Planning Your Marketing

7. Sales and Profit Forecasts

Draw up a budget for the year ahead, showing what you aim to achieve in terms of sales and profits. Then prepare forecasts showing what you expect to achieve. These forecasts should be updated monthly, looking 12 months ahead.

7.1 Base your sales budget and forecasts on last year's sales figures, so you start from a basis of solid fact.

Make adjustments, allowing for changes in the market and account for the impact of each aspect of your marketing activity.

• If the previous year included exceptional one-off sales, assume they will not be repeated this year.

7.2 Focus on the sales you expect to make to your main customers, as these are usually the best indication of overall sales levels.

7.3 If you understand what the 'drivers' are behind the sales figures, it is easier to forecast sales.

• For example, the number of sales leads may be crucial for one business, but the morale of staff may be crucial to another.

7.4 At the start of each year do three forecasts - pessimistic, realistic and optimistic. Plan how you would handle each scenario.

• State the assumptions behind each forecast. For example, major orders, fashion trends or growth in your sales force.If an assumption turns out to have been optimistic, you are immediately warned that the sales will be lower as a result.
• Sales forecasts for new product launches and business start-ups are notoriously difficult - be extremely conservative until results prove you wrong.