Are There Disadvantages to Sales Forecasting?
Without question, sales forecasting is an integral part of any business’s annual planning process. The sales forecast serves as a crucial benchmark that monitors production, output, revenue and profit margins. Without it, business planners are operating in the dark.
Yet, despite the obvious advantages of sales forecasting, many do still dismiss them on the basis of their disadvantages.
Do Guesstimates Count when it comes to Sales Forecasting?
The fact is the vast majority of calculations made when devising a sales forecast are based on guesswork. Yes, the people making those calculations are trained to do that job and have an in-depth knowledge of the company’s past performance, but in order to predict the sales forecast, they work from projected figures not real ones.
What If It’s Wrong?
Because the process of sales forecasting involves guesswork, very often they can be wrong. Figures can be out by a few hundred one month and thousands another month. This is not uncommon. The sales forecaster can merely take note of the difference between projected and real figures.
Change Is Afoot when it comes to Sales Forecasting.
We live in a constantly changing business world. An earthquake in one continent can curb the supply of a product in another. The current economic downturn is forcing many companies to reassess performance and adjust forecasts accordingly. Nothing is constant in business and sales forecasting can have a hard time taking that into consideration.
There’s More to Business than Bottom Line.
One of the biggest criticisms of the sales forecasting process is that it forces management to think only in terms of the bottom line. The reality is that there are many factors that can make a company profitable and by focusing on just costs and expenditures, factors such as employee commitment and customer satisfaction are overlooked.
To assess how your organization can avoid these pitfalls, contact a member of MXI today for a free sales forecast based on your data.
