business plan monthly sales forecast

Sales | Templates

9 Free Sales Forecast Template Options for Small Business

Published March 7, 2023

Published Mar 7, 2023

REVIEWED BY: Jess Pingrey

WRITTEN BY: Jillian Ilao

This article is part of a larger series on Sales Management .

• 1 Simple Sales Forecast Template
• 2 Long-term Sales Forecast Template
• 3 Budget Sales Forecast Template
• 4 Month-to-month Sales Forecast Template
• 5 Individual Product Sales Forecast Template
• 6 Multi-product Sales Forecast Template
• 7 Retail Sales Forecast Template
• 8 Subscription-based Sales Forecast Template
• 9 B2B Lead Sales Forecast Template
• 10 CRMs with Built-in Sales Forecasting
• 11 Frequently Asked Questions (FAQ)
• 12 Bottom Line

Using a sales forecast, business owners can create realistic projections about incoming revenue and business performance based on their current data and how they have performed in the past. Sales forecasts may cover weekly, monthly, annual, and multi-annual projections, and can be done using Google Sheets or Excel templates, as well as through customer relationship management (CRM) software.

We’ve compiled nine free sales projection templates you can download. Each downloadable file contains an example forecast you can use as a reference. We also included a blank template you can copy and fill in with your own sales data.

Did you know? Sales forecasts create projections you can use for things like goal setting, performance measurement, budgeting, projecting growth, obtaining financing, and attracting investors. This is why it is important to use software tools or a CRM system that gives you realistic, data-driven forecasts.

1. Simple Sales Forecast Template

Our free simple sales forecast template will help you get started with sales estimates to plan and grow your business. You can modify this multi-year projection sheet in either Google Sheets or Excel. It can also generate future revenue estimates based on units sold, pipeline growth percentages, lead conversion rates, and your product pricing. This gives you an idea of how much your business can grow sales-wise in the next few years.

Sales projection template for multiple years

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FREE Sales Forecasting Template - One-Year

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FREE Sales Forecasting Template - Multi-Year

2. Long-term Sales Projection Forecast

Part of creating a sales plan is forecasting long-term revenue goals and sales projections, then laying out the strategies and tactics you’ll use to hit your performance goals. Long-term sales projection templates usually provide three- to five-year projections. These templates are accessible in both Excel and Google Sheets.

Long-term sales prediction templates are best for businesses looking to scale and want insights about how much working capital they can expect to be able to tap into for growth initiatives. This type of sales projection template is also often required when applying for commercial loans or through other channels such as outside investors or crowdfunding.

Three-year forecast template

Projection of units sold and gross profit from a three-year forecast template

Three-year projection of units sold

FREE 3-Year Forecast Template

FREE 5-Year Forecast Template

3. Budget Sales Projection Template

A budget sales forecast template shows expense estimates in relation to revenue, allowing you to calculate how much you can spend during a specified period. Budget templates will enable you to enter income projections and available cash to indicate your spending capabilities for that time frame.

This type of template is best for new and growing businesses trying to figure out their future available expenditures. Additionally, businesses interested in making a large asset purchase, such as a company vehicle, piece of equipment, or commercial real estate, can use this template to see how much of the asset can be self-financed.

Budget forecast template example

Budget forecast template for services example

FREE Budget Sales Forecast Template

4. Month-to-Month Sales Forecast Template

The month-to-month (or monthly) sales projection template shows sales projections for a year divided into monthly increments. This type of revenue forecast template makes it easier to estimate your incoming revenue. This is because you can break down your pricing model, such as the average number of units sold, on a monthly rather than an annual basis.

This monthly sales projection example is best for seasonal businesses that experience significant revenue fluctuations in some months compared to others. It’s also appropriate for businesses that want to view rolling 12-month projections as a key performance indicator (KPI). You can also use it to project one-year sales estimates before implementing major campaigns or initiatives, such as a growth strategy.

Month-to-month forecast template example

FREE Month-to-Month Forecast Template

5. Individual Product Sales Forecast Template

An individual product sales projection template can be used by businesses that sell one product or service or for projecting sales of a new (or any single) product or service. This forecast indicates how you expect the product to perform based on units sold and the price per unit monthly.

An individual product forecast template benefits businesses that sell products through a storefront or ecommerce medium. It helps businesses that are adding a new product to their arsenal in estimating sales exclusively for that product. It is also recommended for companies that need to track individual performance for the most popular or profitable products.

Individual product forecast template example

FREE Individual Product Forecast Template

6. Multi-product Sales Forecast Template

Use this revenue projection template to generate sales projections if your business sells multiple products. Through this type of template, you can compare the estimated performance of specific products by tracking the units sold and the price per unit. In turn, this will yield a total sales revenue estimate.

The multi-product forecasting template is best for retail or wholesale businesses selling various products. You can also use it to project the revenue of multiple product categories. Here, each “item” represents a category rather than an individual product, and the price per unit is calculated in aggregate.

Multi-product sales forecast template example

FREE Multi-product Forecast Template

7. Retail Sales Forecast Template

A retail sales projection template forecasts revenue for brick-and-mortar stores since it includes data related to foot traffic. The retail sales template calculates projected revenue by year based on foot traffic, the percentage of foot traffic that enters the store, and the scale of conversions or those who make a purchase. Since it has a field for “other revenue,” it can be used by retail stores selling online.

This business forecast template is mostly designed for brick-and-mortar retail businesses. However, a combination of ecommerce and brick-and-mortar businesses, as well as ecommerce operations, can also use this forecast template. The estimated customers passing store data fields can be replaced with website traffic to convert this sales forecast Excel sheet into an ecommerce sales forecasting template.

Retail forecast template example

FREE Retail Forecast Template

8. Subscription-based Sales Forecasting Template

Businesses relying on recurring revenue from sign-ups or contract renewals should use the subscription-based sales prediction spreadsheet. Enter data into the visitor and sign-up fields to show the visitor-to-sign-up conversion rate. Then, enter the number of new customers to show the percentage of sign-ups that convert to paying customers.

This business projection template also helps you track customer churn. It calculates your churn and retention rate based on the number of paying customers at the end of the period compared to the number at the beginning, plus the number of new customers added. Knowing your churn rate is essential since a high or increasing rate of customer turnover could indicate problems with your organization or its products or services.

How to Calculate Churn Rate:

To manually calculate churn rate, divide the number of lost customers by the total customers at the start of the time period, then multiply the result by 100. For example, if your business had 200 customers at the beginning of January and lost 12 customers by the end, you would divide 12 by 200. The answer is 0.06. Then, multiply that by 100, giving you a 6% monthly churn rate.

Churn Rate Calculator

Manual calculation of monthly customer churn rate

The fields of this template can be altered for use by contract renewal businesses like insurance agencies, information technology (IT) companies, and payroll processors. For example, subscribers can be replaced with “leads,” and new subscribers can be replaced with “presentations,” “free trials,” or “demos.” Then, change the churn rate to “non-renewed contracts” to estimate new and recurring business revenue year-to-year.

Subscription-based forecast template example

FREE Subscription-based Forecast Template

9. B2B Lead Sales Forecast Template

A business-to-business (B2B) lead forecast template estimates sales revenue from current deal opportunities in the sales pipeline through business leads. Businesses can use estimated deal values and the percent chance of closing those deals to obtain a sales projection.

This revenue projection template is best for B2B organizations, aka businesses selling to other businesses or organizations, rather than business-to-consumer (B2C) organizations. It can also be used for direct sales prospecting activities and for businesses that submit business proposals in response to solicitation requests.

FREE B2B Lead Forecast Template

CRMs With Built-in Sales Forecasting Features

Sales forecast sample templates are easy to modify. However, customer relationship management (CRM) systems generally offer more robust tools for managing revenue opportunities that can be converted into sales forecasts. They are valuable tools for providing sales predictions on premade charts through the data collected in the system. Below are examples of CRM platforms that could double as great sales forecasting software :

• HubSpot CRM

HubSpot CRM can instantly create revenue projections or automatically produce these reports for you monthly or quarterly at no additional cost, saving you time and helping your business stay on track.

Users can easily generate sales prediction reports on HubSpot with their historical data. (Source: HubSpot )

Starting price: Free for unlimited users or $45 per month (annual billing) for two users

Visit HubSpot

Pipedrive can take information such as potential deal value and probability of closing for a lead or opportunity to provide sales estimates in highly customizable templates.

Pipedrive weighted deal forecasting (Source: Pipedrive )

Starting price: $14.90 per user, per month (annual billing)

Visit Pipedrive

Zoho CRM provides sales forecasting through its native integration with Zoho Analytics, which analyzes and visualizes the data. Users can customize their forecasts by viewing them on different visual channels, including line, bar, and scatter charts.

Zoho Analytics sales prediction (Source: Zoho )

Starting price: Free for three users or $14 per user, per month (annual billing)

Providing the right tools for your sales team to organize leads, communicate with prospects, and analyze sales data is crucial for streamlining a sales operation, one of many responsibilities of a sales manager. Other insights for managing your sales team can be found in our ultimate guide to sales management .

Visit Zoho CRM

Frequently Asked Questions (FAQ)

Why is sales forecasting essential.

Sales forecasting provides a clear picture of your anticipated sales performance based on the number of opportunities in your pipeline and the industry that your business operates in. Having visibility will help you plan your business correctly—especially when the forecast is downward, and you need to scout for new opportunities to meet your sales targets.

What is a sales forecast template?

A sales forecast template is a predesigned spreadsheet that allows businesses to project their future sales revenue for a specific period. It is typically based on historical sales data figures and market trends. It also includes various factors that may potentially affect future sales performance, such as new product launches, seasonality, economic conditions, and changes in consumer behavior.

Bottom Line

Business forecast spreadsheets are available in both Excel and Google Sheets templates as well as other premade templates you can download, customize, and use. You may also take advantage of CRM features that organize, estimate, and visualize your company’s sales information, including sales predictions.

A CRM can save sales reps time in making projections as well as optimize your sales pipeline to generate leads and close more deals. We highly recommend CRMs such as HubSpot CRM , Pipedrive , and Zoho CRM , which all provide excellent sales forecasting features on top of robust sales management and lead nurturing tools.

About the Author

Jillian Ilao

Jill is a sales and customer service expert at Fit Small Business. Prior to joining the company, she has worked and produced marketing content for various small businesses and entrepreneurs from different markets, including Australia, the United Kingdom, the United States, and Singapore. She has extensive writing experience and has covered topics on business, lifestyle, finance, education, and technology.

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Sales forecasting: How to create a sales forecast template (with examples)

A strong sales team is the key to success for most companies. They say a good salesperson can sell sand at the beach, but whether you’re selling products in the Caribbean or Antarctica, it all comes down to strategy. When you’re unsure if your current strategy is working, a sales forecast can help.

What is a sales forecast?

A sales forecast predicts future sales revenue using past business data. Your sales forecast can predict a number of different things, including the number of new sales for an existing product, the new customers you’ll gain, or the memberships you’ll sell in a given time period. These forecasts are then used during project planning to determine how much you should allocate towards new products and services. 

Why is sales forecasting important?

Sales forecasting helps you keep a finger on your business’s pulse. It sets the ground rules for a variety of business operations, including your sales strategy and project planning. Once you calculate your sales projections, you can use the results to assess your business health, predict cash flow, and adjust your plans accordingly.

An effective sales forecasting plan:

Predicts demand: When you have an idea of how many units you may sell, you can get a head start on production.

Helps you make smart investments: If you have future goals of expanding your business with new locations or products, knowing when you’ll have the income to do so is important. 

Contributes to goal setting: Your sales forecast can help you set goals outside of investments as well, like outshining competitors or hiring new team members.

Guides spending: Your sales forecast may be the wake-up call you need to set a budget and use cost control to reduce expenses.

Improves the sales process: You can change your current sales process based on the sales projections you’re unhappy with.

Highlights financial problems: Your sales forecast template will open your eyes to problem areas you may not have noticed otherwise. 

Helps with resource management: Do you have the resources you need to fill orders if it’s an accurate sales forecast? Your sales forecast can guide how you allocate and manage resources to hit targets.

When you have an accurate prediction of your future sales, you can use your projections to adjust your current sales process.

Sales forecasting methods

Sales forecasting is an important part of strategic business planning because it enables sales managers and teams to predict future sales and make informed decisions. But why are there multiple sales forecasting methods? Simply put, businesses vary in size, industry, and market dynamics, so no single methodology suits all.

Choosing the right sales forecasting method is more of an art than a science. It involves:

Analyzing your business size and industry

Assessing the available data and tools

Understanding your sales cycle's complexity

A few telltale signs that you've picked the correct approach include:

Improved accuracy in sales target predictions

Enhanced understanding of market trends

Better alignment with your business goals

Opportunity stage forecasting

Opportunity stage forecasting is a dynamic approach ideal for businesses using CRM systems like Salesforce. It assesses the likelihood of sales closing based on the stages of the sales pipeline. This method is particularly beneficial for sales organizations with a clearly defined sales process.

For example, a software company might use this method to forecast sales by examining the number of prospects in each stage of their funnel, from initial contact to final negotiation.

Pipeline forecasting method

The pipeline forecasting method is similar to opportunity stage forecasting but focuses more on the volume and quality of leads at each pipeline stage. It's particularly useful for businesses that rely heavily on sales forecasting tools and dashboards for decision-making.

A real estate agency could use it by examining the number of properties listed, the stage of negotiations, and the number of closings forecasted in the pipeline.

Length of sales cycle forecasting

Small businesses often prefer the length of sales cycle forecasting. It's straightforward and involves analyzing the duration of past sales cycles to predict future ones. This method is effective for businesses with consistent sales cycle lengths.

A furniture manufacturer, for instance, might use this method by analyzing the average time taken from initial customer contact to closing a sale in the past year.

Intuitive forecasting

Intuitive forecasting relies on the expertise and intuition of sales managers and their teams. It's less about spreadsheets and more about market research and understanding customer behavior. This method is often used with other, more data-driven approaches.

A boutique fashion store, for example, might use this method, relying on the owner's deep understanding of fashion trends and customer preferences.

Historical forecasting

Historical forecasting uses past performance data to predict future sales. This method is advantageous for businesses with ample historical sales data. It's less effective for new markets or rapidly changing industries.

An established book retailer could use historical data from previous years, considering seasonal trends and past marketing campaigns, to forecast next quarter's sales.

Multivariable analysis forecasting

Multivariable analysis forecasting is a more sophisticated method that's ideal for larger sales organizations. It analyzes factors like market trends, economic conditions, and marketing efforts to provide a holistic view of potential sales outcomes.

An automotive company, for example, could analyze factors like economic conditions, competitor activity, and past sales data to forecast future car sales.

How to calculate sales forecast

Sales forecasts determine how much you expect to do in sales for a given time frame. For example, let’s say you expect to sell 100 units in Q1 of fiscal year 2024. To calculate sales forecasts, you’ll use past data to predict future trends. 

When you’re first creating a forecast, it’s important to establish benchmarks that determine how much you normally sell of any given product to how many people. Compare historical sales data against sales quotas—i.e., how much you sold vs. how much you expected to sell. This type of analysis can help you set a baseline for what you expect to achieve every week, month, quarter, and so on.

For many companies, this means establishing a formula. The exact inputs will vary based on your products or services, but generally, you can use the following:

Sales forecast = Number of products you expect to sell x The value of each product

For example, if you sell SaaS products, your sales forecast might look something like this: 

SaaS FY24 Sales forecast = Number of expected subscribers x Subscription price

Ultimately, the sales forecasting process is a guess—but it’s an educated one. You’ll use the information you already have to create a data-driven forecasting model. How accurate your forecast is depends on your sales team. The sales team uses facts such as their prospects, current market conditions, and their sales pipeline. But they will also use their experience in the field to decide on final numbers for what they think will sell. Because of this, sales leaders are more likely to have better forecasting accuracy than new members of the sales team.

Sales forecast vs. sales goal

Your sales forecast is based on historical data and current market conditions. While you always hope your sales goals are attainable—and you can use data to estimate what your team is capable of—your goals might not line up directly with your forecast. This can be for a number of reasons, including wanting to create stretch goals that push your sales team beyond what they’ve done in the past or big, pie-in-the-sky goals that boost investor confidence.

How to create a sales forecast

There are different sales forecasting methods, and some are simpler than others. With the steps below, you’ll have a basic understanding of how to create a sales forecast template that you can customize to the method of your choice. 

1. Track your business data

Without details from your past sales, you won’t have anything to base your predictions on. If you don’t have past sales data, you can begin tracking sales now to create a sales forecast in the future. The data you’ll need to track includes:

Number of units sold per month

Revenue of each product by month

Number of units returned or canceled (so you can get an accurate sales calculation)

Other items you can track to make your predictions more accurate include:

Growth percentage

Number of sales representatives

Average sales cycle length

There are different ways to use these data points when forecasting sales. If you want to calculate your sales run rate, which is your projected revenue for the next year, use your revenue from the past month and multiply it by 12. Then, adjust this number based on other relevant data points, like seasonality.

Tip: The best way to track historical data is to use customer relationship management (CRM) software. When you have a CRM strategy in place, you can easily pull data into your sales forecast template and make quick projections.

2. Set your metrics

Before you perform the calculations in your sales forecast template, you need to decide what you’re measuring. The basic questions you should ask are:

What is the product or service you’re selling and forecasting for? Answering this question helps you decide what exactly you’re evaluating. For example, you can investigate future trends for a long-standing product to decide whether it’s worth continuing, or you can predict future sales for a new product. 

How far in the future do you want to make projections? You can decide to make projections for as little as six months or as much as five years in the future. The complexity of your sales forecast is up to you.

How much will you sell each product for, and how do you measure your products? Set your product’s metrics, whether they be units, hours, memberships, or something else. That way, you can calculate revenue on a price-per-unit basis.

How long is your sales cycle? Your sales cycle—also called a sales funnel—is how long it takes for you to make the average sale from beginning to end. Sales cycles are often monthly, quarterly, or yearly. Depending on the product you’re selling, your sales cycle may be unique. Steps in the sales cycle typically include:

Lead generation

Lead qualification

Initial contact

Making an offer

Negotiation

Closing the deal

Tip: You can still project customer growth versus revenue even if your company is in its early phases. If you don’t have enough historical data to use for your sales forecast template, you can use data from a company similar to yours in the market. 

3. Choose a forecasting method

While there are many forecasting methods to choose from, we’ll concentrate on two straightforward approaches to provide a clear understanding of how sales forecasting can be implemented efficiently. The top-down method starts with the total size of the market and works down, while the bottom-up method starts with your business and expands out.

Top-down method: To use the top-down method, start with the total size of the market—or total addressable market (TAM). Then, estimate how much of the market you think your business can capture. For example, if you’re in a large, oversaturated market, you may only capture 3% of the TAM. If the total addressable market is $1 billion, your projected annual sales would be $30 million. 

Bottom-up method: With the bottom-up method, you’ll estimate the total units your company will sell in a sales cycle, then multiply that number by your average cost per unit. You can expand out by adding other variables, like the number of sales reps, department expenses, or website views. The bottom-up forecasting method uses company data to project more specific results. 

You’ll need to choose one method to fill in your sales forecast template, but you can also try both methods to compare results.

Tip: The best forecasting method for you may depend on what type of business you’re running. If your company experiences little fluctuation in revenue, then the top-down forecasting method should work well. The top-down model can also work for new businesses that have little business data to work with. Bottom-up forecasting may be better for seasonal businesses or startups looking to make future budget and staffing decisions.

4. Calculate your sales forecast

You’ve already learned a basic way to calculate revenue using the top-down method. Below, you’ll see another way to estimate your projected sales revenue on an annual scale.

Divide your sales revenue for the year so far by the number of months so far to calculate your average monthly sales rate.

Multiply your average monthly sales rate by the number of months left in the year to calculate your projected sales revenue for the rest of the year.

Add your total sales revenue so far to your projected sales revenue for the rest of the year to calculate your annual sales forecast.

A more generalized way to estimate your future sales revenue for the year is to multiply your total sales revenue from the previous year.

Example: Let’s say your company sells a software application for $300 per unit and you sold 500 units from January to March. Your sales revenue so far is $150,000 ($300 per unit x 500 units sold). You’re three months into the calendar year, so your average monthly sales rate is $50,000 ($150,000 / 3 months). That means your projected sales revenue for the rest of the year is $450,000 ($50,000 x 9 months).

5. Adjust for external factors

A sales forecast predicts future revenue by making assumptions about your growth rate based on past success. But your past success is only one component of your growth rate. There are external factors outside of your control that can affect sales growth—and you should consider them if you want to make accurate projections. 

Some external factors you can adjust your calculations around include:

Inflation rate: Inflation is how much prices increase over a specific time period, and it usually fluctuates based on a country’s overall economic state. You can take your annual sales forecast and factor in inflation rate to ensure you’re not projecting a higher or lower number of sales than the economy will permit.

The competition: Is your market becoming more competitive as time goes on? For example, are you selling software during a tech boom? If so, assess whether your market share will shrink because of rising competition in the coming year(s).

