Historical data is the building block for an accurate and reliable sales forecasting. Most business experts require this data before carrying out any step in relation to sales forecasting. However, this does not spell doom to people who don’t have any historical data. Even without historical information, you can still carry out a sales forecasting. This may sound impossible, but it is doable. Something that took place two years ago may not have an impact on what will happen several years to come.
All in all, lets’ look at how you can carry out a data-intensive sales forecasting with and without historical data.
1. Using Historical Data
Sales forecasters gather historical data or analyze the past performance of the business to determine its future. There are various techniques that use past data, including:
Analyzing historical data
Some of the data that can be analyzed when doing sales forecasting include financial statements and invoices from clients. Historical data can also be obtained outside the company. You can use old economic data such as interest rates, tax rates, the Consumer Confidence Index and many other data to do sales forecasting. The data, however, should show its capability of affecting your business in one way or another.
This is a conventional statistical method that is used to analyze different relationships using both dependent and independent variables. From a business perspective, dependent variables can be your marketing efforts, while the independent variables can be interest rates. Regression analysis can be used to identify a correlation between these two variables and show the future of the business.
Regression can be quite complex, especially when you include several independent variables. In such cases, you will be required to deploy more sophisticated methods to analyze the given data.
The most difficult part of sales forecasting is trying to gather information about what will happen in several years to come. Such scenarios call for regression analysis. Note that this technique tends to be more accurate as you increase the number of years.
The goal of historical data is to establish a correlation between variables. When using these methods, it is advisable to use statistical software. There are various programs that are designed to assist you in doing analysis and getting rid of errors.
2. How to do Sales Forecasting without Historical Data
You can still do sales forecasting without using historical data. Here are some of the techniques that you can use:
Examine your current financial position
By looking at your current financial status, you can easily tell where you are going. Begin by analyzing the fixed expenses such as the utility bills and rent. You can then examine other expenses such as labor and cost of goods sold. You should also include loans as an expense. Once you determine your expenses, you will be able to predict your future financial status. For instance, let’s look at the loan. Once you are done with the repayment, you will have fewer burdens to take care of.
Watch your competitors
How are your competitors doing in the market? Although it may be difficult to access their financial statements, you can still get some viable hints about their performance. Take a look at their historical data or study how they interact with their customers. From there, you can pinpoint some specific patterns that you can use to do a sales forecast for your business.
Survey your customers
Instead of relying on data from the archives, why don’t you consider using your current customers to gather useful information? You will be surprised to know how much information you can get from both your regular and new buyers. From the surveys, you will know what your customers think about your business and its products. Once you have gathered the information you require, you can then begin planning on how to implement the things that your customers want. In doing so, you will be in a better position to predict your future sales.
Look out for weaknesses
Scan for the weak areas of your business and try to rectify them. Whether it is the unnecessary expenses or redundancy in the production line, check it out. This is because you can effortlessly use your inefficiencies to predict the future performance of your business. Lack of historical data shouldn’t prevent you from doing sales forecasting. However, if you have the information, you can use it to carry out a comprehensive sales forecasting.