How to Make a Sales Forecast with Templates, Examples & Formulas - (2023)

A sales forecast is a crucial part of managing your business. Without them, you won't be able to properly manage your inventory, control cash flow, or grow your operation. The COVID-19 pandemic has made sales forecasting even more difficult, with unpredictable volatility across the board, from the products consumers buy to the channels they use to buy those products. To create a sales forecast, you can use special software or general sales software with forecasting functions.

Creating a reliable sales forecast for your business is a concern that will always be at the forefront of sales professionals. If you want an accurate prediction, it requires intuition, prediction analysis, and goodnessCRM-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 calculate it to which sales forecast templates to use. This way you can have solid data to support your growth strategy.

How to Make a Sales Forecast with Templates, Examples & Formulas - (1)

How to create a table of contents for a sales forecast

  1. Why do you need a sales forecast?
  2. Tools for accurate sales forecasting
  3. The basic math you need to calculate the sales forecast
  4. Types of forecasting methods
  5. Sales forecast templates
  6. Factors affecting your sales forecast

In 2020, retail sales increased 6.7%, or $4.06 trillion, compared to 2019 numbers. That's almost double the forecast growth of 3.5%, which excludes the impact of a global pandemic. For 2021, the National Retail Federation predicts thisRetail sales will exceed $4.33 trillion in 2021when people get vaccinated and the economy opens up again.

Source: National Retail Association, 2021

In anticipation of increased retail activity, here are a few tips to keep in mindBusiness forecast for 2021. At this point, it's important to review the basics of your business. Go through your key goals and customers, and examine their spend and industry for growth or contraction. If you're in the B2B space, explore the possibility of adding account-based marketing to your tools. If you're in B2C, base your sales forecast on key segments, then review your financial model.

Aside from forecasts, sales forecasts can help you manage other aspects of your business related to your forecast. To help you boardChoosing the Right Cloud Sales Software, consider how it can help you streamline your processes, provide real-time quotes, and integrate with your CRM, among other things.

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Why do you need a sales forecast?

Sales forecasts help you estimate your earnings in the immediate future. This can be next month, next quarter, or next year, depending on how you define a sales period. It helps you manage your supply chain, cash flow and perform strategic planning.

Not getting 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 an indication of a highly aligned organization. When different businesses are on the same page, they tend to achieve faster revenue growth and higher margins. In fact, according to the Miller Heiman Group, with aFormal, structured sales forecast review process increases win rate by 25%compared to not having a formal approach.

How to Make a Sales Forecast with Templates, Examples & Formulas - (2)

Tools for accurate sales forecasting

Before we begin, you need a clear picture of what tools you need to create an accurate sales forecast. This includes:

  1. sales cycle.Do you have a clear pipeline with well-defined phases and timelines for closing a deal?
  2. final installment.How high is the probability of closing per sales phase?
  3. deal value.What is the value of each deal per sales phase?
  4. CRM.Choosing a reliable oneCRM-Softwarehelps you streamline and automate sales forecasting.

The basic math you need to calculate the sales forecast

Sales forecasts are based on three simple calculations:

  1. How much you have earned so far
  2. How much more you earn
  3. The sum of both in a given year.

For simplicity we usemonthlythan our reporting period (you can change this to quarterly, bimonthly or weekly periods at any time).

Monthly Run Rate.The average sales revenue per monthuntil nowthis year. This is the basis of your forecast. You calculate like this:

Revenues to date / no. from months to now

Example:If your current total sales in March is $10,000, divide by 3 months so your monthly run rate is $3,333.

Projected monthly revenue.Revenues you expect in the remaining months. You calculate like this:

Monthly run rate x no. of the remaining months

Example:$3,333 (monthly run rate) x 9 months (April to December) = $29,997

Estimated annual turnover.Expect total sales this year. You calculate like this:

Past sales revenue + forecast monthly revenue

But before you eagerly execute the formulas above, you need to get your numbers right. That means you have toDrill on thatcausedof sales and evaluate them in order to arrive at a more precise forecast.Reverse engineering your sales targetsis a possibility, but for the purposes of this article we'll stick with standard forecasting techniques.