Market changes: The market can shift as people change their behavior. Your audience may spend an average of six hours per day on their phones in one year. In the next year, mental health awareness may cause phone usage to drop. These changes are hard to predict, so you must stay on top of market news.

Industry changes: Industry changes happen when new products and technologies come on the market and make other products obsolete. One instance of this is the invention of AI technology.

Legislation: Although not as common, changes in legislation can affect the way companies sell their products. For example, vaping was a multi-million dollar industry until laws banned the sale of vape products to people under the age of 21. 

Seasonality: Many industries experience seasonality based on how human behavior and human needs change with the seasons. For example, people spend more time inside during the winter, so they may be on their computers more. Retail stores may also experience a jump in sales around Christmas time.

Tip: You can create a comprehensive sales plan to set goals for team members. Aside from revenue targets and training milestones, consider assigning each of these external factors to your team members so they can keep track of essential information. That way, you’ll have your bases covered on anything that may affect future sales growth. 

Sales forecast template

Below you’ll see an example of a software company’s six-month sales forecast template for two products. Product one is a software application, and product two is a software accessory. 

In this sales forecast template, the company used past sales data to fill in each month. They projected their sales would increase by 10% each month because of a 5% increase in inflation and because they gained 5% more of the market. They kept their price per unit the same as the previous year.

Putting both products in the same chart can help the company see that their lower-cost product—the software accessory—brings in more revenue than their higher-cost product. The company can then use this insight to create more low-cost products in the future.

Sales forecast examples

Sales forecasting is not a one-size-fits-all process. It varies significantly across industries and business sizes. Understanding this through practical examples can help businesses identify the most suitable forecasting method for their unique needs.

Sales forecasting example 1: E-commerce

In the e-commerce sector, where trends can shift rapidly, intuitive forecasting is often useful for making quick, informed decisions.

Scenario: An e-commerce retailer specializing in fashion accessories is planning for the upcoming festive season.

Trend analysis phase: The team spends the first week analyzing customer feedback and current fashion trends on social media, using intuitive forecasting to predict which products will be popular.

Inventory planning phase: Based on these insights, the next three weeks are dedicated to selecting and ordering inventory, focusing on products predicted to be in high demand.

Sales monitoring and adjustment: As the holiday season approaches, the team closely monitors early sales data, ready to adjust their inventory and marketing strategies based on real-time sales performance.

This approach allows the e-commerce retailer to stay agile , adapting quickly to market trends and customer preferences.

Sales forecasting example 2: Software development

For a software development company, especially one working with B2B clients, opportunity stage forecasting can help predict sales and manage the sales pipeline effectively.

Scenario: A software development company is launching a new project management tool.

Lead generation and qualification phase: In the initial month, the sales team focuses on generating leads, qualifying them, and categorizing potential clients based on their progress through the sales pipeline.

Proposal and negotiation phase: For the next two months, the team works on creating tailored proposals for high-potential leads and enters negotiation stages, using opportunity stage forecasting to predict the likelihood of deal closures.

Closure and review: In the final phase, the team aims to close deals, review the accuracy of their initial forecasts, and refine their approach based on the outcomes.

Opportunity stage forecasting enables the software company to efficiently manage its sales pipeline , focusing resources on the most promising leads and improving their chances of successful deal closures.

Pair your sales forecast with a strong sales process

A sales forecast is only one part of the larger sales picture. As your team members acquire leads and close deals, you can track them through the sales pipeline. A solid sales plan is the foundation of future success.  

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Free Sales Forecasting Templates

By Kate Eby | December 4, 2019

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In this article, you’ll find a wide range of pre-built sales forecast templates, available in Excel, Google Sheets, and PowerPoint formats. 

Included on this page, you'll find a sales forecast sample , a 12-month sales forecasting template for multiple products , a sales forecast presentation example , and many more helpful templates.

Basic Sales Forecast Sample Template

Download Basic Sales Forecast Sample Template

Excel | Google Sheets | Smartsheet

This sales forecast sample template is simple to use and provides an example of the forecasted sales of a product. Customize this template by using a forecasting technique to gather data, including historical sales information, economic trends, or comparisons within your industry. Enter the year, product, and unit type. Then, add the number of units sold and price per unit — the sales amount and percentage totals will calculate for each month with built-in formulas.

12-Month Sales Forecasting Template for Multiple Products

Download 12-Month Sales Forecasting Template for Multiple Products

Excel | Smartsheet

This sales forecasting template provides an estimate of future sales for multiple products in a yearly view, but you can customize it to project sales for any period of time. Enter the product, service, or other category name according to your needs. Then, enter your estimated monthly sales. There is also space to add historical sales, which can help you identify trends and other information that will be useful for making future projections.

3-Year Sales Forecast Template

Download 3-Year Sales Forecast Template - Excel

This customizable sales forecast template is designed to forecast sales for a 36-month time period. Enter the number of units sold, unit price, and unit cost of goods sold (CoGS). Once you’ve entered those values, built-in formulas will calculate the monthly and yearly sales growth rate, revenue, margin, and gross profit. This template also provides year-to-year comparisons to identify the years that saw the highest rate of growth.

5-Year Sales Forecast Template

Download 5-Year Sales Forecast Template

Excel | Google Sheets

This sales forecast template is user-friendly and displays the monthly and yearly sales projection for a product at a glance. Simply enter the number of units sold and price per unit for a product. Then, the total sales and percentages will auto-calculate with pre-built formulas. This template displays the highest performing month and provides insight into sales trends and fluctuations.

Monthly Sales Projection Template

Download Monthly Sales Projection Template

This monthly sales projection template is customizable and shows forecasts in a monthly and yearly view. Enter the year forecasted at the top, add total projected sales goals for new business and reorders for each month, and then add actual sales for comparison. The variance will calculate via built-in formulas, so you can measure the accuracy of new monthly sales, product reorders, and combined totals.

Daily Sales Forecast Template

Download Daily Sales Forecast Template - Excel

This daily sales forecast template enables you to estimate sales projections for a daily or weekly time frame. Use historical sales data for the same time period in previous years, and use the additional space beneath each week’s start date to add notes, including weekly sales or holidays that influenced the price per unit or total sales.

Sales and Budget Forecast Template

Download Sales and Budget Forecast Template

This customizable sales and budget forecast template is used to project monthly sales and planned expenses for a company, including advertising, insurance, payroll, and overhead. Add the estimated number of customers, average sale per customer, and average cost per sale. Then, add budgets for operating, payroll, and office expenses. Once you’ve entered those values, pre-built formulas will calculate the total sales, gross profit, total expenses, and net profit for a 12-month period.

Product Sales and Profit Forecasting Template

Download Product Sales and Profit Forecasting Template - Excel

This sales and profit forecasting template provides the projected sales, operating income, and market share for a product over a five-year span. Once you’ve entered the product data, the forecasted values will auto-calculate on the Output Scenario tab with built-in formulas. The results provide the forecasted sales and profit based on target operating income and target market share.

Sales Forecast Presentation Template

Download Sales Forecast Presentation Template - PowerPoint

This sales forecast presentation template provides visually appealing graphics that you can customize according to your needs. Add projected sales and growth percentages for any time period. Then, add charts and historical data to display trends. This presentation template also includes a slide that allows you to add key takeaways or other pertinent information to support your forecasts.

Deal-Based Sales Forecasting Template

Download Deal-Based Sales Forecasting Template

This sales forecasting template is based on the deal stage, size, and probability. Enter the company name and contact information related to each deal, select the deal stage, and add the deal size. Once you enter the stage and size, the probability and weighted forecast will auto-calculate with built-in formulas. This template also has space to assign a sales representative, select anticipated close dates, and detail necessary further actions.

Opportunity-Based Sales Forecast Template

Download Opportunity-Based Sales Forecast Template - Excel

This sales forecast template provides a weighted forecast for opportunities based on the probability of the sale. Add the opportunity name, sales phase, sales agent, region, and sales category. Then, add the forecasted amount and probability for each opportunity. Based on the  values you enter, the weighted forecast will auto-calculate with pre-built formulas and display a visual of sales projections on the Forecast Totals and Forecast Graph tabs.

Sales Forecasting by Lead Stage Template

Download Sales Forecasting by Lead Stage Template - Excel

This lead-driven forecasting template enables you to project the value of each lead on a monthly basis, based on historical data (e.g., the previous sales cycle, lead conversion rates, and average unit price). When you customize the Deal Stage key, the deal stages use formulas to automatically update accordingly. Add contact information, key dates, and the deal value for each lead. Then, the weighted forecast value will auto-calculate according to the closure probability you assign to each stage in the key.

E-Commerce Sales Forecast Template

Download E-Commerce Sales Forecast Template

This sales forecast template is designed to project future revenue for an e-commerce business over a five-year time period. Enter the marketing budget at the top of the template. Then, enter the number of organic visits, conversion rate, average order value, and other revenue. Once you enter those values, the paid and organic visits, sales, and total revenue will auto-calculate with built-in formulas.

Retail Sales Forecast Template

Download Retail Sales Forecast Template

This customizable retail sales forecasting template projects the total annual revenue for a five-year time span. Enter the estimated daily footfall, percentage of customers who enter the store and make a purchase, average sale value, and other sources of revenue. Once you enter those values, the total number of customers, sales, and revenue will calculate with pre-built formulas.

Hotel Revenue Projection Template

Download Hotel Revenue Projection Template

This sales forecasting template projects the annual revenue of a hotel over a five-year time span. Enter the total number of rooms and the number of operating days in a given year, the occupancy rate and average daily room rate, and the food and beverage percentage, if applicable. The projected room occupancy and total revenue will calculate automatically with built-in formulas.

Bed and Breakfast (B&B) Sales Forecast Template

Download Bed and Breakfast (B&B) Sales Forecast Template

This sales forecast template is designed to estimate the total revenue for a bed and breakfast (B&B) for a five-year time period. At the top, enter the number of rooms available, the number of days open by season, average room rates, and other revenue. Occupancy rates, available nights, and total projected revenue will calculate with pre-built formulas.

Why Is Sales Forecasting Important?

Performing a sales forecast , or estimating future sales, is a valuable tool you can use to predict the short and long-term performance of your company. When done accurately, a sales forecast can provide keen insight and enable your company to make informed strategic decisions that reinforce and align with your organization’s sales plan . 

Learn more about the key steps involved in performing a sales forecast, along with helpful tips and examples, by visiting " The Last Guide to Sales Forecasting You'll Ever Need: How-To Guides and Examples ."

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How to Create a Sales Forecast

11 min. read

Updated October 27, 2023

Business owners are often afraid to forecast sales. But, you shouldn’t be. Because you can successfully forecast your own business’s sales.

You don’t have to be an MBA or CPA. It’s not about some magic right answer that you don’t know. It’s not about training you don’t have. It doesn’t take spreadsheet modeling (much less econometric modeling) to estimate units and price per unit for future sales. You just have to know your own business. 

Forecasting isn’t about seeing into the future

Sales forecasting is much easier than you think and much more useful than you imagine.

I was a vice president of a market research firm for several years, doing expensive forecasts, and I saw many times that there’s nothing better than the educated guess of somebody who knows the business well. All those sophisticated techniques depend on data from the past — and the past, by itself, isn’t the best predictor of the future. You are.

It’s not about guessing the future correctly. We’re human; we don’t do that well. Instead, it’s about setting down assumptions, expectations, drivers, tracking, and management. It’s about doing your job, not having precognitive powers. 

• Successful forecasting is driven by regular reviews

What really matters is that you review and revise your forecast regularly. Spending should be tied to sales, so the forecast helps you budget and manage. You measure the value of a sales forecast like you do anything in business, by its measurable business results.

That also means you should not back off from forecasting because you have a new product, or new business, without past data. Lay out the sales drivers and interdependencies, to connect the dots, so that as you review plan-versus-actual results every month, you can easily make course corrections.

If you think sales forecasting is hard, try running a business without a forecast. That’s much harder.

Your sales forecast is also the backbone of your business plan . People measure a business and its growth by sales, and your sales forecast sets the standard for  expenses , profits, and growth. The sales forecast is almost always going to be the first set of numbers you’ll track for plan versus actual use, even if you do no other numbers.

If nothing else, just forecast your sales, track plan-versus-actual results, and make corrections — that process alone, just the sales forecast and tracking is in itself already business planning. To get started on building your forecast follow these steps.

And if you run a subscription-based business, we have a guide dedicated to building a sales forecast for that business model.

• Step 1: Set up your lines of sales

Most forecasts show several distinct lines of sales. Ideally, your sales lines match your accounting, but not necessarily in the same level of detail.   

For example, a restaurant ought not to forecast sales for each item on the menu. Instead, it forecasts breakfasts, lunches, dinners, and drinks, summarized. And a bookstore ought not to forecast sales by book, and not even by topic or author, but rather by lines of sales such as hardcover, softcover, magazines, and maybe categories (such as fiction, non-fiction, travel, etc.) if that works.

Always try to set your streams to match your accounting, so you can look at the difference between the forecast and actual sales later. This is excellent for real business planning. It makes the heart of the process, the regular review, and revision, much easier. The point is better management.

For instance, in a bicycle retail store business plan, the owner works with five lines of sales, as shown in the illustration here.  

In this sample case, the revenue includes new bikes, repair, clothing, accessories, and a service contract. The bookkeeping for this retail store tracks sales in those same five categories.

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• Step 2: Forecast line by line

There are many ways to forecast a line of sales.

The method for each row depends on the business model

Among the main methods are:.

• Unit sales : My personal favorite. Sales = units times price. You set an average price and forecast the units. And of course, you can change projected pricing over time. This is my favorite for most businesses because it gives you two factors to act on with course corrections: unit sales, or price.
• Service units : Even though services don’t sell physical units, most sell billable units, such as billable hours for lawyers and accountants, or trips for transportations services, engagements for consultants, and so forth.
• Recurring charges : Subscriptions. For each month or year, it has to forecast new signups, existing monthly charges, and cancellations. Estimates depend on both new signups and cancellations, which is often called “churn.”
• Revenue only : For those who prefer to forecast revenue by the stream as just the money, without the extra information of breaking it into units and prices.

Most sales forecast rows are simple math

For a business plan, I recommend you make your sales forecast a detailed look at the next 12 months and then broadly cover two years after that. Here’s how to approach each method of line-by-line forecasting.

Start with units if you can

For unit sales, start by forecasting units month by month, as shown here below for the new bike’s line of sales in the bicycle shop plan:

I recommend looking at the visual as you forecast the units because most of us can see trends easier when we look at the line, as shown in the illustration, rather than just the numbers. You can also see the numbers in the forecast near the bottom. The first year, fiscal 2021 in this forecast, is the sum of those months.

Estimate price assumptions

With a simple revenue-only assumption, you do one row of units as shown in the above illustration, and you are done. The units are dollars, or whatever other currency you are using in your forecast. In this example, the new bicycle product will be sold for an average of $550.00. 

That’s a simplifying assumption, taking the average price, not the detailed price for each brand or line. Garrett, the shop owner, uses his past results to determine his actual average price for the most recent year. Then he rounds that estimate and adds his own judgment and educated guess on how that will change. 

Multiply price times units

Multiplying units times the revenue per unit generates the sales forecast for this row. So for example the $18,150 shown for October of 2020 is the product of 33 units times $550 each. And the $21,450 shown for the next month is the product of 39 units times $550 each. 

Subscription models are more complicated

Lately, a lot of businesses offer their buyers subscriptions, such as monthly packages, traditional or online newspapers, software, and even streaming services. All of these give a business recurring revenues, which is a big advantage. 

For subscriptions, you normally estimate new subscriptions per month and canceled subscriptions per month, and leave a calculation for the actual subscriptions charged. That’s a more complicated method, which demands more details. 

For that, you can refer to detailed discussions on subscription forecasting in How to Forecast Sales for a Subscription Business .

• But how do you know what numbers to put into your sales forecast?

The math may be simple, yes, but this is predicting the future, and humans don’t do that well. So, don’t try to guess the future accurately for months in advance.

Instead, aim for making clear assumptions and understanding what drives your sales, such as web traffic and conversions, in one example, or the direct sales pipeline and leads, in another. Review results every month, and revise your forecast. Your educated guesses become more accurate over time.

Experience in the field is a huge advantage

In a normal ongoing business, the business owner has ample experience with past sales. They may not know accounting or technical forecasting, but they know their business. They are aware of changes in the market, their own business’s promotions, and other factors that business owners should know. They are comfortable making educated guesses.

If you don’t personally have the experience, try to find information and make guesses based on the experience of an employee,  your mentor , or others you’ve spoken within your field.

Use past results as a guide

Use results from the recent past if your business has them. Start a forecast by putting last year’s numbers into next year’s forecast, and then focus on what might be different this year from next.

Do you have new opportunities that will make sales grow? New marketing activities, promotions? Then increase the forecast. New competition, and new problems? Nobody wants to forecast decreasing sales, but if that’s likely, you need to deal with it by cutting costs or changing your focus.

Look for drivers

To forecast sales for a new restaurant, first, draw a map of tables and chairs and then estimate how many meals per mealtime at capacity, and in the beginning. It’s not a random number; it’s a matter of how many people come in.

To forecast sales for a new mobile app, you might get data from the Apple and Android mobile app stores about average downloads for different apps. A good web search might also reveal some anecdotal evidence, blog posts, and news stories, about the ramp-up of existing apps that were successful.

Get those numbers and think about how your case might be different. Maybe you drive downloads with a website, so you can predict traffic from past experience and then assume a percentage of web visitors who will download the app.

• Estimate direct costs

Direct costs are also called the cost of goods sold (COGS) and per-unit costs. Direct costs are important because they help calculate gross margin, which is used as a basis for comparison in financial benchmarks, and are an instant measure (sales less direct costs) of your underlying profitability.

For example, I know from benchmarks that an average sporting goods store makes a 34 percent gross margin. That means that they spend $66 on average to buy the goods they sell for $100.

Not all businesses have direct costs. Service businesses supposedly don’t have direct costs, so they have a gross margin of 100 percent. That may be true for some professionals like accountants and lawyers, but a lot of services do have direct costs. For example, taxis have gasoline and maintenance. So do airlines.

A normal sales forecast includes units, price per unit, sales, direct cost per unit, and direct costs. The math is simple, with the direct costs per unit related to total direct costs the same way price per unit relates to total sales.

Multiply the units projected for any time period by the unit direct costs, and that gives you total direct costs. And here too, assume this view is just a cut-out, it flows to the right. In this example, Garrett the shop owner projected the direct costs of new bikes based on the assumption of 49 percent of sales.

Given the unit forecast estimate, the calculation of units times direct costs produces the forecast shown in the illustration below for direct costs for that product. So therefore the projected direct costs for new bikes in October is $8,894, which is 49% of the projected sales for that month, $18,150.

• Never forecast in a vacuum

Never think of your sales forecast in a vacuum. It flows from the strategic action plans with their assumptions,  milestones , and metrics. Your marketing milestones affect your sales. Your business offering milestones affect your sales.

When you change milestones—and you will, because all business plans change—you should change your sales forecast to match.

• Timing matters

Your sales are supposed to refer to when the ownership changes hands (for products) or when the service is performed (for services). It isn’t a sale when it’s ordered, or promised, or even when it’s contracted.

With proper  accrual accounting , it is a sale even if it hasn’t been paid for. With so-called cash-based accounting, by the way, it isn’t a sale until it’s paid for. Accrual is better because it gives you a more accurate picture, unless you’re very small and do all your business, both buying and selling, with cash only.

I know that seems simple, but it’s surprising how many people decide to do something different. The penalty for doing things differently is that then you don’t match the standard, and the bankers, analysts, and investors can’t tell what you meant.

This goes for direct costs, too. The direct costs in your monthly  profit and loss statement  are supposed to be just the costs associated with that month’s sales. Please notice how, in the examples above, the direct costs for the sample bicycle store are linked to the actual unit sales.

• Live with your assumptions

Sales forecasting is not about accurately guessing the future. It’s about laying out your assumptions so you can manage changes effectively as sales and direct costs come out different from what you expected. Use this to adjust your sales forecast and improve your business by making course corrections to deal with what is working and what isn’t.

I believe that even if you do nothing else, by the time you use a sales forecast and review plan versus actual results every month, you are already managing with a business plan . You can’t review actual results without looking at what happened, why, and what to do next.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

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• Forecasting isn’t about seeing into the future

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9 Free Sales Forecast Templates to Super-Charge Sales Growth in 2024

Sales forecasting templates might not sound all that exciting. Fair enough. After all, who wants to create more reports—on top of all your other responsibilities?

If you're feeling a little skeptic, take a walk with me and imagine this scenario involving two different sales managers :

Which of these sales managers is more likely to get the budget they want?

No brainer. It's Sales Manager 2 every day of the week.

What's the difference between their pitches? A solid sales forecast to back up the substantial investment they're asking the VP to make.

Sales forecasts can be exciting—they give you the superpower to see what's coming down the pipeline. More importantly, they're easy to create using the right sales forecasting templates.

In this guide, we'll give you a step-by-step method to create a sales forecast and access to several free sales forecast templates (in both Microsoft Excel & Google Sheets format).

But first, let’s quickly touch on why sales forecasts are key to growing your sales team—and your business.

