Theme 2 - Sales Forecasting - 2.2.1 Flashcards
Whats a sales forecast ?
A sales forecast estimates the volume or value f future sales using market research or past sales data
How do sales forecasts help avoid cash flow problems ?
Accurately forecasting the sales and building a sales plan can help the business to manage their production, staff and financing needs more effectively and possibly avoid unforeseen cash flow problems
A sales forecast will help a business to write the income part of the cash flow forecast
Whats Interest ?
Cost of borrowing
Whats Inflation ?
Rate at which prices are going up or down
How do sales forecasts help free up management time ?
While it’s always wise to expect the unexpected, a well- constructed sales forecast can allow the business owners to spend more time developing their business rather than responding to day-to-day developments in sales and marketing
Also managers will have more time to focus on the rest of the business
How do sales forecasts help with production capacity ?
The business can use a sales forecast to estimate if they need to increase or decrease production – and this will also help them to see if they have enough production capacity to deal with expected demand
The business may need to buy or rent new premises if there is a huge increase in sales forecast
How might sales forecasts help employ new workers ?
If the business has high sales forecasts for a new product/service - the business might have to take on more employees to cope with new levels of demand.
Failure to meet required staffing levels could result in poor reviews
How might sales forecast help a business to start promotional activity ?
If the sales forecast says that the product sales are going to be low and the product is not in the decline phase e.g. typewriter is in the decline phase then the business might decide to try and increase the sales through promotion and marketing
What are the factors affecting sales forecasts ?
Consumer trends
Economic Variables
Actions of competitors
How do consumer trends impact sales forecasts ?
- A sales forecast may take into account consumer trends
- Documents like reports can help a business to identify an upcoming trends and this will impact the sales forecast
- fashion shows and trade fairs are also ways that a business can research what might be new popular products
Whats buffer stock
It’s stock that is stored in a warehouse and is ready to be used (put out) when the demand for the stock returns
How do economic variables affect sales forecasts ?
If you can predict that the for e.g. interest rates go up then this will affect your sales forecasts or for e.g. if unemployment rates go up then less people have disposable income so then your sales will go down so this will affect your sales forecast
What are economic variables ?
they are things like : interest rates, inflation, unemployment rate and GDP and these all can affect a business plan and its sales forecast
Whats GDP ?
Gross domestic product - total of products produced in the country
How do actions of competitors affect the sales forecast ?
The actions of competitors may also have an impact on sales forecasting because for e.g. if the sale of your product declines because of another competitor then you might want to sell or produce less products