Here you can draw on proven methods that break down sales forecasts into measurable metrics. Let's discuss these next.

Types of forecasting methods

1. Forecasts in the opportunity phase

This method uses theProbability of closing deals in each sales stageforecast revenue. Rather than simply using past sales as a basis, it examines the rate at which sales were completed.

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How it works:You shouldKnow the close rate at each sale stage and the business value. In general, the bottom stages of the hopper should have higher rates than the top of the hopper stages. For example, at first contact, 5% of deals are expected to become customers, while at later stages, e.g. B. in the presentation phase, the rate increases to 40%.

To forecast sales using this method:

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

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

To get the total sales forecast, just add up all the forecasted values ​​per tier.

advantages of this method

  1. Easy to calculate
  2. Uses recurring trends
  3. Adds some statistical truth to your forecast

Disadvantages of this method

  1. Aging deals can screw up data
  2. Trend shifts lead to an inaccurate forecast
  3. Relies on feedback from sales reps

2. Forecasting the length of the sales cycle

This method toouses a close rate to predict sales, but based on the age of the deal. In fact, it addresses the problem in our first method.

How it works:You shouldKnow your sales cycle and business value. The closer the deal is to the end of the sales cycle, the higher the close rate. For example, if your sales cycle is 6 months and the deal lasts 3 months, the close rate is 50%.

To calculate future sales:

Forecast = deal value x close rate in the sales cycle

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

To get the total sales forecast, simply add up the forecasted values ​​of your current deals.

advantages of this method

  1. It sorts out aging deals
  2. Data is objective

Disadvantages of this method

  1. If you have different sales cycles, the calculation is complex
  2. It does not work on irregular sales cycles

3. Intuitive prognosis

This method relies on theSales rep insights into business opportunities. After all, who could know the offers better than those closest to them.

This is suitable for small businesses or startups.Your employees are likely to be more connected than in large organizations; hence trust is easy to toss around. Startups in particular lack historical data, so they rely on this method.

How it works:All it takes is asking your sales reps when they think the deal will close and by how much.

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advantages of this method

  1. It makes the most use of the insights of the people involved in the business
  2. It's easy to do.

Disadvantages of this method

  1. Prone to over-optimism or abuse
  2. No scalable method for verifying data integrity

4. Historical Forecasts

Some call this the lazy way to forecast sales, but it works for others. The idea isassume that the same result will occur month after month,at least.This works best for subscription-based stores.

How it works:For example, last month's MRR is $500, so assume the same values ​​for the following months. You can also assume the same sales velocity applies every month. So if you grew your sales by 5% month-on-month and your current monthly run rate is $500, your forecast for the next month is:

$500 current monthly run rate x 5% sales velocity = $25 additional sales

$25 + $500 = $525 projected revenue next month

advantages of this method

  1. Calculated quickly
  2. predictable

Disadvantages of this method

  1. Does not take into account seasonal shifts, external events
  2. Assumes demand is constant

5. Multivariable Analyse

This is the most complex method in our guide to making a sales forecast, but it's also the most accurate.It uses the various methods mentioned above and adds predictive analytics.In short, you combine data into:

  1. Probability of business deals
  2. sales cycle
  3. Sales rep insights
  4. Historical data

This is where the math gets convoluted, and if you're like us you might feel overwhelmed by running numbers on various metrics.

Can you imagine calculating the value of closed deals that are guaranteed to be closed and likely to be closed for that month when you have hundreds of prospects? This means that each deal size's MRR and close rate for each sales stage are tracked and plotted through the sales cycle. You also need to consider the MRR by client, which adds another layer to the math.

You can break a sweat with a manual process, or there's a better way: we highly recommend you use a reliable multivariable forecasting CRM software like HubSpot or otherssimpler Salesforce Cloud alternatives. ACRM software guidewill help you understand these solutions and how they can help.