Why are Sales Forecasts Crucial for Sales Teams?

Sales forecasting provides a window into your business's future. Depending on the template, it can help you:

• Predict sales figures for the next quarter: Much like projecting total contract value growth, sales forecasting provides a roadmap for anticipated revenue, enabling you to plan and allocate resources accordingly.
• Make more accurate cash flow projections
• Predict expenses
• See where to invest marketing dollars
• Better allocate hiring budgets
• Spot emerging trends early on
• Diagnosis potential issues in your sales flow early

Lastly, it is a powerful motivation tool for your sales team—especially if you have a longer sales cycle. It allows you to paint a clear picture showing how the work your team is doing today will pay off.

9 Best Sales Forecast Templates (Free Google Sheets + Excel Templates)

Not every sales team needs a super complex sales forecasting model. For instance, small businesses only want (and need) to track a few important metrics. On the other hand, eCommerce companies must track multiple products—which gets challenging without a template.

So, we've sorted through all the free sales forecast templates we could find (in Excel + Google Sheets format), and even created one of our own. Choose the template that works best for your company, sales team, and industry.

Pro tip: Tired of spreadsheets? Cut out the third-party tools with Close's built-in Sales Funnel Reporting .

1. Best General Forecast Template (Without a CRM)

This sales forecasting template from Close provides a simple way to track and forecast two years of sales. The first tab allows for adjusting funnel metrics depending on your sales cycle, average deal size, lead growth, and number of leads.

The second tab forecasts sales by month based on meetings booked, new opportunities created, and leads closed/won. A chart at the bottom displays expected growth.

The only thing better than this is having sales forecasting built right into your CRM ( like with Close ), which enables you to have powerful integrations that enrich your forecasting accuracy and pipeline health over time.

Get the free template here .

2. Best Forecast Template for a Lead-Driven Sales Process

This template is ideal for companies that track their lead generation efforts and monitor their monthly sales forecast. You’ll see it breaks the year into quarters and tracks leads in all stages of the sales funnel .

The best part? This is a Google Sheets template (which can be accessed via Google apps and can also be downloaded for use in Microsoft Excel).

This template tracks deal value and uses a weighted forecast model. It can also predict the probability of closing, which is a helpful metric for B2B companies. You can download it right here .

3. Best Free Forecasting Template for Multiple Product Businesses

Does your company sell multiple products or services? This sales projection template could be a great choice for a business with more complex offerings. It tracks the number of units sold for each product line over 12 months on a single spreadsheet to streamline your forecasting accuracy.

It also carries over sales history from three previous years, making it easy to compare sales by unit, month, or across years. You can download it right here in Google Sheets or Microsoft Excel format. Just make a copy, and start editing the sheet.

4. Best Forecasting Template for Retail Businesses

This template is ideal for retail stores that want to forecast sales, track gross sales, and mark up percentage and profit margin for each item with the goal of generating more new business. The yellow cells allow you to input your own data, and the spreadsheet uses smart Excel automation formulas to calculate forecasts.

While it doesn't display the previous year's data in this view, you could easily create a pivot table in Excel or Google Sheets to pull data from several years. That way you can compare average sales, total sales, and other sales KPIs that matter to your leadership. You can pick this one up right here .

5. Best for Long-Term Future Sales Analysis (36 Months of Historical Data)

This is one of the most colorful templates on the list, but that's not why we included it. This template is ideal for companies that want to monitor long-term data closely.

In addition to 12 months of full historical sales data, you'll also see detailed insights and data for the past five years, including overall revenue for each type of item. This is a good option if you want to focus your sales analysis on the long and short-term. You can grab this one right here .

6. Best Sales Forecasting Model for Scenario Planning (New Product Launches)

Forecasting sales for a new product launch can be a challenge—which is why many companies do a soft launch without high expectations.

After a soft launch, use this forecasting template to track initial sales data and project your next five years of sales. Head over here to download this one .

7. Best Free Template for Multiple Products at Different Growth Rates

Looking to track product sales that grow at different rates? This spreadsheet tracks growth and forecasts revenue for 12 months—even if the products or services grow at different rates. This is a great fit for businesses with legacy products that regularly launch new products.

This forecasting chart also includes five years of historical data so you can see overall sales growth at a glance. Pick this template up right here .

8. Best for Short-Term Forecasts

Want to plan your inventory or marketing campaigns for just the next few weeks? This 3-month forecast template can help.

Customize the start date, then enter your number of units and price per unit to get projections. It’s simple and effective. Download this template right here .

9. Best for Daily Forecasts

Now, let’s shorten the projections even more—to a daily window. This one is primarily useful for businesses in the retail, restaurant, and hospitality industries.

With this template, predict your sales on a daily or weekly time frame. This granular vision can help you optimize day-to-day sales. Plus, you can rely on the historical sales data and add weekly notes.

Grab this forecast template here .

How to Choose the Right Sales Forecast Template (& Forecasting Methods for Your Business)

The right forecasting template provides access to the sales KPIs that matter most to your sales team. But not all businesses are the same.

Retail businesses may need to track hundreds of products and dozens of different suppliers, while a SaaS company might only offer three pricing plans—but have a really long sales cycle.

You need to find the right template for your business needs. Otherwise, you'll be left floundering in a sea of useless data.

Here's how to select the right sales forecast template for your organization.

Get Clear on Your Sales Goals & Set Realistic Sales Revenue Targets

Different sales goals and revenue targets rely on different data. For example, if you want to predict sales over the next two years, you'll want a forecast template that covers a longer time period.

Goals can also impact which template will work best for your team.

For example, suppose an eCommerce company wants to increase monthly sales by 10 percent and boost customer lifetime value . In this case, they'll need a different template than a small business looking to increase sales from a specific customer segment.

Next, set realistic revenue targets using overall market growth as a benchmark. If your industry expands by 25 percent, a 10 percent growth rate might be too low, while 50 percent is likely too high.

Look for a template that fits your business goals and revenue targets.

Consider Your Business Type & Plan Ahead for Sales Fluctuations

Your business type is one of the most important factors to consider when selecting a template. The size, industry, age, and growth rate can all impact which template will work for you.

Also, consider how often your sales fluctuate. For example, an eCommerce store may have 10 to 15 fluctuations a year, so they need a template that can handle their data. On the other hand, a small fly fishing business may have just two fluctuations—on and off-season.

Look for a template that suits your business model and accommodates your sales fluctuations.

Decide Which Method of Sales Forecasting to Use for Your Sales Team

When it comes to sales forecasting methods, there is no one-size fits all solution.

You'll need to adjust your forecasting based on your historical data, the metrics you need to track, and your confidence in the data. Your goals and KPIs also impact the forecasting methods you use.

Here are seven sales forecasting methods, including who should use them:

• Lead-driven forecasting : Looks at previous lead conversion rates and projects future sales based on current lead volume. Best for organizations with clear historical data and a steady stream of inbound leads, such as SaaS or technology companies.
• Length of sales cycle forecasting : Tracks how long a typical lead takes to close based on lead type. Best for organizations with insights into the entire sales pipeline and well-aligned sales and marketing teams, especially B2B.
• Opportunity stage forecasting: Calculates how likely a lead is to close based on specific actions and lead type. Ideal for businesses with good historical data on closing rates.
• Test-market analysis forecasting: Leverages data from a soft release to get a sense of projected revenue. Best for startups or businesses launching a new product line or service.
• Historical forecasting : Forecasting data based on historical data and market trends. Works well for any business with at least a year of historical data.
• Multivariable analysis: A complex analysis that considers multiple factors and closing ratios. Best for companies with varying deal sizes and close rates or selling multiple products or services.

Make sure whatever template you choose fits your analysis method.

Look at Historical Data & Past Sales Metrics

We've already discussed how historical data can impact your sales forecasting, but it's also an important factor in choosing the right template.

Before choosing a template, look at your past metrics and historical data. How much data do you have? If you have several years' worth of data, consider a template with a longer forecasting model.

What data do you want to include based on your business type and forecasting methods? Make sure the template you choose includes the fields important to your business.

Research External Market Conditions to Create an Accurate Sales Forecast

Finally, spend a few hours researching current market conditions and consider how they may impact your sales forecast. For example, if your industry is growing fast, you might select a forecasting template that updates in near real-time.

On the other hand, if a large competitor is acquiring another company, that might make growth more challenging, and you might need to lower your growth expectations.

Look for a template that works well with current market conditions.

How Do You Calculate Sales Forecasts Quickly?

Here’s a simple formula that SaaS businesses can use for a specific forecast period:

Number of expected new customers x Average deal size

The accuracy of such a forecast depends on various factors, including your churn rate, upsells, changes to your existing subscriptions, market conditions, etc. The more informed your assumptions, the better your accuracy.

Pro tip: Are you starting to notice your time is getting consumed by forecasting sales and managing your sales process? Maybe it's time to move to a CRM .

For example, Close’s Opportunity Funnel Report displays funnel insights and graphs to help visualize the health of your pipeline—and make forecasting a breeze.

START YOUR FREE TRIAL→

How to Create a Custom Sales Forecast Template: Five Easy Steps

Sometimes, you need to do it yourself. Sales forecasting can be simple—especially if you create a forecasting template based on your own sales process and KPIs. Assuming you’re already tracking your sales, here are the steps to create your own template.

Step 1: Choose Sales Performance Metrics

What do you want to track? Whether it’s the sales quotas of individual sales reps, your gross profit, or simply one-year sales projections, choose KPIs based on your goals.

You can check out this exhaustive list of KPIs , but most SaaS businesses can start by calculating their run rates. Keep in mind that it requires a few months of revenue data to project your annualized revenue.

Here's the sales run rate formula :

Projected sales = Run rate (Current sales/number of sales periods elapsed) X the remaining number of sales periods

This is one of the easiest ways to predict future growth, and it’s a great starting point. We’ll refine it in the fourth step, but now let’s start creating a template.

Step 2: Create a Layout for Your Template and Add Formulas

Now, add relevant formulas for your chosen metrics so that your sheet can make automatic forecasts based on your data input.

The specific columns you include in your layout depend on the KPIs you want to track, and the information you want to include.

If we were calculating the annual run rate, you could use one column for the month, another for the sales in that month, and another for calculating the total sales up to the current month.

Next, you want to create formulas for the average monthly rate and the annual run rate formula (ARR), which will be your average monthly sales X 12. These two can be additional columns.

Step 3: Calculate Your Sales Forecast

Now it’s time to test your template. Input data and let the spreadsheet automatically calculate your sales forecast. In our example, after inputting data for January through March, here’s what the forecasted annual run rate looked like:

Step 4: Adjust for External Factors and Strategic Business Plans

Our simple run rate formula doesn't consider seasonality, competition, market changes, or business growth.

If seasonality or trends impact your sales, calculate the percent change from your average month during periods of spike or dip. For example, if your sales typically spike by 30 percent in November, you can adjust your sales run rate to account for these trends.

Internal changes can also impact sales forecasting. Are you launching new products ? How have product launches performed in the past? Are you marketing to new customer segments? How many new customers do you expect these new markets to add to your customer file?

Refining your formula will improve your forecast's accuracy, leading to informed sales plans and decisions.

If you want to create a comprehensive SaaS revenue forecast model from scratch in Excel, check out this tutorial .

Step 5: Integrate the Template Into Your Process (& Keep Improving It)

Most sales reps spend only one-third of their day selling to prospects. So, you want to integrate the sales forecasting template into your workflow naturally, so it doesn’t diminish productivity. Work to blend it with your team's existing spreadsheets or software.

Set up a regular cadence for importing data into the template—either manually, or automatically from another software. Then, generate forecasts based on inputted data.

To keep your forecasts relevant, regularly review the accuracy of the results. Make adjustments to your template as needed—and remember that a change in business strategy or market conditions should also invite revisions.

Want to sophisticate your forecasts and consider advanced trends? Then you must use evolved sales forecasting methods. Get more detailed insights into sales forecasting here .

Using Forecasting Templates to Predict + Optimize Future Revenue

When it comes to sales forecasting, the right template can make all the difference. If you're still doing the process manually, you might miss out on actionable insights that could help your team meet and exceed your sales goals. Plus, manual forecasting takes a lot of valuable time—and is prone to error.

So, choose one of the above templates to create a standardized forecasting approach for your company, but don’t be afraid to make it your own. Add columns, include metrics that matter, and even plug in your brand color and name.

Or, you can just design a template from scratch.

Remember that your template isn’t static. Keep refining your forecast assumptions, and iterate to improve accuracy. Over time, you'll end up with a custom sales forecasting spreadsheet that makes you look like a superstar—and boosts your revenue potential.

Want even more actionable insights? See how Close gives you access to the reporting metrics that matter .

But even if you’re working without a CRM, or using another product to manage your sales process, grab our free sales forecast template to achieve your goals that much faster.

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The Complete Guide to Building a Sales Forecast

Set your company up for predictable revenue growth with the right forecasting processes and tools.

Paul Bookstaber

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Building a sales forecast is both an art and a science. Accurate sales forecasts keep your leaders happy and your business healthy. In this guide, we’ll explain everything you need to know about sales forecasting — so you can get a clear picture of your company’s projected sales and keep everyone’s expectations on track.

We’ve organized this reference guide by the top questions sales teams have about the sales forecasting process, based on our internal conversations and more than 20 years of experience developing  sales solutions .

Build sales forecasts with accuracy

Use the real-time data updates and insights of Sales Cloud to keep your forecasts accurate and your teams on track to hit targets.

What you’ll learn:

What is a sales forecast, why is sales forecasting important, who is responsible for sales forecasts, who uses sales forecasts, what are the objectives of sales forecasting, how do i design a sales forecasting plan.

• What happens to sales forecasting in unpredictable times?

How accurate are sales forecasts?

What tools do you use to forecast sales revenue and how do crm systems forecast revenue, how is forecasting better with crm vs. other methods.

If you’re a sales leader who’s already well-versed in the who and what of sales forecasts, skip to the sections on  designing a sales forecasting plan  and  tools to improve sales forecasts  for more relevant knowledge. Sales forecasting can become especially tough when we face an unexpected turn of events, so head to the section on  what happens to sales forecasts in unpredictable times  for more on that.

A sales forecast is an expression of expected sales revenue. A sales forecast estimates how much your company plans to sell within a certain time period (like quarter or year). The best sales forecasts do this with a high degree of accuracy, and they’re only as accurate as the data that fuels them.

A strong data culture is at the heart of an accurate sales forecast. This means all sales data is available to everyone at the company, and all teams do their part in keeping it updated, leaning on AI and automation to help. More on that in the section on  tools used to forecast sales revenue .

All sales forecasts answer two key questions:

• How much:  Each sales opportunity has its own projected amount it’ll bring into the business. Whether that’s $500 or $5 million, sales teams have to come up with one number representing that new business. To create the number, they take everything they know about the prospect into account.
• When:  Sales forecasts pinpoint a month, quarter, or year when the sales team expects the revenue to hit.

Coming up with those two sales projections is no easy feat. So sales teams factor in the important ingredients of who, what, where, why, and how to make their forecasts:

• Who:  Sales teams are responsible for sales forecasting.
• What:  Forecasts should be based on the exact solutions you plan to sell. In turn, that should be based on problems your prospects have voiced, which  your company can uniquely solve .
• Where:  Where is the buying decision made, and where will the actual products be used? Sales teams see better accuracy when they get closer (at least for a visit) to the center of the action.
• Why:  Why is the prospect or existing customer considering new services from your company in the first place? Is there a compelling event making them consider it now? Without a forcing function and a clear why, the deal may stall inevitably.
• How:  How does this prospect tend to make purchasing decisions? If you’re not accounting for how they do it now and how they’ve done it in the past in your forecast, it may be fuzzy math.

Forecasting lets leaders set realistic sales targets, create attainable and motivating quotas for sales reps, and gauge expected revenue, aiding in budgeting and spending decisions for the whole company. If forecasts are inaccurate, businesses may overspend (putting themselves in a risky spot), and set unreachable quotas (which is demoralizing for reps).

To understand why sales forecasting is so important to business health, think about two example scenarios: one with a car manufacturer and another with an e-commerce shop.

In the case of a car manufacturer, cars take a long time to build. The manufacturer has a complex supply chain to ensure every car part is available exactly when they need to build cars, so the number of cars available to purchase will meet demand.

When you buy something online, whether that’s from a large marketplace or a small boutique, you get a delivery estimate. If your delivery comes a day or a week after it’s promised, that’ll affect your satisfaction with the company — and decrease your willingness to want to do business with them again.

Sales forecasting is similar in both cases. Sales forecasts help the entire business plan resources to ship products, pay for marketing, hire employees, and beyond. Accurate sales forecasting yields a well-oiled machine that meets customer demand, both today and in the future. And internally on sales teams, sales revenue that delivers in its estimated time period keeps leaders and collaborators happy, just like a shipment that arrives on time.

If forecasts are off, the company faces challenges that affect everything from pricing to product delivery to the end user. Meanwhile, if forecasts are on point and  sales quotas  are met, the company can make better investments, perhaps hiring 20 new developers instead of 10, or building a much-needed new sales office in a prime new territory.

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Each organization has its own sales forecast owners. These are some of the teams who are usually responsible:

• Product leaders:  They put a stake in the ground for what products will be available to sell when.
• Sales leaders:  They promise the numbers that their teams will deliver. Depending on the seniority of the leader, how they forecast varies. For example, first-line managers forecast collections of opportunities, where third-line managers consider a wide set of numbers and traditional close rates to come up with an overall forecast.
• Sales reps:  They report their own numbers to their managers.

No matter how a company calculates its sales forecasts, the process should be transparent. And at the end of the day, sales leadership has to be responsible to call a number. Whether met, exceeded, or missed, the forecast responsibility falls on them.

Sales forecasts touch virtually all departments in a business. For example, the finance department uses sales forecasts to decide how to make annual and quarterly investments. Product leaders use them to plan demand for new products. And the HR department uses forecasts to align recruiting needs to where the business is going.

At some level, sales forecasting affects everyone in the company.

The main objective of sales forecasting is to paint an accurate picture of expected sales. Leaders are looking to these numbers when they’re building out their operational roadmap and budget. If they’re confident in the projected growth, they can get to planning.

They could decide to staff more customer service touchpoints, fund more external marketing events, or invest more in the community. They could get ahead of purchasing new equipment or upgrades that get more expensive the longer they wait. Without a sales forecast, leaders are making critical spending decisions in the dark. If sales don’t go as planned, it could lead to cutting workforce, reducing support, or halting product development.

Sales forecasting is a muscle, not an item to check off your to-do list. While you should absolutely design a framework for your sales forecasting plan each year, you should also change up your strategies from time to time so new muscles develop.

Craft a sales forecasting plan with your team by focusing on three primary activities:

• Calculating number and time  period:  Your plan should explain how you’ll calculate the estimated monetary amount and what the timeframes will be. See the section on  how a CRM can help with forecasting  later in this guide for more on the sales forecasting tools you can use to do this.
• Reviewing and revising:  You should also plan to review the forecast at key milestones and revise it if necessary. Most sales leaders track progress against their forecast daily! But you’ll also want to schedule designated check-ins throughout the quarter. Make sure you’re reviewing the latest numbers with  sales automation tools  that sync your CRM’s forecast data.
• Breaking the patterns:  Even the best sales organizations need to shake up their  sales process  once in a while. Breaking your patterns can help you find new ways of crafting even more accurate forecasting. Try skip-level forecasting, ask different questions, have executive sponsorship reviews, and take different angles of the data.

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What happens to sales forecasts in unpredictable times.

Unpredictable events have an enormous impact on your sales forecast. Extreme weather or economic crises all dramatically change your forecast. What you thought you knew about expected revenue growth can be suddenly flipped on its head.

As soon as an extraordinary event hits, sales and finance leaders at your company will quickly want to know:

• How’s our  sales pipeline  looking today?
• What are the best- and worst-case scenarios?
• How has the forecast changed from a week or a month ago?

Your forecast implicates resourcing, headcount, and more (see the section on  sales forecasting objectives ). So although things may be changing quickly, you don’t want to give up on your forecast.

Rather than attempt to recalculate your forecast based on dubious estimates or conjecture, your best bet is to  rely on a CRM solution  to get an accurate view of deal status and pipeline in real time.

During a crisis, reps need to feed their CRM with data as events unfold so leaders have clear visibility into the rapidly evolving pipe. That data enables those leaders to support their reps with corporate-level decisions about where they should be focusing their time — and craft the new forecasts. Your forecast is only as good as the data coming into it from your sales teams.

In uncertain times, quick access to sales data and the ability to pivot  sales territory  and resource deployment accordingly can make the difference between business continuity and dissolution. There’s no silver bullet to forecast perfectly in a crisis or unforeseen scenario. But vigilantly updating what’s in the pipeline and analyzing sales data more frequently than usual will help you see trends and retool your forecast accordingly.

Empathy and care are always fundamental, but this is especially true in these situations. Empathizing with your customers’ challenges and caring for your own sales reps should come before anything else. Build trust with internal and external partners. That trust will help you grow again in the future. Learn more about  maintaining customer relationships as a sales leader .

