determine Production Capacity
Whether you make goods or you sell a service, your business’s production capacity will always fluctuate. Sometimes this will be dictated by seasonal variances whereas other times it could be affected by other variables. Just like the stock levels, balance is everything. Having a far greater capacity than required means you’re wasting money and resources, whereas being under capacity, unable to meet demand, will have a detrimental effect on your ability to keep your customers and your staff happy.
If you’re selling consumer goods then you can probably expect to see demand rise before Christmas. But demand planning won’t always be this easy and without forecasts based on accurate information, previous figures and predicting trends, you could all too easily lose out. If you can’t fulfil your orders, you can bet that somebody else out there will.
Plan your Marketing
Different marketing channels work for different businesses and your marketing strategy needs to take into consideration whether you go all out to push your sales when demand is at its highest or if you’re going to target the drier times of the year when the figures need a boost. Achieving true value from your marketing will be determined by how you’ve fitted you campaigns around your forecasting.
The Use of Sales Forecasting Software
Because sales forecasting software is generally offered in a Software as a Service (SaaS) format, utilising cloud computing power to make it more accessible to the masses, there are now far more opportunities for smaller businesses and new ventures to take advantage of its many benefits. Where once accurate sales forecasting would require considerable time and human resources in order to compile all the relevant data, often long after the periods to which it would relate, it is now a quick, simple and cost effective process to automate using state of the art software to do the hard work for you.
Whilst the businesses of today must navigate the many obstacles presented by financial uncertainty across the globe, they do benefit greatly from the advancements in technology that have slashed hours, if not weeks and months from the time taken to perform what are now routine tasks.