AStudy of the Aberdeen Groupshows, that82% of companies that use CRM heavily achieve their overall quotaversus 65% of companies not using CRM heavily. Likewise, 60% of the former's salespeople achieve their sales quota versus 50% of the latter's salespeople.

You'll see that tracking actual and projected earningswith a high-quality CRM tool such asHubSpot-CRMit is simplified and automated, so you are always up to date. You can also see where your current sales compare to your monthly quota.

Aside from that,HubSpot CRM automatically logs sales activity, such as calls, emails and social media posts. It also gives you complete visibility into your pipeline, helping you track deals and view related records with ease.

How to Make a Sales Forecast with Templates, Examples & Formulas - (3)

It's easy to track your deals, closed deals, and leads on HubSpot, greatfree CRM.

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Overall, this tool provides the context to more accurately measure the close rate of your sales reps. Over and beyond,HubSpot CRM is a completely free CRM. If you want to try it, you can easily do soSign up for HubSpot CRM here.

Sales forecast templates

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

You can find numerous templates on the internet. On the one hand, HubSpot afree sales forecast template, which you can use immediately for any of the first four methods discussed. It organizes prospects, forecasts monthly sales, and tracks annual sales target. You keep your contingent under control.

Factors affecting your sales forecast

Sales forecasting goes beyond deals and close rates. Many things that are beyond your team and your control affect your ability to make accurate predictions. You must consider these factors and adjust your forecast as necessary.

  1. seasonality.Demand usually goes through peak and off-peak seasons, meaning you won't have the same results month-to-month.
  2. marketing expenses.Post campaigns can lead to sales spikes. Find out what the marketing team is up to.
  3. Market variations.These are changes in consumer behavior, technological disruption and societal trends.
  4. Competition.What your competitors are planning soon can affect your future sales. Examples include: a price drop, new product launch, and a major branding campaign.
  5. Internal Changes.Changes to your product, brand, and organization affect your future sales. For example, the product gets a facelift or rebranding or a price adjustment, or your company downsizes its sales team.
  6. Top-Management.Strategic decisions and plans can also affect your forecast. For example, mergers and acquisitions, IPOs and new fund rounds directly or indirectly affect your future sales.

Also, always be open to refining your forecast as new opportunities arise or threats derail your initial objective.An accurate and honest low-level forecast is always better than an impressive but inflated target.False hope costs money.

Completion of your sales forecast

Creating an accurate sales forecast is your blueprint for future success. To help you create exactly one, take a look at your sales cycle, close rate, business value, and your CRM tool. You can then proceed to calculate your run rate, projected monthly revenue, and projected annual revenue. 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 forecasting templates like Hubspot's. Whichever route you choose, keep in mind the various factors that affect your sales forecasts, such as: B. seasonality, market shifts and the like.

Remember, while no one can predict the future, with the right intuition, formulas and data, you can estimate it andtop-notch CRM tools. Your sales forecast can also be supplemented with proven CRM tips and approaches to further increase sales. This allows you to create meaningful sales forecasts even in turbulent times like the pandemic.

We hope this guide to making a sales forecast will help you hit a more reliable target as you work on your next project. If you need additional help, you can always try more accurate sales forecasts fromSign up for the free HubSpot CRMTool.


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How to Make a Sales Forecast with Templates, Examples & Formulas - (4)

VonAdam 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 working with FinancesOnline for over 5 years. During that time, Andrew has analyzed more than 2,000 CRM solutions and is known for his honest reviews and unique perspective on the challenges and opportunities that arise from customer-centric innovation. He is a strong believer in business process automation and the role it plays in managing customer data, conversational intelligence and customer engagement. His work has been featured in many important publications and media sites including MSN, Springer, TheNextWeb and CIO.


What is the formula for sales forecast? ›

The simplest formula to use is: sales forecast = the previous period's sales + estimated growth (or shrinkage) in sales for the next period.