Only 45% of sales leaders are confident in their organization’s sales forecasts,  according to Gartner . While it’s natural for sales reps to bring in some intuition to their sales forecasts, that’s where room for error can creep in.

This brings us back to embracing a  strong data culture . To get a more accurate forecast, everyone in the sales cycle — from reps to managers to execs — should have a stake in making sure those numbers reflect the latest reality. Reps can keep all prospect info up to date, managers can track pipeline progress, and leaders can review how all teams are tracking toward those forecast numbers, with AI playing backup to spot any inaccuracies or chances to adjust along the way.

A  CRM  gives sales leaders a real-time view into their entire team’s forecast. The tool forecasts revenue by giving you:

• An accurate view of your entire business.  Comprehensive forecasts in a CRM come with a complete view of your pipeline.
• Tracking of your top performers.  See which reps are on track to beat their targets with up-to-the-minute leaderboards.
• Forecasting for complex sales teams.  Overlay splits allows you to credit the right amounts to sales overlays, by revenue, contract value, and more.

A forecast is based on the gross rollup of a set of opportunities. You can think of a forecast as a rollup of currency or quantity against a set of dimensions: owner, time, forecast categories, product family, and territory. You can collaborate on forecasts with all the necessary people to see how opportunities are stacking up. Drill down into opportunities by sales leader, operating unit, manager, and individuals.

We also love a CRM with  reports and dashboards . These highlight where the business challenges are, in plain and simple terms. It could be that four of five selling teams are at the right growth rate, and we just need to focus on another one. It could be that a certain product is challenged. The data opens up new doors to grow sales and see what could be working more effectively.

Another thing that’s great about a CRM is the guidance from AI. An  AI for sales  tool offers a neutral perspective on what’s actually happening in sales. For example, AI might note that an opportunity has been pushed out three quarters in a row — a finding that would’ve taken an individual reviewing the data longer to discover. Think of AI as your personal data scientist, taking your forecasting and entire sales operations to a new level.

Predictive AI tools take a look at historical sales data to give you a glimpse of what you might expect in the future. The AI will analyze factors like win rate or number of customer meetings. It takes some of the guesswork out of sales forecasting and helps you get to more accurate numbers. Try to analyze sales data for at least 12 months. Otherwise, there may not be enough data to get accurate sales predictions.

Sales forecasting is significantly more accurate when using a CRM instead of a spreadsheet. When a company is just starting out, sales teams usually rely on spreadsheets or back-of-the-napkin ways to calculate their sales forecasts. This may work for a while, but eventually, you’ll find this doesn’t scale.

The reality is, selling is more complex than ever. It involves everything from how demand generation campaigns are performing to how your phone calls to prospects are landing. The more you want to sell, the more you’ll want to  rely on a CRM .

See how Salesforce manages forecasts with confidence

The secret to an accurate forecast? Reliable, well-maintained pipelines. See how we manage both efficiently (with the help of the right technology), and use our best practices in your business.

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Paul Bookstaber is a writer at Salesforce. He has a decade of experience in content marketing in B2B tech. Before that, he published a magazine and ran a tabloid blog. Today, he splits his time between Florida and the Mountain West, and loves to hike, ski, and watch Bravo. He is in a polyamorous relationship with Luke and Roger, who are cats.

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How to create a sales forecast for your business

The sales forecast section is a key section of your business plan.

This section relates directly to the market analysis, competitive edge, marketing plan and pricing sections (see our guide to writing a business plan ).

The objective here is to build and justify your sales estimate for the next three years.

How to forecast sales?

Building a sales forecast is a double exercise. You first need to build the numbers using a bottom-up approach and then sanity checks them using a top-down approach. If you are not familiar with these 2 methods of building financial estimates, these are explained in details in our article on how to do a market for a business plan .

The idea when building a financial forecast is to decompose the figure in a set of measurable sub-hypothesis. That way you will later be able to easily analyse the differences between the forecast figure and the actual figure, adjust the hypothesis and get a new, more accurate, forecast.

Here we will use a series of hypothesis to build a sales volume forecast and a price hypothesis. How to set the price is explained in the pricing section of our business plan outline article therefore I won't talk about it here.

Estimating the volume is a difficult exercise but there are a couple of techniques you can apply to increase the accuracy of your guess.

Forecasting sales of location-based businesses

If you are operating a location-driven business, such as a shop or a restaurant, the best thing to do is to go in the street where your business will be based and look at how many customers the other shops or restaurants in the street have.

If you feel that your concept is too different from the shops and restaurants in your street, then try to find a street with similar traffic which has shops and restaurants with a similar concept to yours.

When you go on street due diligence like this you need to make sure you that your analysis isn't biased by the day of the week and the attached seasonality. Make sure you cover at least one weekday and a full weekend.

Once you have estimated the traffic, all you need to do is to apply a conversion rate to deduct the number of sales.

In the end, your sales forecast should look like this:

• 600 people come to the street every day
• 1 out of 10 will enter the shop: 60 people/day
• 1 out of 5 people coming to the shop will buy: 12 sales/day
• the average price of an item is £80: £960 of sales/day
• the shop is opened 30 days a month: £28,800 of sales/month

Estimating sales using your competition

If your business is not location-driven then it is more complicated. The first thing to do is to go on a financial information website such as Companies House and try to get your competitors accounts or the accounts of a similar business. These accounts will give you the historical sales figure of these businesses from which you can estimate their historical volume sold.

From there you can use ratios such as the number of sales / square meter or the number of sales/employee to forecast your sales.

Your sales forecast will look like this:

This should give you an indication of what a mature business can deliver: Therefore if you are just starting out it will probably take you a bit of time to get there so you need to try to estimate what your ramp-up is going to be.

Also, if you are selling your goods through a distributor he should be in a position to give you an estimate. My advice here would be not to take it at face value and to discount it slightly to avoid any bad surprises.

Lead-based sales forecasting

One of the best techniques to forecast the sales of businesses that have a sales force is to build your volume forecast based on your lead generation capacity.

Let's see how it works with an example. Let's say that you sell services to small businesses and that your sales process is as follow: you phone potential customers to get a meeting and then go to the meeting and try to close the sale.

To forecast your sales, you can estimate how many phone calls an average sales representative can handle in one day. From there you can deduct how many meetings your sales representative is likely to get based on an estimated success rate. And then apply another estimated success rate to deduct the number of sales from the number of meetings.

Try to work out the entire sales funnel rather than using a global conversion ratio. That way you will be able to track the intermediary steps and adjust your sales forecast on the fly as you get more clarity on what the conversion rate at each step is. You will also be able to set more precise objectives for your sales force.

With this technique your sales forecast will look like this:

• 2 sales representatives generating 250 phone calls/month
• 1 phone call out of 5 leading to a meeting, which results in 50 meetings/month
• 1 meeting out of 10 leading to a sale, which results in 5 sales/month
• the average price of a sale of £50,000, which results in a monthly sales forecast of £250,000

Forecasting the revenues of an online business

If you are on online business you can use Google Adwords keyword tool. This tool will give you an estimate of the traffic associated with each keyword as well as an estimate of the number of clicks you should get for a given ad campaign. Then to build your volume forecast you need to figure out how much you can afford to spend on Adwords which will give you an estimated number of clicks. You can then apply a conversion ratio to the number of clicks to estimate a number of sales.

Your sales forecast will be something like this:

• Marketing budget: £6,000 / month
• The average cost per click: £0.8, hence 7,500 clicks
• Conversion rate: 4%, which results in 300 sales
• Average basket: £30, which results in a monthly sales forecast of £9,000

Sanity checking your sales estimate

Once you have to build your volume and your sales estimates you need to sanity-check them using a top-down approach. The idea here is to compute the implied market share of your forecast and check how realistic it is. If the number seems too high then you probably missed something.

If you are a capacity constraint business such as a hotel or a restaurant you also need to ensure that the volume makes sense compared to your capacity. For example, if you have a hotel with 10 rooms and forecasted 270 nights per month then you are implying that your hotel will run at 90% capacity which seems high.

You also need to factor in the seasonality and check that it is reflected properly in your sales forecasts.

Why the bottom-up approach is king

There are two reasons why you need to build your sales forecast using a bottom-up approach and not a top-down approach.

The first one is that, once you have started trading it enables you to check your assumptions and adjust your forecast based on your actual numbers.

For example, if you estimated that your salesmen will be able to get in average x meetings per month but they are actually getting y. Just replace x by y in your model and you have a revised, more accurate forecast on which you can take business decisions.

The second reason is to prepare your discussion with investors. If you use a purely top-down approach and say: "the market is worth £300m and we are going to take 1% market share the first year which gives us £3m revenues", the investor is going to reply: "I challenge that, prove it to me". And you are in trouble.

Now if you say: "we have 2 sales representative who will be able to generate 50 leads per month. We estimate that we will close 10% of our leads, which gives us 5 sales per month at an average price of £50k so £3m of revenues in year 1". The investor will most likely say nothing, give a phone call to a competitor or an expert and ask him if 25 leads per salesman per month make sense and what is the average success rate in the industry. If you are not too far off (remember that you need to demonstrate that you know your market) the investor will come back to you and ask you to run your model with the numbers the expert gave him (which you will then challenge because it is your market and you are the expert!).

The bottom line is that using a bottom-up approach enable a constructive discussion based on the assumptions used to build the number whereas the top-down approach is a black box and it just looks like you took a guess. No one likes to invest money based on a guess.

Also on The Business Plan Shop

• Free business plan template to download
• TAM SAM SOM, what it means and why it matters
• Tips for writing a business plan for investors

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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How to Do a Sales Forecast for Your Business the Right Way

Posted june 8, 2021 by noah parsons.

New entrepreneurs frequently ask me for advice about forecasting their sales . These entrepreneurs are always optimistic about the future of their new company. However, when it comes to the details, most aren’t sure how to predict future sales and how much money they’re going to make.

It’s an intimidating task, looking into the future. The good thing is, none of us are fortune tellers and none of us know any more about your new business than you do. (If you do happen to be able to see into the future, please just skip the whole startup thing and go play the stock market. It’ll be much easier and make you richer!)

So, my advice is always to just take a deep breath and relax. You’re as well equipped as everyone else to put together a credible, reasonably accurate forecast. Let’s dive right in and figure it out.

What is sales forecasting?

Sales forecasting is the process of estimating future sales with the goal of better informing your decisions. A forecast is typically based on any combination of past sales data, industry benchmarks, or economic trends. It’s a method designed to help you better manage your workforce, ash flow, and any other resources that may affect revenue and sales

It’s typically easier for established businesses to create more accurate sales forecasts based on previous sales data. Newer businesses, on the other hand, will have to rely on market research, competitive benchmarks, and other forms of interest to establish a baseline for sales numbers. 

Why is sales forecasting important?

Your sales forecast is the foundation of the financial story that you are creating for your business. Once you have your sales forecast complete, you’ll be able to easily create your profit and loss statement , c ash flow statement, and balance sheet.

Sales forecasts help you set goals

But beyond just setting the stage for a complete financial forecast, your sales forecast is really all about setting goals for your company . You’re looking to answer questions like:

• What do you hope to achieve in the next month? Year? 5-years? 
• How many customers do you hope to have next month and next year?
• How much will each customer hopefully spend with your company?

Your sales forecast will help you answer all of these questions and potentially any others that involve the future of your business.

Sales forecasts inform investors

Having a solid sales forecast also provides a picture of your performance and performance milestones for potential investors. Like you, they want to be sure you have established goals and a firm trajectory for your business laid out. The more detailed, organized, and up-to-date your forecast is, the better you explain the position of your business to third parties and even employees.

How to use your sales forecast for budgeting

Your sales forecast is also your guide to how much you should be spending. Assuming you want to run a profitable business , you’ll use your sales forecast to guide what you should be spending on marketing to acquire new customers and how much you should be spending on operations and administration. 

Now, you don’t always need to be profitable, especially if you are trying to expand aggressively. But, you’ll eventually need your expenses to be less than your sales in order to turn a profit.

How detailed should your forecast be?

When you’re forecasting your sales , the first thing you should do is figure out what you should create a forecast for. You don’t want want to be too generic and just forecast sales for your entire company. On the other hand, you don’t want to create a forecast for every individual product or service that you sell.

For example, if you’re starting a restaurant, you don’t want to create forecasts for each item on the menu. Instead, you should focus on broader categories like lunch, dinner, and drinks. If you’re starting a clothing shop, forecast the key categories of clothing that you sell, like outerwear, casual wear, and so on.

You’ll probably want between three to ten categories covering the types of sales that you do. More than ten is going to be a lot of work to forecast and fewer than three probably means that you haven’t divided things up quite enough.

You really can’t get this wrong. After all, it’s just forecasting and you can always come back and adjust your categories later. Just pick a few to get started and move on.

Which forecasting model is best? Top-down or bottom-up?

Before they have much historical sales data, lots of startups make this mistake—and it’s a big one. They forecast “from the top down.” What that means is that they figure out the total size of the market ( TAM, or total addressable market ) and then decide that they will capture a small percentage of that total market.

For example, in 2015, more than 1.4 billion smartphones were sold worldwide. It’s pretty tempting for a startup to say that they’re going to get 1 percent of that total market. After all, 1 percent is such a tiny little number, it’s got to be believable, right?

The problem is that this kind of guessing is not based on any kind of reality. Sure, it looks like it might be credible on the surface, but you have to dig deeper. What’s driving those sales? How are people finding out about this new smartphone company? Of the people that find out about the new company, how many are going to buy?

So, instead of forecasting “from the top-down,” do a “bottom-up” forecast. Just like the name suggests, bottom-up forecasting is more of an educated guess, starting at the bottom and working up to a forecast.

Start by thinking about how many potential customers you might be able to make contact with; this could be through advertising, sales calls, or other marketing methods. This is your SOM (your “share of the market”), the subset of your 1 percent of the market that you will realistically reach—particularly in the first few years of your business. This is your target market .

Of the people you can reach, how many do you think you’ll be able to bring in the door or get onto your website? And finally, of the people that come in the door, get on the phone, or visit your site, how many will buy?

Here’s an example:

• 10,000 people see my company’s ad online
• 1,000 people click from the ad to my website
• 100 people end up making a purchase

Obviously, these are all nice round numbers, but it should give you an idea of how bottom-up forecasting works.

The last step of the bottom-up forecasting method is to think about the average amount that each of those 100 people in our example ends up spending. On average, do they spend $20? $100? It’s O.K. to guess here, and the best way to refine your guess is to go out and talk to your potential customers and interview them. You’ll be surprised how accurate a number you can get with a few simple interviews.

How to create a sales forecast

Keep in mind that your sales forecast is an estimate of the number of goods and services you believe you can sell over a period of time. This will also include the cost to produce and sell those goods and services, as well as the estimated profit you’ll come away with.

We’ll dive into specific methods, assumptions, and questions you’ll need to ask in order to build a viable sales forecast. But to start, here are the general steps you’ll need to take to create a sales forecast:

• List out the goods and services you sell
• Estimate how much of each you expect to sell
• Define the unit price or dollar value of each good or service sold
• Multiply the number sold by the price
• Determine how much it will cost to produce and sell each good or service
• Multiply this cost by the estimated sales volume
• Subtract the total cost from the total sales

This is a super basic rundown of what is included in your sales forecast to give you an idea of what to expect. For example, you may find the need to aggregate similar items into unified categories, if you sell a large variety of items. And if at all possible, try to keep your forecasted items grouped similarly to how they appear on your accounting statements to make updates easier.

Check out this video for a quick overview of how to forecast sales:

Now let’s dive into some specific elements of your forecast you’ll need to define ahead of time.

Should you forecast in units or dollars?

Let’s start by talking about “unit” sales.

A “unit” is simply a stand-in for whatever it is that you are selling. A single lunch at a restaurant would be a unit. An hour of consulting work is also a unit. The word “unit” is just a generic way to talk about whatever it is that you are selling.

Now that’s out of the way, let’s talk about why you should forecast by units.

Units help you think about the number of products, hours, meals, and so on, that you are selling. It’s easier to think about sales this way rather than to think just in dollars (or yen, or pounds, or rand, etc.).

With a dollar-based forecast, you are only thinking about the total amount of money that you’ll make in a given month, rather than the details of the number of units that you are selling and the average price you are selling each unit for.

To forecast by units, you predict how many units you’re going to sell each month—using the bottom-up method of course. Then, you figure out what the average price is going to be for each unit. Multiply those two numbers together and you have the total sales you plan on making each month.

For example, if you plan on selling 1,000 units at $20 each, you’ll make $20,000.

When you forecast by units, you have a couple of different variables to play with: What if I’m able to sell more units? What if I raise or lower my prices?

Also, there’s another benefit: At the end of a month of sales, I can look back at my forecast and see how I did compared to the forecast in greater detail. Did I meet my goals because I sold more units? Or did I sell for a higher price than I thought I would? This level of detail helps you guide your business and grow it moving forward.

Sales forecast assumptions

One thing to remember is that your sales forecast is built on assumptions. You’re not predicting the future, but aggregating information to help define your future outlook. These assumptions are always changing, meaning that you’ll need to have a pulse on the following:  

Market conditions

Having a general understanding of the macro effects on your business can help you better predict overall growth. A growing or shrinking market can either provide a low or high ceiling for potential sales increases. So, you need to understand how your business can react to any changes.

What does the broader market look like? Is the economy slowing or growing? Is the industry you operate in seeing an influx of competition? Maybe there’s a labor or material shortage? Are there new customers you now have access to?

Products and services

You may find yourself making regular changes to your products and services. This can be sales factors that impact the customer, or production factors that impact the overall cost. 

Are you making any changes or updates to current offerings? Are you launching a new product or service that compliments or disrupts your existing sales? Are you adjusting prices or sales channels? Are you able to decrease the cost of production? Or are expenses rising due to material, labor, or other production costs?

Seasonality

Depending on what you’re selling, you may find dips or increases in sales at specific times during the year. This seasonality may have to do with the weather, holidays, product/feature releases, or a number of other predictable factors. 

If you have been operating for a while, you can likely look at your accounting data to identify any trends. If you’re a new business look to your competitors to see how they act during specific times of the year to help you identify these trends earlier on.

Marketing efforts

How much you spend on marketing, and even your messaging may have an impact on your overall sales. Make sure that you connect any performance changes to marketing efforts that may affect your performance.

Are you launching a new marketing campaign? Are you spending more or less on advertising? Are you adjusting your targeting for digital ads? Are you branching out or removing specific marketing channels from your overall strategy?

Regulatory changes

You may find that specific laws or regulations directly impact your industry. It’s difficult to anticipate what legislation will provide a negative or positive impact, and just how often this type of regulatory change may occur. The best thing you can do is keep your ear to the ground, and be ready to adjust expenses or sales when any changes appear to make traction.

How far forward should you forecast?

I recommend that you forecast monthly for 12 months into the future and then just develop an annual sales forecast for another three to five years.

The further your forecast into the future, the less you’re going to know and the less benefit it’s going to have for you. After all, the world is going to change, your business is going to change, and you’ll be updating your forecast to reflect those changes.

12 months from now is far enough into the future to guess. You’ll have to update your forecasts regularly with actual performance to help keep them accurate. 

And don’t forget, all forecasts are wrong—and that’s O.K. Your forecast is just your best guess at what’s going to happen. As you learn more about your business and your customers, you can change and adjust your forecast. It’s not set in stone.

Why using visuals will make forecasting easier

My final word of advice is to make sure that you graph your monthly sales with a chart.

A chart will make it easy to see how your sales might dip during a slow period of the year and then grow again during your peak season. A chart will also highlight potentially unreasonable guesses at your sales growth. If for example, you show a big jump in sales from one month to the next, you should be able to back this up with a strategy that’s going to deliver those sales.

Adjust your forecasts based on actual results

Your sales forecast isn’t done when you start sharing it with lenders and investors. Instead, smart businesses use their sales forecast to measure their progress and ensure that they’re on the right track. Their sales forecast becomes a live forecast . An up-to-date management tool that helps them run their business better.

The easiest way to convert your sales forecast into a management tool is to have a monthly financial review meeting where you look at your business’s finances. You shouldn’t just look at your accounting system, though. You should compare the numbers from your accounting software to your forecast and see if you’re on track. 

Are you exceeding your goals? Or maybe you’re falling a little bit short. Either way, knowing if you’re meeting your goals or not will help you determine if you need to make some shifts in strategy. This way, your business numbers drive your strategy.

Forecasting is easier with LivePlan

Tools like LivePlan can help with this. LivePlan uses a smart dashboard to automatically compare your forecast to your numbers from your accounting system—no cutting and pasting or complicated spreadsheets required. And with LivePlan’s LiveForecast feature , you can update the forecasts within your Profit and Loss Statement, with the push of a button. 

This allows you to spend less time updating and more time analyzing performance to make better decisions. In fact, the LiveForecast feature allows you to expand the details of your performance and identify the variance in performance within your statements. You’ll know your current cash position and the impact on projected year-end totals at a glance. It provides you with enough information to then explore the dashboard with questions and potential steps in mind.

Sales forecasting isn’t as difficult as you think

Just remember that sales forecasting doesn’t have to be hard. Anyone can do it and you, as an entrepreneur, are the most qualified to do it for your business. You know your customers, and you know your market, so you can forecast your sales.

