SALES FORECASTING AND

BUDGETING
Joy M. Gacayan
Forecasting

Forecasting is a technique that uses historical data as

inputs to make informed estimates that are predictive in
determining the direction of future trends. Businesses
utilize forecasting to determine how to allocate
their budgets or plan for anticipated expenses for an
upcoming period of time. This is typically based on the
projected demand for the goods and services offered.
Forecasting and It’s Relationship to Operational
Planning

Sales Forecast

Is a prediction of the future market potential for

a specific product. Simply put it set the sales
expectations for a given time period. And just
like the weather forecast, a bad sales forecast
may expose you to some stormy times ahead.
MARKET POTENTIAL

Is a quantitative estimate, in either physical or monetary units, of the

total sales for a product within a market.

SALES POTENTIAL

Is the portion of market potential that one among a set of competing

firms can reasonably expect to obtain.
Here is an example of using sales forecast to calculate how many
salespeople are needed for an upcoming year:

$500,000
Sales
NSP = Potential (1 + TO) = $50,000 (1 + .1) = 10 X 1.1 = 11
Sales per SP
SP

Where :
NSP = Number of Salespeople
Sales per SP = Sales per Salesperson
TO = Turnover