How do you forecast sales template in Excel? ›

On the Data tab, in the Forecast group, click Forecast Sheet. In the Create Forecast Worksheet box, pick either a line chart or a column chart for the visual representation of the forecast. In the Forecast End box, pick an end date, and then click Create.

What is a sales forecast template? ›

A sales forecast predicts future sales revenue using past business data. You can use sales forecasting to assess your financial projections and change your business plan if necessary. Learn how a sales forecast template can help you set goals, budget, and refine your sales cycle.

How does forecast formula work in Excel? ›

The FORECAST function in Excel is used to predict a future value by using linear regression. In other words, FORECAST projects a future value along a line of best fit based on historical data. Where: X (required) - a numerical x-value for which you want to predict a new y-value.

What are six basic steps in the forecasting process? ›

The following slide highlights the six steps of business forecasting process illustrating key headings which includes problem identification, information collection, preliminary analysis, forecasting model, data analysis and performance review.

What are the 4 basic forecasting method? ›

While there are a wide range of frequently used quantitative budget forecasting tools, in this article we focus on four main methods: (1) straight-line, (2) moving average, (3) simple linear regression and (4) multiple linear regression.

How do you forecast sales manually? ›

The formula is: sales forecast = estimated amount of customers x average value of customer purchases. New business approach: This method is for new businesses and small startups that don't have any historical data. It uses sales forecasts of a similar business that sells similar products.

What are three forecasting examples? ›

There are three basic types—qualitative techniques, time series analysis and projection, and causal models.

What are the 3 major types of forecasts? ›

Organizations use three major types of forecasting (economic, technological and demand forecasting) in planning the future of their operations.

What is forecast template? ›

Sales Forecasting by Lead Stage Template

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).

What is the best forecasting method Excel? ›

Choosing the right forecasting models in Excel

If you're looking to better understand your recent business activity (and what it means for your business going forward), then the moving average method might be your best option.

How do you forecast sales growth? ›

Divide the current sales by the prior year's sales. For example, if your sales this year were $487,000 and last year's sales were $412,000, the sales growth rate is 18 percent ($487,000 divided by $412,000). Repeat the process for all other years in the series of sales data.

Which is the #1 rule of forecasting? ›

The first law of forecasting is that forecasts are always wrong. The important thing is to understand how wrong the forecast is, and how to improve the accuracy to a point where realistic planning can be achieved.

What are the main two techniques of forecasting? ›

There are two types of forecasting methods: qualitative and quantitative.

What is the most difficult part of forecasting? ›

Step 1: Problem definition. Often this is the most difficult part of forecasting. Defining the problem carefully requires an understanding of the way the forecasts will be used, who requires the forecasts, and how the forecasting function fits within the organisation requiring the forecasts.

What is the first step in forecasting? ›

Specify the Input Data Set

The first step in the forecasting process is to tell the system to use this data set by setting the Data Set field.

What is the most simplest type of forecasting? ›

Passive demand forecasting is the simplest type. In this model, you use sales data from the past to predict the future. You should use data from the same season to project sales in the future, so you compare apples to apples.

What is the easiest methods of sales forecasting explain your answer? ›

Straight-Line Method (aka Historical Growth Rate)

This is the simplest of all the methods to calculate future sales and factor any growth into the equation. Straight-line forecasting is sometimes referred to as the historical growth rate and can give you a rough look at where sales will be based on past growth rate.

What is a forecast statement and example? ›

A forecasting statement introduces the reader to the points in your thesis, reducing each point to one or two words. It mentions these points in the same order as the essay, similar to an outline. The forecasting statement does not include every idea presented in the thesis.

What is sales forecasting in simple words? ›

What is a sales forecast? 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.

What is an example of forecast of future sales performance? ›

From this data, the sales team can predict future sales for the next month, quarter or year. For instance, if the first two months moved an average of $100,000 worth of apparel, they might predict $1,200,000 in sales over the next year.


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