Editor’s note: This article was originally published in March 2016, and was updated for 2021.

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How to Build a Sales Forecast with Templates, Examples and Formulas

A sales forecast is a crucial part of managing your business. Without it, you will not be able to properly manage your inventory, control cash flow, or grow your operations. The COVID-19 pandemic has made sales forecasting even more challenging, with unpredictable swings across the board, from the products consumers purchase to what channels they use to purchase these products. To create a sales forecast, you can make use of dedicated software or general sales software with forecasting capabilities.

Building a reliable sales forecast for your company is a concern that will always be top of mind for sales professionals. If you want an accurate prediction, this involves intuition, predictive analysis, and good CRM software . In this guide we’ll walk you through all the steps you need to take to be successful at sales forecasting, from how to compute it, to what sales forecasting templates to use. This way, you can have solid data to support your growth strategy.

How to Build a Sales Forecast Table of Contents

Why do you need a sales forecast, tools for accurate sales forecasting, the basic math you need to calculate sales forecast, types of forecasting methods.

• Sales Forecasting Templates
• Factors that Impact Your Sales Forecast

In 2020, retail sales grew by 6.7% or to $4.06 trillion compared to 2019 figures. This is almost double the predicted growth of 3.5% which did not account for the effects of a global pandemic. In 2021, the National Retail Federation forecasts that retail sales will amount to more than $4.33 trillion in 2021 as people get vaccinated and the economy reopens.

Source: National Retail Federation, 2021

In anticipation of increased retail activities, there are a few tips to keep in mind as you do your business forecasting for 2021 . At this point, it’s essential to review the basics of your business. Go over your key targets and customers and review their spending as well as checking your industry for growth or shrinkage. If you are in the B2B space, look into the possibility of adding account-based marketing to your tools. If you are in the B2C space, build your sales forecast around key segments then verify your financial model.

Aside from forecasting, sales forecasting can help you manage other aspects of your business related to your forecast. To help you in selecting the right cloud sales software , take into account how it can help you streamline your processes, provide real-time quotes, and integrate with your CRM, among other considerations.

Sales forecasting helps you gauge your revenues in the immediate future. This can be next month, quarter or year, depending on your definition of a sales period. It helps you manage your supply chain, cash flow and perform strategic planning.

Not doing sales forecasts right is like driving through a dark tunnel with no headlights. Will you reach the other end?

An accurate sales forecast is also a clue to a highly aligned organization. When different business units are on the same page they tend to achieve faster revenue growth and higher margins. In fact, according to data from Miller Heiman Group, having a formal, structured review process of sales forecast increases win rates by 25% compared to not having a formal approach.

Before we start you need a clear picture of what tools you’re going to need to help you create an accurate sales forecast. This will include:

• Sales cycle. Do you have a clear pipeline with well-defined stages and length of period to close deals?
• Closing rate. What’s the probability of closing per sales stage?
• Deal value. What’s the value of each deal per sales stage?
• CRM. Selecting a reliable CRM software will help you streamline and automate sales forecasting.

At its base, sales forecasting involves three simple computations:

• How much you’ve earned so far
• How much you’ll earn more
• The sum of both in a given year.

For simplicity, we’ll use monthly as our reporting period (you can always adjust this to quarterly, bi-monthly or weekly periods).

Monthly run rate. The average sales revenue per month so far this year. This is the base of your forecast. You calculate it like this: Sales revenues to date / no. of months to date Example: If your current total sales revenues as of March is $10,000, divide it by 3 months, so your monthly run rate is $3,333.

Forecasted monthly sales. Sales revenues you expect to earn from the remaining months. You calculate it like this: Monthly run rate x no. of remaining months Example: $3,333 (monthly run rate) x 9 months (April to December) = $29,997

Forecasted annual sales. The total sales revenues you expect this year. You calculate it like this: Sales revenues to date + Forecasted monthly sales

But before you eagerly run the formulas above, you need to get your numbers right. That means you have to drill down to the causes of the revenues and evaluate them to arrive at a more accurate forecast. Reverse engineering your revenue goals is one way but for purposes of this article, we’ll stick with standard forecasting techniques.

Here, you can turn to proven methods that break down sales forecasting to measurable metrics. Let’s discuss those next.

1. Opportunity stage forecasting

This method uses the probability of deals to close at each sales stage to forecast revenues. As opposed to simply using past sales as a basis, it looks into the rate by which the sales were closed.

How it works:  You should know the close rate in each sales stage and the deal value . In general, the bottom of the funnel stages should have higher rates than the top of the funnel ones. For example, in initial contact 5% of deals are expected to become customer, while at later stages, such as in the presentation stage, the rate jumps to 40%.

Here’s how you forecast sales using this method:

Forecast = total value of current deals in a stage x close rate

Example: $2,000 worth of deals ready for presentation x 40% close rate = $800 forecasted value per stage.

To get the overall sales forecast simply add all forecasted values per stage.

Pros of this method

• Easy to calculate
• Leverages recurring trends
• Lends to your forecast some statistical truth

Cons of this method

• Aging deals may screw up data
• Shifts in trends will lead to an inaccurate forecast
• Relies on sales reps’ feedback

2. Length of sales cycle forecasting

This method also uses a close rate to predict sales but based on the deal’s age . In effect, it addresses the problem in our first method.

How it works:  You should know your sales cycle and deal value . The closer the deal to the end of the sales cycle, the higher the close rate. For instance, if your sales cycle is 6 months and the deal is at 3 months, the close rate is 50%.

Here’s how you calculate future sales:

Forecast = deal value x close rate at sales cycle

Example: $1,000 deal value x 10% close rate at two months = $100 forecasted value

Again, to get the overall sales forecast simply add the forecasted values of your current deals.

• It sorts out aging deals
• Data is objective
• If you have various sales cycles calculation is complex
• It doesn’t work for irregular sales cycles

3. Intuitive forecasting

This method relies on the sales reps’ insight on the chances of closing deals . After all, who better to know the deals than those closest to them.

This suits small businesses or startups. Their people are likely to be more engaged with each other than in big organizations; thus, trust is easy to toss around. Startups especially lack historical data, so they rely on this method.

How it works:  It requires no more than asking your sales reps when they think the deal will close and how much.

• It leverages the insight of the people involved in the deal most
• It’s simple to conduct.
• Vulnerable to overoptimism or abuse
• No scalable way to verify data integrity

4. Historical forecasting

Some call this the lazy way to forecast sales, but it works for others. The idea is to assume the same result will happen month over month , at least. This works best for subscription-based business.

How it works:  For example, last month’s MRR is $500, so you assume the same values for the succeeding months. You can also assume the same sales velocity applies each month. So, if you’ve been increasing sales by 5% month to month, and your current monthly run rate is $500, your next month’s forecast is:

$500 current monthly run rate x 5% sales velocity = $25 additional sales $25 + $500 = $525 forecasted sales next month

• Quick to calculate
• Predictable
• Doesn’t factor in seasonal shifts, external events
• Assumes demand is constant

5. Multivariable analysis

This is the most complex method in our how to build a sales forecast guide, but the most accurate, too. It uses the various methods above and adds predictive analytics. In short, you combine data in:

• Probability of closing deals
• Sales cycle
• Sales reps’ insights
• Historical data

Here the math gets convoluted and, if you’re like us, you might feel overwhelmed running numbers on different metrics.

Can you imagine calculating the value of deals closed, guaranteed to close and likely to close for this month if you have hundreds of prospects? That means tracking each deal size MRR and close rate for each sale stage and plotting them across the sales cycle. You also need to consider MRR by client, adding another layer to the math.

You can sweat it out with a manual process or there’s a better way: we highly recommend you use a reliable CRM software for multivariable forecasting Like HubSpot or other simpler Salesforce Cloud alternatives . A CRM software guide  will help you understand these solutions and how they can help.

A  study by the Aberdeen Group shows that 82% of companies that heavily use CRM achieve their overall quota vs. 65% of companies that don’t leverage CRM much. Similarly, 60% of the former’s sales reps achieve their sales quota vs. 50% of the latter’s sales reps.

You’ll realize that tracking actual and predicted revenue using a high-quality CRM tool like  HubSpot CRM will make it simplified and automated , allowing you to stay on top of your game. You can also see where your current sales against your monthly quota.

Furthermore, HubSpot CRM logs sales activities automatically , such as calls, emails, and social media posts. It also gives you total visibility across your pipeline, which helps you track deals and surface their associated records with ease.

It’s easy to track your deals, closed deals and leads on HubSpot, a great free CRM .

Overall, this tool provides the context to gauge your sales reps’ closing rate with more accuracy. Moreover, HubSpot CRM is a completely free CRM . If you want to try it out you can easily sign up for HubSpot CRM here .

Sales forecasting templates

If you’re not ready for a CRM push and want to stick with spreadsheets, or you’re just starting out, you can at least level up the process by using sales forecasting templates. A template puts structure to your data. It also disciplines your team to standardize data gathering and reporting.

You can find plenty of templates on the internet. For one, HubSpot is offering a free sales forecasting template , which you can immediately use for any of the first four methods we discussed. It organizes prospects, forecasts monthly revenue and tracks yearly revenue goal. You stay on top of your quota.

Factors that impact your sales forecast

Sales forecasting goes beyond deals and closing rate. A lot of things beyond your team and control will affect your ability to predict with accuracy. You need to consider these factors and adjust your forecast where needed.

• Seasonality. Demand usually go through high and low seasons, meaning, you won’t have the same month-to-month results.
• Marketing spend. Post campaigns can create a spike in sales. Find out what the marketing team is up to.
• Market shifts. These are changes in consumer behavior, technological disruption, and social trends.
• Competition. What your competitors are planning soon can impact on your future sales. Examples are: a price cut, new product launching and major brand campaign.
• Internal changes. Changes in your product, brand and organization impact on your future sales. For example, the product gets a facelift or rebranding or price adjustment or your company downsizes its sales team.
• Top management. Strategic decisions and plans may also impact on your forecast. For instance, mergers & acquisitions, IPOs and new round of fund seeding all have direct or indirect effect on your future sales.

Moreover, always be open to refining your forecast as new opportunities pop up or threats derail your original target. An accurate and honest low-level forecast is always better than an impressive but bloated target. False hope costs money.

Wrapping Up Your Sales Forecast

Creating an accurate sales forecast is your blueprint for future success. So you can accurately generate one, take a look at your sales cycle, closing rate, deal value, and your CRM tool. You can then proceed with computing your run rate, forecasted monthly sales, and forecasted annual sales. You can use different forecasting methods, from opportunity stage forecasting to multivariable analysis. If you don’t have a CRM or sales software, you can use sales forecast templates like those from Hubspot. Whatever route you decide, keep in mind the different factors that impact your sales forecasts, such as seasonality, market shifts, and the like.

Remember, even though nobody can predict the future, you can gauge it with the right intuition, the right formulas and data, and top-notch CRM tools . Your sales forecast can also be complemented with tested CRM tips and approaches to further improve sales revenues. With this, you can build useful sales forecasts even in turbulent times like the pandemic.

We hope this guide on how to build a sales forecast will help you achieve a more reliable goal when you work on your next project. If you need some extra help, you can always try out more accurate sales forecasting by signing up for the free HubSpot CRM tool.

By Adam Goldberg

Adam Goldberg is a senior market research analyst and one of the key customer experience technology and CRM pioneers working for the FinancesOnline review team. He has been cooperating with FinancesOnline for over 5 years now. During that time Andrew has analyzed more than 2,000 CRM solutions and he’s well-known for his honest reviews and his unique perspective on challenges and opportunities posed by customer-centric innovation. He’s a strong believer in business process automation and the role it plays in customer data management, conversational intelligence, and customer engagement. His work has been mentioned in many major publications and media sites, including MSN, Springer, TheNextWeb, and CIO.

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3 Popular Sales Forecast Examples For Small Businesses

• October 9, 2022
• Small Businesses

When creating financial forecasts for their business, entrepreneurs often face difficulties. Yet, there are 3 popular sales forecast examples you can use when creating yours. They work for the most popular revenue models , from restaurants, to retail shops, to software companies and other online businesses.

If you aren’t sure what are sales forecasts, read our article and follow these 5 simple steps to create accurate sales forecasts for your business. Looking for examples instead? In this article we explain what are the most popular 3 sales forecast examples for (almost) any type of business. Let’s dive in.

What is a sales forecast?

A sales forecast is the financial projection of a business’ sales (or revenues, turnover) over a given period. Therefore, sales forecasts are a must have of any financial forecast: by projecting sales and expenses we can then prepare the  4 financial statements  which constitute a financial forecast.

Often, sales forecasts are included within a business plan as part of your projected financial statements. Indeed, investors will want to see your business’ financial projections over a given period. Sales forecasts often are  3 or 5-years projections .

For more information on sales forecasts for small businesses and why they are important, read our article here .

Let’s now dive into the 3 most popular sales forecast examples which work for any type of business, from restaurants, to retail shops, to software companies and other online businesses.

Why are sales forecasts important?

Because sales forecasts are part of your financial forecasts, and ultimately your business plan, it is very important to get it right.

Sales forecasts help you set goals for your business

Sales forecasts aren’t simply a requirement for your business plan. Instead, they also help you set goals for your business. The sales you expect to generate as per your sales forecast should be used as a guidance for your budget and your business decisions later on.

You show you understand your business

Showing investors you’re not only a great entrepreneur but also a well-rounded and omniscient founder is very important to get the best deal. A great sales forecast will help understand how your business generates revenues, what are the different drivers affecting revenue and the potential risks involved.

Investors will give more credit to financial plans based on verified assumptions and reasonable targets. Calculate expected revenue using market size , market share and/or user adoption rates for instance. The more you justify your plan with verified assumptions, the more credible it will be.

You know how much you need to raise

Many entrepreneurs and founders do not really know exactly how much they need to raise.

Sales also drive expenses, so forecasting sales plays a pretty important role when assessing things such as your breakeven or the amount of money you need to raise . Miss the mark and you may be in trouble.

How much cash do you need to cover your losses over the next 12-18 months? The amount of money you need to raise is the result of your financial projections. This is very important to accurately estimate your revenues and expenses.

How to do a sales forecast?

Before we dive into the specifics of creating a rock-solid sales forecast for your small business, let’s first explain which approach you should follow.

Many entrepreneurs make the same mistake when forecasting their sales: they use a top-down approach. So what is bottom-up and top-down sales forecasting? Let’s use an example below.

• Top-down sales forecasting : we forecast sales using from the top down. For example, you make $500k in revenue per year and you forecast the next 3 years revenue by assuming you will capture 3% of your market size (assuming it is $100 million). By following this approach, your annual revenue is 3 years time is $3 million, a 6x increase from today.
• Bottom-up sales forecasting : we forecast sales using operational drivers (from the bottom up). For example, if your $500k sales are a function of your website traffic, we will forecast revenues based on this metric instead. Assuming website traffic increase by 50% each year (as you invest in paid and content), your revenue in 3 years time is $1.7 million, a 3x increase from today.

Bottom-up sales forecasting is the best approach for 2 main reasons:

• It allows us to relate revenues to another metric, helping us making sense of the projection. Does $3 million really make sense given this would mean multiplying website traffic by 6x over the next 3 years?
• Top-down approach requires us to make assumptions on the market size, which is often inaccurate for lack of publicly available data. Instead, bottom-up uses your own business’ historical data

Sales forecasts: 3 popular examples

1. location-based businesses.

If you are running a businesses with a physical location, such as a hotel, a restaurant, a repair shop or a retail store for example, forecasting sales boils down to forecasting street traffic.

Indeed, sales (revenues) are a function of the sales volume you generate (the number of “units” or products you sell). The sales volume itself is a function of the number of people who enter your store, and, by extrapolation, the number of people who pass by your store.

When forecasting sales for a new business, you should look at the location where your business will be based first. Assess the approximate number of people who are passing by.

Note: when assessing traffic, be careful to exclude any external factors (e.g. Christmas day), cyclicality and seasonality. Ideally, your assessment should look at a full week and all work hours in the day.

Once we have established the approximate number of people who pass by the street in a day, we will need to apply conversion rates, in order:

• How many people enter the store?
• Out of the people who enter the store, how many make a purchase?

Of course, if you already have some historical data (if you already run a store and are opening a new one), use your existing conversion rates. Else, make assumptions.

When making assumptions, you should use the data you have collected when making your own observations earlier. Use similar stores to yours, in a different street for example.

For example:

• 5% of people passing by your store enter
• 10% of people entering the store make a purchase

We can now create a simple sales forecast over a week, adding up the average traffic over a typical week:

2. Online businesses

Online businesses often acquire their customers via their website, or any type of online presence.

As such, unlike location-based businesses, sales (revenues) are a function of visitors (and not street traffic). The visitors can be visitors on a website, on a Appstore page (mobile apps) or any type of online lead acquisition page.

We often refer this type of acquisition as inbound acquisition . The traffic is two fold: paid and organic:

• Paid traffic : all visitors coming from paid marketing channels (Google Search, Facebook Ads, etc.). You are either paying for clicks, or impressions. 
• Organic traffic : all visitors landing on your landing page(s) organically (either via a referral link, direct search, social media post, blog article, etc.)

Paid marketing is the easiest way to generate traffic. Yet, because you are paying for each paid visitor, you will need to monitor your  Return on Ad Spend (ROAS)  to make sure your paid marketing campaigns are profitable.

In comparison, whilst you do not directly pay for each organic visitor, organic traffic is not free. Organic traffic is earned from investment into  SEO  and content. Whilst investing into your SEO for instance does not pay immediately, the returns can far outweigh those of your paid marketing in the long run.

So, when forecasting sales for online businesses, we should make assumptions on traffic. For example assuming:

• 30,000 visitors last month: 20,000 paid and 10,000 organic
• 3% monthly increase
• 2% conversion rate
• $50 average purchase price

This is how could look like a simplified sales forecast example for an online business:

3. Lead-acquisition businesses

Lead-acquisition businesses are companies that make sales through their sales teams efforts. This is also known as outbound acquisition (vs. inbound discussed above).

With outbound acquisition, a business acquires customers through its sales team. Whether it is via phone, email, Linkedin or even in-person, the number of acquired customers is a function of the number of sales people.

Outbound acquisition is very common for business-to-business (B2B) companies. For example, Enterprise SaaS and B2B marketplaces use outbound acquisition to acquire their customers.

Outbound customer acquisition is therefore easier to forecast vs. inbound. The simple formula to estimate new customers over time is:

The number of closings per sales person is also referred to as the efficiency of your sales team = the number of customer one sales person acquire (or “close”) each month, in average.

For example, lets’ assume you have 20 sales people. Historically, your sales team has closed (“acquired”) in average 2 B2B clients per month per sales person. Assuming you have the same number of sales persons and the same sales efficiency in the future, we can reasonably expect 40 new customers per month.

Now, assuming 1 new hire every 2 months, a sales forecast example for a lead-acquisition business could look like this:

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10 Free Sales Forecast Templates in Excel and ClickUp

Praburam Srinivasan

Growth Marketing Manager

February 15, 2024

An effective sales forecast ensures the organization (or the sales team) hits the targets by setting realistic goals. A sales forecast template makes it easy for a busy manager to forecast sales and revenue. 

Let’s take two scenarios: 

Sales Manager A asks the VP of Sales to hire more people to crush their 2025 goals. The manager has a rough idea of how many sales reps they need. 

On the other hand, Sales Manager B has a solid plan of how many reps they need and what the sales projections and future revenue look like based on market trends, customer data, and the revised headcount. 

If you were the VP of Sales, whose sales forecasting would you opt for?

Manager B, naturally. Why? Because Manager B provides a solid sales forecast to back what they’re asking for.

This article covers the sales forecast templates in Excel and ClickUp to improve your business forecasting accuracy and decision-making. 

What is a Sales Forecast Template?

What makes a good sales forecast template, 1. clickup sales forecast template, 2. clickup sales report template, 3. clickup sales crm template, 4. clickup sales page template, 5. clickup sales pipeline template, 6. clickup sales kpi template, 7. excel sales forecast template by salesflare , 8. excel sales forecast template by excel skills, 9. sheets retail businesses forecasting template by close, 10. excel sales forecast template by gong.

A sales forecast template is a customizable form that gives you expected sales and revenue over a specific period.

Your sales forecast template can predict the increase in the average order value for an existing product or the number of units sold, the growth rate for a specific time (weekly/monthly/quarterly), and the number of new customers you’re likely to add. 

Sale forecast templates are helpful during the planning stage as they help businesses allocate resources, estimate costs, and assess if the business actions align with the short and long-term organizational goals. 

Business owners rely on the sales forecasting template to develop budgets for hiring and plan the production cycles. Sales teams use them for territory and quota planning and to drive their sales strategy with channel and partner sales.

