Sales forecast

• Factors affect sale forecast

  • Economic variables
  • Consumer trends
  • Actions of competitors
• Difficulties of sale forecast

  • No guarantee : there are no guarantee that sales will meet these levels due to uncertain factors e.g impact of terrorism on tourism
  • Dynamic markets : hard to predict since the market is always changing
  • Short term thinking : useful for a business which can produce and sell product in a one year period, a one year forecast will not be useful or appropriate for multi-billion-dollar contracts, over a longer time period
• Uses of cash flow forecast

  • Free management time
  • Production capacity
  • Employ more workers
  • Start promotinal activity
  • Purpose avoid cash flow problems
• Free up management time : A well constructed sales forecast can allow the business owner to spend more time developing their business
• Production capacity : to estimate of they need to increase or decrease production - to see if they have enough production capacity to deal with unexpected demand
• Consumer trends

  • Documents like reports that Mintel produce can help a business to identify an upcoming trends.
  • Fashion shows and trade fairs are also ways that a business can research what might be new popular products.
• Economic variables E.g: interest rate, inflation, unemployment and GP

  • Some sales contracts may not be renewed due to inflation and the rising cost of the products from the business, so it may need to lower prices to maintain the correct level of sales predict.
• Action of competitors

  • If the business has products that face declining sales, perhaps because of a competitor's superior product, they may decide to produce or sell less of those products