How to Forecast Your Sales During COVID-19
December 1, 2020
Sales forecasting helps your business avoid unforeseen cash flow problems and allows you to manage business operations without any liquidity crisis. A sales forecast is an essential tool to analyze future cash flows. If you can prepare sales forecasts for your business, it will help you to analyze factors that impact the sustainability of your business. It is difficult to prepare sales forecasts during COVID-19 as businesses are operating in abnormal situations. Setting realistic sales targets sometimes becomes unrealistic during tough times. Nowadays, many Canadians are working with low disposable incomes as their earning capacities have been compromised due to COVID. Sales forecasting majorly depends on the following key factors. Before you prepare sales forecasts for your business, you need to relate the below factors to your sales forecasting activity.
Set Realistic Targets
It is difficult for businesses to meet their sales targets during COVID-19. You prepare sales forecasts based on realistic targets. Defining your sales targets is a critical part of sales forecasting that will help you identify future cash flows. Sales targets should be defined based on current market dynamics. If you prepare your sales forecast based on unrealistic numbers, you will find yourself facing cash flow problems.
You need to make sure that every worker who works in your business is sensitive to the implementation of COVID-19 precautionary measures. Whether you are in a service industry or operate a departmental store where customers are exposed to this virus and can be a potential carrier, your efforts to implement COVID protocols in your business will determine your future cash flows and your business will surely have a positive impact in the long-term.
Use Historic Data
The easiest way to prepare sales forecasts is to use historical data. By adding a certain percentage to the previous year’s sales data will help you determine the future cash flows of your business. All of your revenue management reports are linked to your sales forecasts. You can visualize your revenue dashboard which will help you make an informed decision.
Conduct Market Analysis
You need to conduct market research on various factors to know how your competitors are behaving during this COVID time. It is recommended to set your product pricing just below your competitors’ pricing. The price reduction should not be done at the cost of quality but it will have a positive impact on your sales revenue. Business owners will have to reduce their profit margins and transfer the impact of reduced profitability to end customers to better forecast your sales figures.
Utilize CRM Support
If you have implemented customer relationship management software, you can always use different CRM reports to better prepare your sales forecasts as the CRM is the process of managing your interactions with existing as well as past and potential customers.
You should also analyze your sales forecasts and market trends so that you can ask your suppliers to provide you with the necessary materials when needed. Before preparing sales forecasts for the next period, you should keep in mind the factors mentioned above so that you can get realistic and reliable sales forecast data. Since sales forecasting is an essential tool, the sustainability of your business depends on the sales revenue of your business. You also need to focus on managing your business’s working capital so that you can effectively manage all of your account receivables and payables during tough times.
GTA Accounting is a Toronto Accounting firm that can assist you in helping you build a more accurate sales forecast, especially during these uncertain times. Speak to one of our team members and find out how we can assist you in more accurate sales projections.