For the sales project template to be functional, it should be:

• Clear and simple: The template should be easy to use along with essential sections such as financial projections, revenue targets, and sales quotas
• Customizable: A good sales projection template is customizable to fit your organization’s decision-making process and adapt to your sales cycle
• Collaborative: The free sales forecasting template should allow input from stakeholders, the sales team , and leadership to promote cross-departmental collaboration
• Visually engaging: You should be able to add charts, tables, whiteboards, and diagrams to understand future sales revenue targets at a glance
• Workflow automation: For an accurate sales forecast, you need automation to convert raw numbers into insights and assign follow-up tasks rather than doing it manually
• Integrations: Choose a sales forecast template that integrates with Google Sheets, strategic planning templates , customer relationship management (CRM) software, and tools your sales team uses
• Artificial intelligence: Does the sales forecasting template have built-in AI tools to complete the template or speed up the process?

10 Sales Forecast Templates to Use in 2024

ClickUp’s Sales Forecast Template helps you visualize the pipeline and current sales process, set future goals, and collaborate with your team in one place.

Here’s how to use this template effectively:

• Gather historical data of order volumes, revenue by accounts, profit margin, or deal value. Create a spreadsheet of your company data and add relevant data using Table View in ClickUp to project growth 
• Analyze the data and look for trends and patterns. There are 17 custom attributes such as product name, month, shipping cost for average sale, lead conversion rates for multiple products, and forecast amount to help you visualize the trends easily
• Set realistic goals for sales growth considering consumer feedback, historical sales data, and upcoming market opportunities. Create tasks to track your progress toward the goals
• Project future revenue based on the goals you’ve set. Assess different scenarios, such as high-growth and low-growth situations, and use Gantt charts in Clickup to visualize your projections
• Monitor and course-correct the forecasts as you progress toward your goals 

One of the most widely used free sales forecasting templates, it ensures you include all viable deals when making future growth projections. 

Even seasonal businesses use this template as their go-to tool to make accurate sales forecasts.

Presenting an efficient sales report helps you stay organized and builds trust with the leadership team. Whatever sales forecasting methods you use, this sales report template gives you an overview of your sales efforts by breaking down your annual, quarterly, and monthly sales. 

Compare historical performance for multiple years by exporting data from sales plan templates . 

Clickup Sales Report Template is your go-to guide to stay organized and monitor sales performance. Understand what has worked in the past and gain insights into how you’re doing and where you’re headed.

Slice and dice the information using key data points such as geography, key account managers, sales achievements, and sales goals. Set up custom views to generate monthly, quarterly, and annual growth rates and have this information at your fingertips.

Use this template to highlight dependency warnings, track capabilities, and improve sales performance tracking. 

ClickUp’s beginner-friendly forecast template lets you track your actual sales against projections and break them up by service type or how many units are sold if you have multiple products. Track the impact of seasonality in retail stores or compare how different regions are performing against each other and export other relevant information from your sales report template . 

Use this data in your after-action report data templates to evaluate the performance in tangible terms, such as technical correction or lessons learned. 

Managing and tracking leads is exhausting, and sales reps detest it.  Any sales rep would rather spend time building relationships and closing deals than making manual entries.

ClickUp’s Sales CRM Template serves as a backbone to your team. Whether you are a small business or a large enterprise, having a robust CRM is essential to stay ahead of the competition and focus on the factors that matter most.

With a robust no-code database and real-time analytics, you can trust ClickUp’s Sales CRM Template to:

• Help your sales team stay organized 
• Gain visibility into customer interactions and buying cycles 
• Identify prospects, customers, in-active users, and uncover insights about closed deals 
• Gain clarity into customer communications 
• Store and access customer data from a central location 
• Increase productivity by eliminating manual tasks and automating processes 

Use toggles and dropdowns to move lead status such as Onboarding, Active, and Payment Pending to monitor the progress on every sale. Set key customer demographics and interests to personalize your campaigns and automate follow-up emails.

Build a transparent sales forecasting process wherein everyone can see the shared sales data, forecast revenue, and other critical data points. 

Use quarterly business review (QBR) templates to align organizational goals, hold everyone accountable, and drive continuous improvement. 

ClickUp’s Sales Page Template lets you create engaging and visually appealing sales pages to take your product to more customers.

This template gives you a starting point to create the best possible page with capabilities such as: 

• Generate more leads and improve conversions
• Communicate product offerings with customers
• Organize and track sales key performance indicators (KPIs) such as forecasted sales easily
• Encourage website visitors to take the next action (sign-ups or become paying customers)
• Highlight your product features and benefits with multiple media formats such as text, images, or videos

Although not a forecast template per se, the Sales Page Template lets you create sales pages without dependency on your tech teams.

Tips to best use this template:

• Define your target audience and understand who you’re trying to reach to create a page that directly speaks to their needs. Use ClickUp Docs to note all the characteristics of your potential customers and your sales goals  
• Use tasks to list the key features and benefits of your product or multiple products and make this the basis of your sales page
• Write a compelling copy for your sales page while focusing on the benefits and addressing your target audience’s pain points in Docs
• Design an engaging sales page that keeps your visitors engaged using ClickUp Whiteboard
• Once the page is live, A/B test different versions of the page to see the best-performing version and optimize it further. The Board view lets you track sales page versions and their performance
• Lastly, collect user feedback to improve the landing page and your product. The key to achieving projected revenue is keeping an open mind and the ability to make changes based on user input  

As a sales leader, the last thing you want to do is follow up with your team members to know the total sales vs. the sales projections vs. sales goals and the growth rate. You should have all these details with you 24/7. 

A structured and efficient sales pipeline management process takes you from stressful month-end to more focused and strategy-driven conversations with your sales team.

Unless you have a structured sales pipeline, the leaders have limited visibility on how close or far the sales reps are in meeting their quotas.  

Clickup’s Sales Pipeline Template gives you an ultimate toolkit to monitor and optimize every stage of your sales process. Use this forecast template to get a bird’s eye view of the pipeline and sort your actions based on urgency, value, and potential.

Consider adding the daily sales forecast and monthly sales projection template to your workflow to visualize the entire sales funnel in a single view. 

KPIs track critical sales metrics to improve sales performance, identify opportunities and prospects, and increase revenue generation. While they’re an excellent resource to measure the success of your sales strategy, with so many metrics, deciding which ones to track becomes overwhelming.

ClickUp Sales KPI Template helps you set measurable goals and track them across the sales funnel. The free sales forecasting template offers visibility into a team’s efforts and assesses if they maximize organizational goals.

This template provides an easy solution for sales leaders and their teams to understand the metrics they drive, provide clarity and transparency on performance, and take corrective actions.

Visualize relevant KPIs using custom fields such as Upsell Attempts, Value of Quotes, and Repeat Sales Revenue and send regular reports to your C-suite. 

If a small business owner needs a template for forecasting sales or keeping track of expected revenue, Salesflare’s Excel Sales Forecast Template is a good starting point. 

Or, if you’re facing scalability challenges using an Excel sheet as your budget forecast template, use this template to forecast your revenue, track historical sales data, and improve your sales process.

Create your sales funnel, record the probability of closing deals, set targets for your team, and assign them tasks. Use pre-built charts to fine-tune your forecast for quarterly, annually, or for any specific time.

Set sales OKRs for your team, closure probabilities, and a custom # of days after which you would like to follow up. This tells you how your sales reps are doing and how their conversions look and equips you to take relevant action.

Salesflare lets you import your Excel and Google Sheets templates into its CRM, making extra space for you to focus on building relationships.

Excel Skills Sales Forecast Template is effective when you have shorter sales cycles and don’t need pipeline-level lead tracking. This template compiles monthly sales forecasts for three years.

Compared to other sales forecast templates by ClickUp, the caveat is you must manually enter data such as monthly sales volumes, selling prices, and gross profit percentages for each product category. All the other calculations are automatically updated.

This sales projections template has pre-built functions showing you total sales, cost of sales, and monthly gross profit. The template includes five product categories, but you can add additional categories by simply inserting the appropriate number of rows in each sales forecast section.

While the other sales forecast templates in this list are industry-agonistic, the Retail Business Forecasting Template by Close is for retail businesses.

Traditionally, retail sales forecasts happen over spreadsheets. This beginner-friendly retail sales forecast template allows retail shops to compile monthly sales forecasts, allocate budgets, spot trends, and catch potential pitfalls early.

The different ways to use this Excel-native template are:

• Track your leads and meetings and get a complete view of your sales pipeline
• Perform monthly and yearly forecasting to plan your sales projections 
• Customize the free sales forecasting template with adjustable funnel metrics
• Interpret data using visual graphs 

Do you forecast in the dark? Are your committed deals backing out? Need help with low quota issues?

If you answer yes to any or all of these issues, Gong’s Excel Sales Forecast Template is for you. Designed in Excel, this simple and free sales forecast template identifies gaps in your pipeline and ensures your team hits its targets.

Within the pre-built template, you must enter your team-specific numbers, and the premade formulas make your forecasts in minutes.

This sales forecasting template covers you from weekly sales forecast, pipeline coverage, or total pipeline coverage.

Predict and Optimize Your Future Revenue with the Right Sales Forecasting Template

Manual forecasting is time-consuming and erroneous. You’re missing out on all the actionable insights that could help your sales managers meet and exceed their sales goals.

A suitable sales forecast template will make all the difference—you don’t have to create forecasting frameworks from scratch every time.

Modern sales teams and business owners love ClickUp’s forecast templates as they’re customizable, integrate with third-party tools, and combine project management with forecasting.

  Sign up on ClickUp to get started for free.

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Run » finance, how to create a financial forecast for a startup business plan.

Financial forecasting allows you to measure the progress of your new business by benchmarking performance against anticipated sales and costs.

When starting a new business, a financial forecast is an important tool for recruiting investors as well as for budgeting for your first months of operating. A financial forecast is used to predict the cash flow necessary to operate the company day-to-day and cover financial liabilities.

Many lenders and investors ask for a financial forecast as part of a business plan; however, with no sales under your belt, it can be tricky to estimate how much money you will need to cover your expenses. Here’s how to begin creating a financial forecast for a new business.

[Read more: Startup 2021: Business Plan Financials ]

Start with a sales forecast

A sales forecast attempts to predict what your monthly sales will be for up to 18 months after launching your business. Creating a sales forecast without any past results is a little difficult. In this case, many entrepreneurs make their predictions using industry trends, market analysis demonstrating the population of potential customers and consumer trends. A sales forecast shows investors and lenders that you have a solid understanding of your target market and a clear vision of who will buy your product or service.

A sales forecast typically breaks down monthly sales by unit and price point. Beyond year two of being in business, the sales forecast can be shown quarterly, instead of monthly. Most financial lenders and investors like to see a three-year sales forecast as part of your startup business plan.

Lower fixed costs mean less risk, which might be theoretical in business schools but are very concrete when you have rent and payroll checks to sign.

Tim Berry, president and founder of Palo Alto Software

Create an expenses budget

An expenses budget forecasts how much you anticipate spending during the first years of operating. This includes both your overhead costs and operating expenses — any financial spending that you anticipate during the course of running your business.

Most experts recommend breaking down your expenses forecast by fixed and variable costs. Fixed costs are things such as rent and payroll, while variable costs change depending on demand and sales — advertising and promotional expenses, for instance. Breaking down costs into these two categories can help you better budget and improve your profitability.

"Lower fixed costs mean less risk, which might be theoretical in business schools but are very concrete when you have rent and payroll checks to sign," Tim Berry, president and founder of Palo Alto Software, told Inc . "Most of your variable costs are in those direct costs that belong in your sales forecast, but there are also some variable expenses, like ads and rebates and such."

Project your break-even point

Together, your expenses budget and sales forecast paints a picture of your profitability. Your break-even projection is the date at which you believe your business will become profitable — when more money is earned than spent. Very few businesses are profitable overnight or even in their first year. Most businesses take two to three years to be profitable, but others take far longer: Tesla , for instance, took 18 years to see its first full-year profit.

Lenders and investors will be interested in your break-even point as a projection of when they can begin to recoup their investment. Likewise, your CFO or operations manager can make better decisions after measuring the company’s results against its forecasts.

[Read more: ​​ Startup 2021: Writing a Business Plan? Here’s How to Do It, Step by Step ]

Develop a cash flow projection

A cash flow statement (or projection, for a new business) shows the flow of dollars moving in and out of the business. This is based on the sales forecast, your balance sheet and other assumptions you’ve used to create your expenses projection.

“If you are starting a new business and do not have these historical financial statements, you start by projecting a cash-flow statement broken down into 12 months,” wrote Inc . The cash flow statement will include projected cash flows from operating, investing and financing your business activities.

Keep in mind that most business plans involve developing specific financial documents: income statements, pro formas and a balance sheet, for instance. These documents may be required by investors or lenders; financial projections can help inform the development of those statements and guide your business as it grows.

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How to calculate a sales forecast for a new business

Table of Contents

Definition of a sales forecast

The uses of a sales forecast, how to calculate sales forecast for a new business, calculate a sales forecast using the accounts of your competition , calculate a sales forecast using a target market, manage your finances with countingup.

When you’re running a business, you should always keep one eye on the future. If you don’t have a rough idea of what the next week, month, or year might bring, you’ll be at a disadvantage when making business decisions. This means that calculating a sales forecast is essential, especially when you’re just starting a business or beginning to write a business plan . 

Sales forecasting can be tough if you don’t have much business experience, but we’re here to help. This article will cover a range of different topics related to sales forecasting, including:

Creating a sales forecast is the first step in managing your company’s cash flow . Your cash flow is the movement of money in and out of your business. By forecasting your sales, you’ll be able to predict your gro s s profit and net profit , which means you can start anticipating what money you’ll have to spend on running your business for the next month. 

Put simply, a sales forecast is a prediction of how much you’re going to sell in the coming month. This forecast doesn’t need to be a guess — it’s possible to calculate a fairly accurate forecast with some thorough research. The focus of your research will differ depending on which sales forecast method you pick.

Firstly, your sales forecast is important because it helps you set sales goals . Measuring the success of your business is a vital part of deciding its future, and setting sales goals is one of the simplest ways to measure success. 

If you have an accurate sales forecast, you’ll be able to set realistic sales goals. You’ll want your goals to be realistic, as this will give the clearest picture of how well your company is doing and if significant changes are needed.

Similarly, sales forecasts can also help create an accurate budget for your business. As a sales forecast is essential for predicting the money your business will make, it also plays an important part in working out how much money you’ll have to spend. 

Finally, sales forecasts help with finding investors for your business . If you’re looking for financial support to start your business, any investor you approach will likely be interested in the amount of money you expect the business to make. If you’ve created a sales forecast, you’ll be able to provide this information.

Large, well-established businesses rely on the sales figures of previous months to calculate their sales forecasts for the future. While having previous sales figures helps create more accurate forecasts, it’s not essential. There are a couple of methods new businesses can use to calculate their sales forecasts, even if they don’t have a sales history to look back at.

It’s always a good idea to research the competition when you’re setting up a new business. This is also true when calculating a sales forecast, but it depends on the type of businesses that make up your competition.

If any of your competitors are registered with the government as limited companies , they will have to make their accounts publicly available. These accounts will contain things like their monthly expenses, total profits, and (most importantly) the money they’ve made from sales. 

Using this last figure, you can work out how much your competitors are making from sales each month, and get a reasonable estimate of your own sales. You can find these accounts by searching for your competitor’s business on Companies House .

Please note that this method isn’t effective if your competitors are sole traders , as this means they won’t need to publish their accounts publicly. In this instance, you should use the forecasting method below. 

This method is known as ‘bottom-up’ forecasting, as you start at the bottom — your potential market of customers — and then work up to a forecast — the percentage of those customers that make a purchase.

The first step of this method is identifying your target market . This is the section of the population that you think will be interested in your product. With a little market research — things like sending out surveys, or posting polls on social media — you can work out how many people are in your target market. 

Once you have the size of your target market, you need to make realistic estimates of how many people will make a purchase. For example, if 1000 people in the local area are potential customers, you should expect 10% to visit your store or website, and 1% to actually make a purchase.

This method of calculating a sales forecast is good because it’s very adaptable. If you get many more or far fewer sales than you originally calculated, then you can adjust your figures accordingly and record the new forecast. 

It’s also a good idea to categorise this sort of sales forecast. Instead of estimating your overall sales, estimate the sales of each type of product you sell. That way, you can use the forecast to work out how many of each product to make or order each month. 

Creating a sales forecast is a great start, but it’s only the first part of managing your sales revenue. Once you start making sales and money starts coming in, you’ll need to track that cash so you can work out where to spend it. If you think you might have trouble with this, try using a financial software tool like Countingup.

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward!  Find out more here .

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Tim berry on business planning, starting and growing your business, and having a life in the meantime., standard business plan financials: how to forecast sales.

Real Goals of Sales Forecast

Your sales forecast won’t accurately predict the future. We know that from the start. What you want is to understand the sales drivers and interdependencies, to connect the dots, so that as you review plan vs. actual results every month, you can easily make course corrections.

Sure, people shy from doing forecasts, because it can feel like real numbers and you can think only the numbers people can do it. Don’t believe that. You don’t have to have an MBA degree or be a CPA. You don’t need sophisticated financial models or spreadsheets. I was a vice president of a market research firm for several years, doing expensive forecasts, and I saw many times that there’s nothing better than the educated guess of somebody who knows the business well. All those sophisticated techniques depend on data from the past. And the past, by itself, isn’t the best predictor of the future. You are. So let’s look at how to forecast sales, step by step.

If you think sales forecasting is hard, try running a business without a forecast. That’s much harder. Your sales forecast is also the backbone of your business plan. People measure a business and its growth by sales, and your sales forecast sets the standard for expenses, profits and growth. The sales forecast is almost always going to be the first set of numbers you’ll track for plan vs. actual use, even if you do no other numbers.

If nothing else, just forecast your sales, track plan vs. actual results, and make corrections; that’s already business planning.

Match Your Forecast to Your Accounting

It should be obvious: Make sure the way you organize the sales forecast in rows or items or groups matches the way your accounting (or bookkeeping) tracks them.

Match your chart of accounts, which is what accountants call your list of items that show up in your financial statements.

If the accounting divides sales into meals, drinks, and other, then the business plan should divide sales into meals, drinks, and other. So if your chart of accounts divides sales by product or service groups, keep those groups intact in your sales forecast. If bookkeeping tracks sales by product, don’t forecast your sales by channel instead.

If you’re planning for a startup business, coordinate the bookkeeping categories with the forecasting categories.

Get your last Income Statement (also called Profit & Loss) and keep it in view while you develop your future projections.

If you don’t have more than 20 or so each rows of sales, costs, and expenses, then make the rows in the projected statement match the rows in the accounting.

If your accounting summarizes categories for you – most systems do – consider using the summary categories in your business plan. Accounting needs detail, while planning needs a summary.

If your categories in the projections don’t match the accounting output, you’re not going to be able to track plan vs. actual well. It will take retyping and recalculating. And you’ll lose the most valuable business benefit of business planning: management, steering your company.

The math is simple

Normally your sales forecast will group sales into a few manageable rows of sales and show projected units, prices, and sales monthly for the next 12 months and annually for the second and third years in the future. Here’s a quick example from a bicycle retailer named Garrett (with columns for April-November hidden on purpose, to make viewing easier):

If you’re a LivePlan customer, don’t worry about this spreadsheet view, which is generic. LivePlan will guide you through the sales forecast assumptions and do the calculations automatically. For the generic spreadsheet option, shown here, you multiply units times prices to calculate sales. For example, unit sales of 36 new bicycles in March multiplied by $500 average revenue per bicycle means an estimated $18,000 of sales for new bicycles for that month.

Total Unit Sales is the sum of the projected units for each of the five categories of sales.

Total Sales is the sum of the projected sales for each of the five categories of sales.

Calculate Year 1 totals from the 12 month columns. Units and sales are sums of the 12 columns, and price is the average, calculated by dividing sales by units.

The numbers for Year 2 and Year 3 are just single columns; unless you have a special case, projecting monthly results for two and three years hence is overkill. It’s a problem of diminishing returns; you don’t get enough value to justify the time it takes. Other experts will disagree, by the way; and there may be special cases in which extended monthly projections are worth the effort.

Estimate Direct Costs

A normal sales forecast includes units, price per unit, sales, direct cost per unit, and direct costs. Direct costs are also called COGS, cost of goods sold, and unit costs.

COGS stands for Cost of Goods Sold, and applies to businesses that sell goods. COGS for a manufacturer include raw materials and labor costs to manufacture or assemble finished goods. COGS for a bookstore include what the storeowner pays to buy books. COGS for Garrett are what he paid for the bicycles, accessories, and clothing he sold during the month. Direct costs are the same thing for a service business, the direct cost of delivering the service. So, for example, it’s the gasoline and maintenance costs of a taxi ride.

Direct costs are specific to the business. The direct costs of a bookstore are its COGS, what it pays to buy books from a distributor. The distributor’s direct costs are COGS, what it paid to get the books from the publishers. The direct costs of the book publisher include the cost of printing, binding, shipping, and author royalties. The direct costs of the author are very small, probably just printer paper and photocopying; unless the author is paying an editor, in which case what the editor was paid is part of the author’s direct costs.

The costs of manufacturing and assembly labor are always supposed to be included in COGS. And some professional service businesses will include the salaries of their professionals as direct costs. In that case, the accounting firm, law office, or consulting company records the salaries of some of their associates as direct costs.

