Any forecast can be termed as an indicator of what is likely to happen in a specified future time frame in a particular field. Sales forecasting is the process of estimating future sales. Accurate sales forecasts enable companies to make informed business decisions and predict short-term and long-term performance. It forms a basis of sales budget, production budget natural budget etc.
The purpose of sales forecasting should be to provide information that you can use to make intelligent business decisions.
Factors that Considered for Sales Forecasting:
Following factors should be considered while making the sales forecast:
To assess demand, it is the main factor to know about the existing and new competitors and their future programme, the quality of their product, sales of their product. The opinion of the customers about the products of other competitors with reference to the product manufactured by the firm must also be considered.
- Changes in Technology:
With the advancement of technology, new products are coming in the market and the taste and the likings of the consumer’s changes with the advancement and change of technology.
- Government Action:
When the government produces or purchases then depending upon the government policy and rules, the sales of the products are also affected.
- Factors Related to the Concern Itself:
These factors are related to the change in the capacity of the plant, change in price due to the change in expenditure, change in product mix etc.
Accurate sales forecasting is essential for a business house to enable it to produce the required quantity at the right time. Further, it makes the arrangement in advance for raw materials, equipment’s, labor etc. Many firms manufacture on the order basis, but in general, every firm produces the material in advance to meet the future demand.