How To Plan for Startup Success With Practical Sales Forecast Examples
What is Sales Forecasting?
Sales forecasting is a data-driven process of preparing an estimate of the expected sales of a restaurant or retail business during a particular time period, say a month or quarter. Forecasts consider several factors, including the efforts put in by sales teams, business plans and sales cycles. The better your sales forecasting, the more accurate your numbers and marketing efforts.
Sales forecasting earlier depended on the intuition of the sales team and sales reps of a company. Today, thanks to artificial intelligence (AI), the process has become far more accurate. Modern forecasting methods simplify the prediction of future sales by studying a company's historical data, sales patterns and the market situation.
Why is it Important to Forecast Sales?
Imagine you are running a quick service restaurant that sees lean business at certain times of the year. But it is expecting better sales around Christmas and New Year. While it is aware that the footfall may increase, the business owners and managers are not completely sure about the kind of numbers they may see. So how will they prepare in advance with inventory?
This is where a sales forecasting system can help plug the gap. Forecasting tools will study monthly sales patterns, understand the market scenario and accurately identify the kind of future sales the eatery should expect. Accordingly, the restaurant can plan its additional manpower, inventory stocks, marketing efforts, and so on.
With accurate sales predictions, a business is better prepared to meet its customer demands, keep sales leaders happy and achieve the desired revenue figures. This also helps in the overall growth of a company. If the sales forecast miss the right numbers, the entire business plan is likely to be hit. From customer service to delivery, business growth and revenue, everything will get affected.
Planning for sales forecasts is a difficult task. There are so many tools out there, it can be hard to know which one to use.
These sales forecast examples will help you draw up an accurate plan with the right tools.
There are primarily two kinds of Sales Forecasting methodsqualitative and quantitative methods. Qualitative forecasting methods are applied when there is no data to bank upon and predictions are subjective. On the other hand, quantitative methods of sales forecasting are heavily dependent on data, and sales leaders rely on calculations to arrive at a sales forecast.
Qualitative forecasting method-
Qualitative methods of sales forecasting are purely based on the intuitions, opinions and judgement of the sales teams, sales reps and their sales leaders, experts, and other industry leaders. This is a process of gauging customer mood and demand and making sales forecasts accordingly, while also considering a number of factors that may affect the primary customer's attitude towards the business.
Quantitative forecasting method-
Quantitative methods of sales forecasting, such as test marketing or time series analysis, take into consideration large volumes of historical data, sales processes and monthly sales plans, and marketing efforts, before predicting future sales. For example, the test marketing method uses surveys and promotional campaigns to gauge the audience's reaction to a business plan. These forecasts will generate a bank of data that the company can use to understand the customer's mood and make sales forecasts accordingly.
How to Create a Sales Forecast for a New Business
While opening a new restaurant may seem like a daunting task, sales forecasts can make the job easier. And contrary to common belief, it doesn't require heavy-duty number-crunching to forecast salessimple math will get this right. So how does one go about it?
- Talk to experts, industry leaders and fellow restaurant owners who have already seen market trends and sales patterns and can help you. Be realistic with your estimates and sales expectations for the near future.
- Hire an accountant, but also try to understand the simple math you may have to use for these sales forecasts.
- Conduct extensive market research that can help you make informed assumptions about your future sales. Familiarize yourself with market trends and see how they might affect your business.
- Know your restaurant floor and its exact capacity. The square footage of your establishment, number of tables and seats, operation hours and pricesall of these need to be factored in to make accurate sales forecasts.
Sales Forecasting Examples
1. Opinion surveys- In a hypothetical situation, restaurant-goers are asked what kind of dining experience they prefer, at what time slot, what their food preferences are, and what kind of a menu/cuisine attracts them most. This kind of an opinion survey or buyer intention survey will help new restaurant businesses conduct qualitative sales forecasting by gauging the customer mood and demand, market trends and what will sell.
2. Market tests- Market testing or controlled experiments is another qualitative forecasting method that can be used to test a product or a new menu or a new dish. It can be done by launching a new dish or brunch menu to tests patrons' reactions. This will help the business owner understand if the market is ready for the new item.
3. Multi-factor forecasting- This process takes into account a number of factors that can affect a business's sales, including seasonal spikes, holidays, the prevalent economic situation, market trends and competitor actions.
An accurate sales forecast is crucial to any new business. It’s the only way to know whether you can achieve your goals or not.
This article will teach you how to plan for success with practical sales forecast examples.
How Can Sales Forecasting Software Help?
1. Better customer knowledge- Sales automation and sales forecasting help sales reps achieve a holistic view of their customers and their buying behavior while at the restaurant. Tools like Predictive Analytics help sales teams make better use of the historical data of the customer base to arrive at better business decisions. Not only will the software help sales teams better understand their customers and their purchase patterns, but also market trends. This will help sales leaders engage with customers in a far more involved and efficient manner.
2. Increase productivity- With accurate sales predictions and targets in mind, your sales teams will have a better vision to chase. This will ensure better productivity and business growth. Moreover, with the burden of manual sales forecasting gone, your sales team can shift its focus to business growth and revenue generation.
3. Optimize sales processes- Sales forecasting software comes with a bunch of tools that help sales reps with insights and analytics on their marketing efforts, sales processes and sales cycles. These insights can help sales teams take a deep dive into the operation and take corrective action or apply growth measures as needed.
3 Sales Forecasting Software Solutions for New Restaurants
1. Zip Forecasting- This automated forecasting tool can be completely tailored to your restaurant needs to maximize profits. Zip Forecasting is a dedicated software meant for restaurants that provides sales forecasts in real-time. Its automated and accurate forecasting methods will analyze your data to help you easily anticipate demand and optimize labor scheduling and inventory levels. This in turn will reduce food and labor costs. Zip Forecasting also promises guaranteed profitability with its easy-to-useforecasting methods. The software can be downloaded from Hubworks, a one-stop online restaurant management shop.
2. Pipedrive- This forecasting software pulls up a company's sales pipeline to point out system flaws and bottlenecks that drag down the business. Your sales teams will be better equipped to address the drawbacks and optimize the system for better growth and sales. The Pipedrive dashboard further helps sales reps arrive at a real-time sales performance analysis.
3. Gong.io- This software allows sales teams to visualize the entire customer journey and address each touchpoint and their specific needs. The software also helps businesses establish a communication channel with their customers to get better feedback and immediate results in terms of sales. Gong.io makes it easier to monitor sales numbers, and thus form accurate sales predictions.
Building a business is hard. There are so many things to consider, and you’re not sure where to start.
An accurate sales forecast will help you plan for success. These examples will help you understand what it takes to draw up an accurate plan that meets your goals.