The illustration below shows how Garrett uses estimated margins to project the direct costs for his bicycle store. For the highlighted estimates, the direct entry for bicycles unit cost is the product of multiplying the price by 68 percent. The total direct costs for bicycles in January are the result of multiplying 30 units by $340 per unit. And here again, LivePlan users don’t need to do these calculations; your software does it automatically.

Some Quick Notes About Standards

Timing matters.

Standard accounting and financial analysis have rules about sales and direct costs and timing. A sale is when the ownership of the goods changes hands, or the service is performed. That seems simple enough but what happens sometimes is people confuse promises with sales. In the bike store example, if a customer tells Garrett in May that he is definitely going to buy 5 bicycles in July, that transaction should not be part of sales for May. Garrett should put those 5 bicycles into his July forecast and then they will actually be recorded as sales in the bookkeeping actual sales in July when the transaction takes place. In a service business, when a client promises in November to start a monthly service in January, that is not a November sale.

Direct costs also happen when the goods change hands. Technically, according to accounting standards (called accrual accounting), when Garrett the bike storeowner buys a bicycle he wants to sell, the money he spent on it remains in inventory until he sells it. It goes from inventory to direct costs for the income statement in the month in which it was sold. If it is never sold, it never affects profit or loss, and remains an asset until some day when the accountants write off old never-sold obsolete inventory, at which time its lowered value becomes an expense. In that case it was never a direct cost.

Most of this has to do with proper accounting. My standard business plan financials series includes What’s Accrual Accounting and Why Do You Care , which is directly related. When in doubt, please read that one.

Gross Margin

The distinction isn’t always obvious. For example, manufacturing and assembly labor are supposed to be included in direct costs, but factory workers are paid sometimes when there is no job to work on. And some professional firms put lawyers’ accountants’ or consultants’ salaries into direct costs. These are judgment calls. When I was a young associate in a brand-name management consulting firm, I had to assign all of my 40 hour work week to specific consulting jobs for cost accounting.

Garrett can easily calculate the gross margin he’s projecting with his sales forecast. The illustration below shows his simple calculation of gross margin using his sales and direct costs.

How do I know what numbers to use?

But how do you know what numbers to put into your sales forecast? The math may be simple, yes, but this is predicting the future; and humans don’t do that well. Don’t try to guess the future accurately for months in advance. Instead, aim for making clear assumptions and understanding what drives sales, such as web traffic and conversions, in one example, or the direct sales pipeline and leads, in another. And you review results every month, and revise your forecast. Your educated guesses become more accurate over time.

Use experience and past results

• Experience in the field is a huge advantage . In the example above, Garrett the bike storeowner has ample experience with past sales. He doesn’t know accounting or technical forecasting, but he knows his bicycle store and the bicycle business. He’s aware of changes in the market, and his own store’s promotions, and other factors that business owners know. He’s comfortable making educated guesses. In another example that follows, the café startup entrepreneur makes guesses based on her experience as an employee.
• Use past results as a guide . Use results from the recent past if your business has them. Start a forecast by putting last year’s numbers into next year’s forecast, and then focus on what might be different this year from next. Do you have new opportunities that will make sales grow? New marketing activities, promotions? Then increase the forecast. New competition, and new problems? Nobody wants to forecast decreasing sales, but if that’s likely, you need to deal with it by cutting costs or changing your focus.
• Start with your best guess , and follow up. Update your forecast each month. Compare the actual results to the forecast. You will get better at forecasting. Your business will teach you.

How to Forecast a New Business or New Product

What? You say you can’t forecast because your business or product is new? Join the club. Lots of people start new businesses, or new groups or divisions or products or territories within existing businesses, and can’t turn to existing data to forecast the future.

Think of the weather experts doing a 10-day forecast. Of course they don’t know the future, but they have some relevant information and they have some experience in the field. They look at weather drivers such as high and low pressure areas, wind directions, cloud formations, storms gathering elsewhere. They consider past experience, so they know how these same factors have generally behaved in the past. And they make educated guesses. When they project a high of 85 and low of 55 tomorrow, those are educated guesses.

You do the same thing with your new business or new product forecast that the experts do with the weather. You can get what data is available on factors that drive your sales, equivalent to air pressure and wind speeds and cloud formations. For example:

• To forecast sales for a new restaurant first draw a map of tables and chairs and then estimate how many meals per mealtime at capacity, and in the beginning. It’s not a random number; it’s a matter of how many people come in. So a restaurant that seats 36 people at a time might assume it can sell a maximum of 50 lunches when it is absolutely jammed, with some people eating early and some late for their lunch hours. And maybe that’s just 20 lunches per day the first month, then 25 the second month, and so on. Apply some reasonable assumption to a month, and you have some idea.
• To forecast sales for a new mobile app, you might get data from the Apple and Android mobile app stores about average downloads for different apps. And a good web search might reveal some anecdotal evidence, blog posts and news stories perhaps, about the ramp-up of existing apps that were successful. Get those numbers and think about how your case might be different. And maybe you drive downloads with a website, so you can predict traffic on your website from past experience and then assume a percentage of web visitors who will download the app.
• So you take the information related to what I’m calling sales drivers, and apply common sense to it, human judgment, and then make your educated guesses. As more information becomes available — like the first month’s sales, for example – you add that into the mix, and revise or not, depending on how well it matches your expectations. It’s not a one-time forecast that you have to live with as the months go by. It’s all part of the lean planning process.

Sales forecast depends on product/service and marketing

Never think of your sales forecast in a vacuum. It flows from the strategic action plans with their assumptions, milestones and metrics. Your marketing milestones affect your sales. Your business offering milestones affect your sales. When you change milestones — and you will, because all business plans change — you should change your sales forecast to match.

Thank you for this great informations I really learn a lot. Thanks

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How to create a sales forecast for your small business

July 25, 2023 | 7 minute read

What you know about tomorrow can help you make better decisions about running your small business today. A sales forecast can be a helpful tool in estimating future sales, so you can take that information into account in your planning. Simply put, a sales forecast estimates the quantity of goods and services you can reasonably expect to sell over a specified period, the cost of those goods and services and the potential profit. It’s based on your sales in the past, industry benchmarks and market conditions. 

A sales forecast is an invaluable tool for better  managing your cash flow , spending, staffing and more. Once you complete your forecast, you’ll have a better sense of what’s driving your revenues and profits, know where to put your time and resources and be able to identify efforts that are not fueling growth so you can consider eliminating them. 

Why sales forecasting is important

A sales forecast helps you understand your financial position. It can be a good starting point for setting goals and provides guidance in many areas of your business, such as planning for new hires, purchasing inventory and equipment, knowing when to preserve cash, increasing your marketing budget or alerting you that you need to find new  ways to make more money . It can also help you illustrate your business’s potential to investors.

What factors impact a sales forecast?

A forecast is really an educated guess. There are any number of conditions that might shake up your projections, such as new laws and regulations. A downturn in the economy could mean a change in business conditions, making it harder to get credit. A dip in consumer confidence could lead to less spending on your company’s goods and services. New competition in your market, a drop in customer satisfaction or extreme weather (a major storm that essentially shuts down a city for a few days, for example) could all make a difference in what you thought was going to happen. Something like seasonality can also impact your forecast. Internal factors like new production processes and procedures can also keep you from hitting your target. 

Sales forecasting methods

There are several methods to creating a sales forecast. Here are three that many small businesses use:

Historical forecasts

This method is based on your business’s past performance. If you’ve been in business for a year or more, you can look back at data by the week, month, quarter or year. If you’ve launched your business recently, this option won’t work well because you won’t have enough data available. 

Bottom-up forecasts

To come up with these forecasts, you must project the number of units you will sell, then multiply that figure by the average cost per unit. If you run a larger small business, you can also include metrics like the number of locations, sales representatives or online interactions. The rationale behind a bottom-up sales forecast is to begin with the smallest components of the forecast and build up from there. The advantage of this type of forecast is that if any variables change (like cost per item or number of reps), the forecast is easy to adjust. 

Top-down sales forecasts

Start with the total size of the market and estimate what percentage of the market the business can capture. If the size of a market is $20 million, for example, a company may estimate it can win 10% of that market, making its sales forecast $2 million for the year. If you’re a natural optimist, it’s a good idea to ask an advisor to provide a reality check on the percentage of customers in your market that you can reasonably expect to attract and serve so that your projections are more accurate. 

How to create a sales forecast

Once you’ve selected a sales forecasting method, you’ll want to take several steps.

1. List the goods and services you sell

In a sales forecast, you’ll want to account for each product or service that you are selling so your forecast is accurate. 

2. Quantify your sales

Each sales forecasting method has its own way of estimating future sales: 

In  historical forecasting , you will need to project the quantity of each product or service you will sell and multiply the unit price by that number. In this type of forecasting, you can base your estimate on the sales figure you brought in last month as long as nothing major has changed in the marketplace. So, if you sold $50,000 worth of your product in July, you might estimate selling $50,000 worth in August. 

In  bottom-up forecasts , you must first estimate the total number of orders that customers will place for your products or services through your website, social media channels and other places you make sales. Then you estimate the average price minus any discounts you offer. Finally, you must multiply the estimated number of orders for each item by the average price to get estimated revenue. 

In  top-down forecasts , you start by estimating the total market for each item you sell. For example, if you were lucky enough to capture 100% of the sales, how much would you have sold? Then project how much of that market you can realistically capture. So, for instance, if the total addressable market for what you sell is $1 million, and you capture 7% of that with your product, your estimated sales will be $70,000. 

3. Make adjustments

Some owners adjust their forecasts to reflect projected market conditions, regulatory changes, new marketing efforts and other variables.

4. Subtract costs

Business owners will typically subtract the costs of creating each good or service they sell from their estimated sales forecast to understand how much profit would be generated from sales. Let’s say you sell a backyard game you invented by outsourcing the manufacturing to a local factory. You might subtract  overhead expenses , such as paying the factory and buying materials, from your projected revenue to anticipate how much money would be left over as profit. Or if you run a social media agency that has taken on new clients who’ve hired you on retainer, you might subtract costs, such as paying freelancers to write social media posts and subscribing to a website that provides stock photos, to get a clearer picture of future profits. 

Tools for sales forecasting

If you haven’t done so already, you might want to consider software to help with sales forecasting. 

Sales forecasting software

Sales forecasting software can use historical business data and trends to create a report of expected sales revenue. Forecast reports can compare sales targets with actual sales. 

Ideally, sales software can help you answer questions like: 

What is your expected revenue? 

Which forecasting method produces the most accurate forecast for your business? 

How did actual sales compare to expected sales?

Sales pipeline forecasting software

With sales pipeline forecasting software, you’ll get an analysis of existing opportunities and a calculation of your success rate in pursuing them, helping you prioritize your efforts. This method focuses on pipeline management and calculates a historical win-rate percentage based on the value and age of the opportunity and the sales representative working on it. Some software programs include features that will give you the ability to view pipeline activity and internal sales data or save you time, letting you integrate information from third-party sales software, for instance. You can create sales forecasts using software such as QuickBooks, Salesforce Sales Cloud, Zoho CRM and Pipedrive.

Historical sales forecasting software

Historical sales forecasting software analyzes previous company performance to calculate a mean (or average) sales level you can expect for the following month, quarter or year. It emphasizes historical trends and seasonality of products and services sold, but it does not consider the opportunities in your pipeline. This software is ideal for small businesses that don’t have big swings in their monthly sales. 

Bottom line

Your sales forecast can be a vital tool as you make plans to grow your business or adjust to challenges. By comparing your actual performance to your forecasts, you’ll be able to get a clear handle on your success and failures, fine-tune your strategies and capitalize on what is working for you so you can keep your business moving to the next level. 

Explore more

Cash flow management basics for small businesses

How to write an effective business plan

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How to Create a Sales Forecast Business Plan

Sales forecasting is a powerful way to improve decision-making and make smarter choices as a business. But the reality is, many organisations don’t get it right.

Accurate sales forecasts rely on astute insights driven from robust, holistic data. If your business has struggled to accurately predict future sales revenue in the past, our guide could help you get it right in the future.

Ready to get started? Use the links below to navigate or read on for our full guide to accurate sales forecasting.

Quick Links

What is a Sales Forecast?

Why is sales forecasting important, what factors can affect sales forecasting, how to create a sales forecast, tools to help with sales forecasting.

A sales forecast is an estimate of what a company will sell in a week, month, quarter or year. It’s used to predict future revenue, accounting for the number of units an individual, team or company is likely to sell over a set period.

Sales forecasting offers many benefits when leveraged as part of a broader business strategy. At all levels and across all functions within a business, forecasting can facilitate shrewd decision-making, whether that’s setting goals and budgets, prospecting for new leads, deciding on the best time to hire new staff, or effective stock management to help maximise cashflow.

Accurate sales forecasting is a projection of where a company will stand in the future. And that’s important, not only for business continuity and growth, but for cultivating credibility, trust and advocacy with key stakeholders – be it partners, investors, clients or customers.

Let’s take a look at some of the reasons why sales forecasting matters:

• Bolsters decision-making – accurate predictions about future revenue can facilitate improved decision-making across all business functions, from hiring managers tasked with recruiting new talent, to procurement teams discerning when and how much stock to source.
• Adds value to all business functions – sales forecasting defines the value brought by different departments across the business. It highlights how different functions and channels contribute to revenue generation, helping businesses manage their resources.
• Accurate sales and buying for reduced costs – a sales forecast simplifies inventory management, with accurate stock predictions reducing costs and freeing up valuable resources, like warehouse space.
• Allocation of sales and marketing budget – Forecasting helps account for peaks and troughs in sales, so you can assign marketing budgets and determine which products and services need attention.
• Guarantees timely recruitment and outsourcing to drive business growth – understanding the areas of your business that drive the most revenue can make for seamless recruitment. Reinvesting revenue in personnel is a seismic driver of business growth, and sales forecasting can help you decide where to make hires and when. Not only that, but it can help companies decide whether they should look at outsourcing or whether to bring outsourced activities back in-house, e.g., the use of courier companies versus investing in your own delivery fleet.
• Provides valuable revenue expectations to outside stakeholders, like investors – sales forecasting quantifies your revenue predictions, making it easier and less risky to attain outside support from investors and stakeholders.
• Allows for simple company benchmarking against competitors – where your business ranks against competitors is important, and sales forecasting highlights how your trajectory compares to your closest rivals.
• Offers a powerful means of motivating sales personnel – a sales forecast is the best way of benchmarking the performance of salespeople within your business. It’s also a great motivator, particularly for staff incentivised by the promise of commission.

Many internal and external factors can impact the accuracy of your sales forecasts. You’ll need to account for all sorts of influences when predicting sales activity, including:

• Economic uncertainty and conditions
• Competitor changes
• Market trends and seasonality
• Product changes and future innovations
• Internal pricing or policy changes
• Available marketing spend and budgets
• Staff levels (more or fewer sales personnel will affect figures, for example)
• Future business plans e.g., expansion or diversification plans

This isn’t an exhaustive list of factors that can affect sales forecasting, but it does provide a steer for the types of influences that you’ll need to factor into your predictions.

Sales forecasting isn’t rocket science, but it does require a methodical approach to guarantee accuracy. Here, we’ll demonstrate how to make accurate sales predictions in five easy-to-follow steps.

Step 1: Consider Sales History

The first step to accurate sales forecasting is to look not to the future, but the past. By examining sales data over the past 12 months, you’ll glean insights that you can use as the basis of your future sales predictions, noting things like volumes, trends, and seasonality changes that caused peaks and troughs in demand.

When exploring historic sales data, be mindful of your ‘sales run rate’ – the number of projected sales for a particular period. For example, sales data may reveal a large disparity between quarterly sales figures, affecting the overall run rate; you’ll need to factor this into your forecasts for the future.

Step 2: Anticipate Changes and External Influences

While historic sales data provides a clear view of when and where sales typically happen over a year, it doesn’t guarantee the same sales figures for the future. Depending on a plethora of external and internal influences, next year’s sales could be up or down – so how do you accurately predict future revenue?

Start by taking each influence in turn and assess how such a force would have impacted last year’s sales figures. For example, do you plan to increase prices over the next 12 months? If so, how might this affect sales in relation to previous figures?

Here are some of the factors you should consider when predicting future sales performance:

• Pricing changes – will your prices change? How might this affect custom?
• Customer changes and trends – are consumer trends turning in your favour, or going the other way? Market awareness is crucial for accurate sales forecasting.
• Promotions – do you have any sales or promotions lined up to increase demand? How might these affect sales targets?
• Product alterations – are you improving your products and services?
• Sales channels – do you plan to expand into additional sales channels in the near future or acquire new branches?

Step 3: Lean on the Right Systems for Accurate Data Capture and Analysis

Sales forecasting becomes much simpler and more accurate when the right tools are used to capture and analyse data. Integrated ERP software, for example, collates sales data from every channel of your business – including trade counter or EPOS sales, telesales, sales rep orders, ecommerce etc. – so you can make data-backed predictions with confidence.

A great example of the types of tools you can use for accurate sales forecasting is predictive stock management. Automating the forecasting process, it presents the user with a forecast prediction aligned to their stock preferences, e.g., how much buffer stock you want to carry, as well as stock lead times.

Presented with this data, the procurement team can then use their insight and knowledge to tweak this forecast where necessary. It’s a great example of the marriage of automation to reduce manual work, whilst still allowing people to have input on the end result.

Elsewhere, utilising customised dashboards or control desks, instead of static reports, to differentiate pipeline value by rep, branch, prospect customer etc., can give businesses dynamic information to adjust their forecasts and be agile around expectations and demand.

What’s more, clever use of the CRM in conjunction with opportunity probability management enables you to allocate an estimated percentage chance that you think you will win a sales deal. By giving each sales opportunity/quotation a probability, you can produce a sales weighting forecast that will give you a fairly accurate idea of what your sales will be.

This will give you a better chance of forecasting the revenue and stock position of months and years ahead.

Step 4: Align Sales Predictions with Your Business Strategy

Many businesses have a five-year plan, a strategy that looks to drive business growth and profitability. But remember, such a plan will impact sales in one way or another, so it’s important that you align your sales forecasts with your short and long-term business objectives.

Say, for example, your business plan sets out a period of growth in the form of new hires or the creation of a whole new department. How will this affect sales? And to what extent should it be factored into your revenue forecasts?

Aligning your business strategy and sales forecasts is a crucial step. It helps prioritise business activity, ensuring that the right decisions are made to drive the business forward.

Step 5: Set Out Your Sales Forecasts in the Right Way

Charts, graphs and annotations can all be used to set out your sales forecasts for the year ahead. These should be included in your business plan, providing an accessible means of sharing forecasts with key stakeholders, personnel and investors.

As well as charting forecasts in number terms, you should set out your sales strategy, including how you arrived at the quoted figures. This not only quantifies your reasoning, but serves as a reminder of the market position at the time of writing – something that could prove useful if you need to refer back to where the figures came from at a later date.

Sales forecasting can be a laborious process, particularly if you want to guarantee accuracy. There are, however, a range of tools and software which can be leveraged to automate some elements of the process, removing some of the legwork associated with sales forecasting.

At Intact, we’re well aware of the importance of sales forecasting – and the arduous nature of it. That’s why we offer specialist expertise and solutions to help automate and simplify the process, from ERP software and predictive stock management to data analytics tools designed to improve data-driven decision-making.

We hope this guide helps you take stock of sales forecasting. If you’d like to optimise this area of your business, the Intact team can help. For more information or to speak to a member of our specialist team, visit the homepage . Alternatively, for more help and advice on ways to manage your inventory, take a look at our free guide to effective stock management .

Fiona McGuinness

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How to create a sales forecast

Our experts

Written and reviewed by:.

Reading the future of your business is impossible. But forecasting what it could potentially look like is essential. Sales forecasting is a crucial part of predicting your team’s sales activity to identify gaps in performance, control cash flow and to understand how you can best allocate your resources.

We get it’s daunting crunching the numbers, but you don’t need a degree in accounting to make a sales forecast. In this guide, we walk you through the various options and give you the pros and cons of each method. By the end, you will have a variety of tools to create a clear sense of direction for your sales strategy and understand where your account books are taking you.

In this page

How does sales forecasting work, what are the different types of sales forecast (and when do you use them), the 5 steps to creating a sales forecast, how to use a sales forecast.

Forget instinct, intuition, guestimates and gut feelings. Sales forecasting is completely data-led. In a nutshell, you use your current information and other macro conditions that could affect your sales to estimate how much you’ll sell over a certain period of time (monthly, quarterly, semiannual or annual). Let’s look at this more in depth.

Overview of the process and its purpose

Sales hinge on several factors. These need to be considered in your sales forecast. These include your industry’s recent growth or contract rates, the economy in general, the competition’s sales of similar items, new product or service launches, fluctuations in operating costs, and other regulations restricting your usual operation. For instance, when COVID-19 hit, companies forecast a reduction in sales as consumers spent less.

When you consider these factors, you can then identify both internal and external sales issues and resolve them with enough time to reach your sales goals. Ideally, you’ll be able to create a sales forecast that gives you all the right data to make robust business decisions for hiring, budgeting, prospecting, and other activities that are impacted by your revenue. For instance, if your sales forecast predicts a 26% increase in opportunities, you’ll likely want to recruit some more people to keep up with demand.

