Everyone knows that sales forecasting is the backbone of every good business strategy and financial plan. It is even more important for a new or young business when creating your business plan. Accurate sales forecasting can help your business growth, it will help you budget and forecast your expenses, profits and overall business growth.
Additionally, a good sales forecast is necessary for many businesses in order to get insurance, it is crucial for funding, and so on.
Sales forecasting can be tricky exercise within any business, but it is even more so when we are looking at the new product sales forecasting.
In order to make sure that your forecasts are not just random numbers, a few things that you need to consider specifically when creating a new product sales forecasting:
- Unit sales projection – one of the things that can set your new product sales forecasting off the mark is unit sales projections. Where you can start by forecasting new product sales units per month. However, not every business and business model will encounter the same units, and your forecast must reflect only what is relevant to you. For some businesses, it might be easier to start this by breaking things down into their component parts, while the product-oriented business will sell units, or those that provide professional services will deal in hours.
- Past data – the majority of forecasts, sales or not, will use past data in order to estimate the future, while taken without any other data, this is not going to provide you accurate forecasts anyways it is a crucial part of your new product sales forecasting.
- Make data – using past data in new product sales forecasting, obviously might not be possible, but if you have other similar products use their data as your baseline and then consider other factors that might affect this item, as your brand recognition, trust you already established with your customers and so on. Additionally, look at competitor items and their seasonality, what demand is there already and review the forecasts for the market of this item.
- Break it down – in order to ensure the success of your new product sales forecast one has to break the purchase funnel down into smaller steps in order to make forecasting and monitoring easier. This is particularly useful in the hospitality industry, or when you are dealing with average order values. Also, at this point, it is crucial to consider the average cost of sale of your items and the length of your purchase cycle.
- Price it all up – looking at your budgets and cost per sale, deliberate your prices. It is important to consider multiple what-if scenarios here to ensure that your business can take slight turbulence on a way!