Although no sales forecast will ever be perfect – after all, who could have predicted the pandemic or supply chain shocks – it provides an invaluable framework. . to set goals, identify gaps in performance, manage cash flow and serve as a motivator for your sales and marketing teams.

There’s no one-size-fits-all way of creating a sales forecast. The model you choose will depend on your goals and your business. Here are the different ways of forecasting your sales:

• Opportunity stage forecasting → this one is all about your sales funnel. It looks at what stage in the funnel a deal is at, so as you can probably guess, the lower down the funnel a deal is, the more likely it is to transform into a sale. Once you’ve picked a reporting period – quarterly, yearly, etc – you multiply each deal’s potential value by the probability it will close. You repeat this process for all your active leads and then add them all up to get your total sales forecast. However, keep in mind this doesn’t account for the age of an opportunity. For instance, if you’ve been working with a prospective client for months, it’s more likely the deal will close even if it’s not as far down the funnel.
• Historical forecasting → this is a pretty simple one that businesses with a couple of years of maturity can use, especially if your company is affected by seasonality. You start by taking your recent or seasonal data from the equivalent period in the previous year or period, and assume your results will be equal to or greater than those results. Obviously, this model will assume that buyer demand will be constant so it’s not a highly reliable model if the market is fluctuating. This model should be considered a benchmark rather than a robust prediction.
• Length-of-cycle forecasting → this pertains to the period of time over which your sales funnel progresses. In other words, you look at the age of individual opportunities to get an idea of when they’re likely to close. This way, you can have a rough estimate of how many sales you’ll be making over your chosen period of analysis. To get the most accurate length-of-cycle forecasting, you’ll want to rely on robust data rather than on the feedback of your sales representatives, as they’re likely to underestimate the speed at which deals can close. This is where the right CRM system can provide you with invaluable information. .
• Multivariable analysis forecasting methods → this one is the most sophisticated sales forecasting method. It uses predictive analysis and incorporates several of the factors mentioned like average sales cycles length, probability of closing based on opportunity type and individual rep performance. Because it takes so many variables into account, it tends to be the most accurate. However, it requires an advanced analytics solution meaning it’s not always feasible if you have a small budget.

Less than 50% of sales leaders and sellers have high confidence in their organisation’s forecasting accuracy. Therefore, knowing how to create an effective forecast will put you ahead of the curve.

What are the different kinds of sales data and metrics?

Sales terminology is a seemingly endless stream of jargon and acronyms. We’ve listed and explained some of the most relevant here:

• Total revenue : gross sales or turnover. This refers to the entire income generated from all operational and sales activities across all products and services that you offer. It is the quantity of products and services sold x price of the product or service . It basically measures your ability to generate income, so ideally, you want to have the highest total revenue possible.
• Revenue by product or service : this is the income generated per product or service. This is key for a nuanced understanding of which offerings are pulling the heavy weight of your total revenue. The equation is simple – you just have to times the quantity of each product service sold x price .
• Market penetration : this is your total customer base compared with the total market potential. Basically, you’re trying to measure how well you’re doing at reaching potential customers and turning them into actual clients. The higher the market penetration rate, the greater the opportunity for growth and revenue. To calculate this you need (number of customers/total target market size) all multiplied by 100 .
• Year-on-Year growth: the name sort of says it all. You’re basically comparing the revenue generated from year to year, and ideally, you want that to keep going up. This is a good metric to track to get a feel of your company’s overall performance and success. You can calculate this as follows: (Current year metric – previous year metric) / previous year metric all multiplied by 100.
• Average Customer Lifetime Value (CLV) : this measures the total revenue a business can anticipate from generating a single customer over the course of its relationship with your company. You can therefore track how long a customer sticks around, which is really useful specially for businesses that offer subscription based products or services.
• Average length of sales cycle : this refers to the time it takes for a potential customer to go through all the stages of the sales funnel until they finally become a customer. The shorter the length of the cycle is, the better as you’ll spend less resources and time trying to persuade a customer to hop onboard.
• Cost of selling : also known as selling expenses, this refers to the costs you incur in the process of selling your products or services. This can be the cost of paying the salaries of your marketing department, any software or platforms you use to advertise, and buying space for ads online. You can calculate it as the average of the revenue that sale made you, so the lower the percentage, the better.

Once you’ve assessed which type of sales forecast works best for your business, you can start the process of building it. . This can be done in five steps: setting a sales goal, identifying sales drivers, gathering sales data and metric, analysing your sales data and creating a sales plan to reach your goals.

1. Set sales goals

Before you sit down to start crunching any numbers, you’ll need to have an objective definition of success. This will obviously be very different for every business and will depend on the resources you have and what your long-term goals are. To set a realistic goal, you can sit down with your sales representatives to understand what a feasible sales quota is. This will then serve as your financial baseline to better make your predictions and check whether you’re setting yourself realistic targets.

2. Identify sales drivers, trends, and seasonality

The next thing you’ll need to grasp is the health of the economy and what is driving sales. For instance, if you’re a clothing ecommerce store, seasonality will heavily affect your sales. For example, you’ll want to release new clothing lines for the summer in spring to sustain your desired level of sales. You’ll also want to consider macroeconomic factors – you can obviously expect lowered sales of summer clothing if the country is in a prolonged recessionary period or experiencing unseasonably bad weather.

3. Gather sales data and metrics

In order to understand how you’re performing and how you’d like to perform to meet or overtake your sales forecast, you need hard numbers to guide your decisions. Remember that your sales goals should not be based on a gut feeling, but on what you can realistically achieve based on the resources and data you have at hand. Good accounting software or CRM software is a time and labour-saving way to surface this information as accurately as possible.

4. Analyse sales data and forecast sales

Now that you have the building blocks of your sales forecast, you need to drill down into the detail to get a feeling of what you can expect and achieve over the next period. Is that increased opportunities? Lowered sales? A new entryway into a new market that could boost revenue? This step is crucial: your sales decisions will be informed by your interpretation of the data.

5. Create a sales plan to reach sales goals

The last part is to create your sales plans based on the insights you’ve gained from your data and your goals. Keep in mind that a sales forecast is not fixed – you might have to go back and readapt it if there’s a change in the market that throws you off track whether in a positive or negative way.

Once you have a more solid idea of what to expect over the next sales period, there are multiple ways a sales forecast can add value to your sales teams’ activity.

• Monitor sales performance against goals: the best ingredient against business performance anxiety is knowing that your sales are exactly (or above) where they need to be. Your sales forecast helps measure how well your business is actually doing. For instance, your sales may be lower than the month before, but – using a Year-on-Year comparison – you can be reassured that they’ve doubled compared to the same month the previous year. . Sales forecasts can help give you a big picture perspective that allows you to more accurately understand variable metrics.
• Manage sales resources more effectively : by surfacing potential sales methodology issues, cost savings and market trends, a sales forecast allows you to adjust resources with enough time to still achieve your sales targets.
• Use sales forecasts for planning, budgeting, and decision-making: your sales forecast allows you to be flexible and plan for predictable market changes. For instance, it can flag which months there’ll be extra cash for hiring and new software and when it’s better to rein in extra spending.. In this way, you can meet your goals,whilst also keeping cash flow stable.

If you’re serious about growing your business, you can’t get by without a sales forecast. A realistic and well-structured sales forecast will keep you on track to reach your targets facilitating data-led decision making and effective allocation of resources.

To make an accurate sales forecast, the devil’s in the data. data. Your accounting or CRM software is the best source , but you’ll definitely want to look at Year-on-Year growth, revenue, and market penetration as these can help identify gaps in performance and understand what realistic goals look like.

Although sales forecasts are not crystal balls that can perfectly predict the future, they are definitely useful compasses that let you navigate through your market in the right direction.

• What is the purpose of a sales forecast? A sales forecast gives you an idea of how your sales will look over a period of time. They can either tell you they’re expected to grow, stay stable, or lower. This can help you make better decisions based on the expected revenue you’re going to make.
• How often should sales forecasts be updated? This depends on industry or sector, but usually, you want to be updating towards the end of your period you’re measuring. For instance, if you’re doing a yearly forecast, you probably would want to start creating your next year’s forecast a couple of months before the year is over. However, if there’s a shock in the market such as supply freezes, you’ll want to update your sales forecast immediately.
• What type of sales data is relevant for sales forecasting? Factors like revenue, Year-on-Year growth, revenue per service or product, and cost of selling are all crucial data points in piecing together a sales forecast.
• What are the benefits of sales forecasting? Sales forecasting allows you to better allocate your resources and identify gaps in your sales performance. Overall, it enables you to make data-backed business decisions that will help your business’s growth strategies.
• How can sales forecasts help a company reach its sales goals? A sales forecast serves as a benchmark for your current performance, a plan for future performance and a motivator for your sales team.
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What is Sales Planning? How to Create a Sales Plan

Published: December 06, 2023

Sales planning is a fundamental component of sound selling. After all, you can‘t structure an effective sales effort if you don’t have, well, structure . Everyone — from the top to the bottom of a sales org — benefits from having solid, actionable, thoughtfully organized sales plans in place.

This kind of planning offers clarity and direction for your sales team — covering everything from the prospects you‘re trying to reach to the goals you’re trying to hit to the insight you're trying to deliver on.

But putting together one of these plans isn‘t always straightforward, so to help you out, I’ve compiled this detailed guide to sales planning — including expert-backed insight and examples — that will ensure your next sales plan is fundamentally sound and effective.

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In this post, we'll cover:

What is a sales plan?

Sales planning process.

• What goes in a sales plan template?

How to Write a Sales Plan

Tips for creating an effective sales plan, sales plan examples, strategic sales plan examples.

A sales plan lays out your objectives, high-level tactics, target audience, and potential obstacles. It's like a traditional business plan but focuses specifically on your sales strategy. A business plan lays out your goals — a sales plan describes exactly how you'll make those happen.

Sales plans often include information about the business's target customers, revenue goals, team structure, and the strategies and resources necessary for achieving its targets.

Free Sales Plan Template

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• Target Market
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What are the goals of an effective sales plan?

And if (or more likely when ) those goals change over time, you need to regularly communicate those shifts and the strategic adjustments that come with them to your team.

Your sales strategy keeps your sales process productive — it offers the actionable steps your reps can take to deliver on your vision and realize the goals you set. So naturally, you need to communicate it effectively. A sales plan offers a solid resource for that.

For instance, your sales org might notice that your SDRs are posting lackluster cold call conversion rates. In turn, you might want to have them focus primarily on email outreach, or you could experiment with new sales messaging on calls.

Regardless of how you want to approach the situation, a thoughtfully structured sales plan will give both you and your reps a high-level perspective that would inform more cohesive, effective efforts across the team.

An effective sales org is a machine — one where each part has a specific function that serves a specific purpose that needs to be executed in a specific fashion. That's why everyone who comprises that org needs to have a clear understanding of how they specifically play into the company's broader sales strategy.

Outlining roles and responsibilities while sales planning lends itself to more efficient task delegation, improved collaboration, overlap reduction, and increased accountability. All of which amount to more streamlined, smooth, successful sales efforts.

Sales planning can set the framework for gauging how well your team is delivering on your sales strategy. It can inform the benchmarks and milestones reps can use to see how their performance stacks up against your goals and expectations.

It also gives sales leadership a holistic view of how well a sales org is functioning as a whole — giving them the necessary perspective to understand whether they have the right people and tools in place to be as successful as possible.

Sales planning isn‘t (and shouldn’t) be limited to the actual sales plan document it produces. If that document is going to have any substance or practical value, it needs to be the byproduct of a thorough, well-informed, high-level strategy.

When sales planning, you have some key steps you need to cover — including:

• Gather sales data and search for trends.
• Define your objectives.
• Determine metrics for success.
• Assess the current situation.
• Start sales forecasting.
• Identify gaps.
• Ideate new initiatives.
• Involve stakeholders.
• Outline action items.

When putting this list together, I consulted  Zach Drollinger — Senior Director of Sales at edtech provider Coursedog — to ensure the examples detailed below are sound and accurate.

Step 1: Gather sales data and search for trends.

To plan for the present and future, your company needs to look to the past. What did sales look like during the previous year? What about the last five years? Using this information can help you identify trends in your industry. While it's not foolproof, it helps establish a foundation for your sales planning process.

For the sake of example, let‘s say that I’m a new sales director for an edtech company that sells curriculum planning software to higher education institutions. My vertical is community colleges, and my territory is the East Coast.

Once I assume this new role, I‘m going to want to gather as much context as possible about my vertical and how my company has approached it historically. I would pull information about how we’ve sold to this vertical.

How much new business have we closed within it in the past five years? How does that compare to how we perform with other kinds of institutions? Are we seeing significant churn from these customers?

I would also want to get context about the general needs, interests, and pain points of the kinds of institutions I‘m selling to. I’d look for insight into figures like degree velocity, staff retention, and enrollment.

Ultimately, I would get a comprehensive perspective on my sales process — a thorough understanding of where I stand and what my prospects are dealing with. That will ensure that I can deliver on the next step as effectively as possible.

Step 2: Define your objectives.

How do you know your business is doing well if you have no goals? As you can tell from its placement on this list, defining your goals and objectives is one of the first steps you should take in your sales planning process. Once you have them defined, you can move forward with executing them.

To extend the example from the previous step, I would leverage the context I gathered through the research I conducted about both my and my prospect's circumstances. I would start setting both broader goals and more granular operational objectives .

For instance, I might want to set a goal of increasing sales revenue from my vertical. From there, I would start putting together the kind of specific objectives that will facilitate that process — like connecting with administrators from at least 30 community colleges, booking demos with at least 10 schools, and successfully closing at least five institutions.

Obviously, those steps represent a streamlined (and unrealistically straightforward) sales process, but you get the idea — I would set a concrete goal, supplemented by SMART objectives , that will serve as a solid reference point for my org's efforts as the sales process progresses.

Step 3: Determine metrics for success.

Every business is different. One thing we can all agree on is that you need metrics for success. These metrics are key performance indicators (KPIs). What are you going to use to determine if your business is successful? KPIs differ based on your medium, but standard metrics are gross profit margins, return on investment (ROI), daily web traffic users, conversion rate, and more.

I kind of covered this step in the previous example, but it still warrants a bit more elaboration. The “M” in SMART goals (“measurable”) is there for a reason. You can‘t tell if your efforts were successful if you don’t know what “successful” actually means.

The edtech sales example I‘ve been running with revolves mostly around me assuming ownership of an existing vertical and getting more out of it. So it’s fair to assume that sales growth rate — the increase or decrease of sales revenue in a given period, typically expressed as a percentage — would be an effective way to gauge success.

I might want to structure my goals and objectives around a sales growth rate of 20% Y/Y within my vertical. I would make sure my org was familiar with that figure and offer some context about what it would take to reach it — namely, how many institutions we would need to close and retain.

Step 4: Assess the current situation.

How is your business fairing right now? This information is relevant to determining how your current situation holds up to the goals and objectives you set during step two. What are your roadblocks? What are your strengths? Create a list of the obstacles hindering your success. Identify the assets you can use as an advantage. These factors will guide you as you build your sales plan.

Continuing the edtech example, I would use the historical context I gathered and the objectives I set to frame how I look at my current circumstances. I might start by considering my goal of increasing revenue by 20% Y/Y. In that case, I would look at the company's retention figures — ideally, that would give me a sense of whether that needs to be a major area of focus.

I would also try to pin down trends in the colleges that we've already closed — are there any pain points we consistently sell on? I might take a closer look at how we demo to see if we might be glossing over key elements of our value proposition. Maybe, I would use conversation intelligence to get a better sense of how reps are handling their calls.

Ultimately, I would try to identify why we're performing the way we are, the inefficiencies that might be resulting from our current strategy, and how we can best set ourselves up to sell as effectively as possible.

Step 5: Start sales forecasting.

Sales forecasting is an in-depth report that predicts what a salesperson, team, or company will sell weekly, monthly, quarterly, or annually. While it is finicky, it can help your company make better decisions when hiring, budgeting, prospecting, and setting goals.

After the COVID-19 pandemic, economics has become less predictable. Claire Fenton , the owner of StrActGro — a professional training and coaching company — states, “Many economic forecasters won't predict beyond three months at a time.” This makes sales forecasting difficult. However, there are tools at your disposal to create accurate sales forecasts .

In our edtech example, I would approach this step by trying to estimate how my sales org is going to fare with the specific vertical we‘re pursuing in the time window we’ve allotted.

The method I decide to go with will depend on factors like how many concrete opportunities we have lined up — in addition to elements like the kind of historical data we have handy, how the reps working these deals tend to perform, and the degree of insight we have about our potential customers.

Let's say I consider those factors and decide to run something called a multivariable analysis. In that case, I could start by taking stock of the opportunities my reps have lined up. Then, I could look at the reps working those deals, their typical win rates, and the time they have to close — among other factors.

For instance, I might calculate that a rep working with a particularly large institution has a 50% chance of closing within the window we‘ve allotted. Using that insight, we could attribute 50% of the potential deal size to our forecast — we’d repeat that process with all of the opportunities in question and ideally get a solid sense of the revenue we can expect to generate in this window.

Step 6: Identify gaps.

When identifying gaps in your business, consider what your company needs now and what you might need in the future. First, identify the skills you feel your employees need to reach your goal. Second, evaluate the skills of your current employees. Once you have this information, you can train employees or hire new ones to fill the gaps.

Continuing the edtech example, let‘s say my forecast turned up results that weren’t in keeping with what we need to reach our goals. If that were the case, I would take a holistic look at our process, operations, and resources to pin down inefficiencies or areas for improvement.

In my search, I find that our sales content and marketing collateral are dated — with case studies that don‘t cover our product’s newest and most relevant features. I also might see that our reps don‘t seem to have too much trouble booking demos, but the demos themselves aren’t converting due to a lack of training and inconsistent messaging.

And finally, I find that a lack of alignment with marketing has prospects focusing on unrealistic outcomes our sales team can‘t deliver on. Once I’ve identified those gaps, I would start to hone in on ways to remedy those issues and improve those elements.

Step 7: Ideate new initiatives.

Many industry trends are cyclical. They phase in and out of “style.” As you build your sales plan, ideate new initiatives based on opportunities you may have passed on in previous years.

If your business exclusively focused on word-of-mouth and social media marketing in the past, consider adding webinars or special promotions to your plan.

In the edtech example we've been running with, I would likely ideate initiatives based on the gaps I identified in the previous step. I would start a push to ensure that our sales content and marketing collateral are up-to-date and impressive.

I would also consider new training programs to ensure that our coaching infrastructure is prioritizing how to conduct effective demos. Finally, I would start to work on a plan with marketing to ensure our messaging is aligned with theirs — so we can make sure prospects' expectations are realistic and effective.

One way or another, I would take the gaps I found and find concrete, actionable ways to fill them. I would make sure that these initiatives aren't abstract. Just saying, " We're going to be better at demos," isn‘t a plan — it’s a sentiment, and sentiments don't translate to hard sales.

Step 8: Involve stakeholders.

Stakeholders are individuals, groups, or organizations with a vested interest in your company. They are typically investors, employees, or customers and often have deciding power in your business. Towards the end of your sales planning process, involve stakeholders from departments that affect your outcomes, such as marketing and product. It leads to an efficient and actionable sales planning process.

This step is sort of an extension of the previous two — once I‘ve identified the key issues and roadblocks obstructing my edtech startup’s sales org, I would start identifying the right people to fulfill the necessary initiatives I've put together.

In this example, I would tap some stakeholders in charge of our sales content and marketing collateral to produce newer, more relevant case studies and whitepapers we can pass along to the institutions we're working with.

I would also go to middle management and either offer more direction for coaching on demos or bring in a third-party training service to offer more focused, professional insight on the issue.

Finally, I would connect with marketing leadership to align on the benefits and outcomes we generally stress when pitching the schools we sell to. That way, we can ensure that the institutions we're connecting with have realistic expectations of our product or service that we can speak to more clearly and effectively.

Step 9: Outline action items.

Once you have implemented this strategy to create your sales planning process, the final step is outlining your action items. Using your company's capacity and quota numbers, build a list of steps that take you through the sales process. Examples of action items are writing a sales call script, identifying industry competitors, or strategizing new incentives or perks.

In our edtech example, some key action items might be:

• Revamp our prospecting strategy via more involved coaching and re-tooled sales messaging.
• Revamp administrator and college dean buyer personas.
• Conduct new trainings on demoing our software.
• See our new prospecting strategy from ideation to execution.
• Align with our sales enablement stakeholders for new, more relevant case studies and whitepapers.

Obviously, that list isn‘t exhaustive — but those are still the kinds of steps we would need to clarify and take to structure a more effective high-level strategy to produce different (ideally much better) results than we’ve been seeing.

One thing to keep in mind is that sales planning shouldn't end with creating the document.

You‘ll want to reiterate this process every year to maintain your organization's sales excellence.

Now that you‘re committed to the sales planning process, let's dive into the written execution component of sales planning.

Featured Resource: Sales Plan Template

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