How To Forecast Revenue Growth In Excel – Sales forecasting models may not be so interesting. done But imagine this scenario with two sales managers:
The sales manager hopes to hit his Q1 goals and asks the sales VP to hire a few more reps. He has a pretty solid idea of how many reps he needs.
How To Forecast Revenue Growth In Excel
A sales manager doesn’t need 2 prospects. He already knows how many reps he needs to hit his end-of-quarter goals and has a sensitive report ready to send to the VP of Sales, complete with graphs and charts.
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What’s the difference? (Also, it’s possible to get the budget to hire more representatives, and no one else will).
Fun – because it gives you superpowers to see what’s coming down the pipe. What’s more, they’re relatively easy to create using the right sales forecasting model.
In this guide, we’ll walk you through a few of our favorite sales forecasting templates (in Microsoft Excel and Google Sheets) for easy access.
But first, let’s dive a little deeper into why sales forecasting is essential to growing your sales team and your business.
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A sales forecast is a report that shows projected sales and revenue over a period of time, usually monthly or quarterly.
When done well, sales forecasting helps businesses allocate resources, estimate costs, and predict whether short-term and long-term business goals will be met.
For example, a startup might use sales forecasting to determine whether they will meet their end-of-quarter revenue goals or whether they need to hire more sales representatives.
The challenge is that sales forecasting is only as useful as it is accurate – which is why many teams use sales forecasting templates that standardize the process and make it easier to find key marketing ideas.
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Sales forecasts provide a small window into the future of your business. You can see if you can reach your quarterly goals and track the overall performance of your sales reps and sales team. This data makes it easy for you to track or adjust your strategy if you need to.
Imagine you’re the sales manager of a SaaS company and you’re hitting your revenue goals or needing to hire more salespeople.
Based on your sales forecast, you’ll find that you generate 10% fewer leads. This means it’s time to step up your lead generation efforts and hire more SDRs.
Finally, it’s a powerful motivational tool for your sales team, especially if you have a long sales cycle. This gives you a clear picture of what your team is doing today.
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The truth is that sales forecasting can be very simple – if you follow the step-by-step process and use sales forecasting.
We’ve broken down the process into 4 steps to help you create the best estimate for your business. If you need a quick and easy solution, this process will go ahead.
Revenue Forecast The easiest way to get a revenue forecast is if your sales continue at the same rate.
Say you earned $120,000 on March 30th. Divide $120,000 over 3 months and see if you can earn $40,000 per month. Here’s your rate.
Excel Of Yearly Sales Growth Chart.xlsx
Then multiply that annual number by the remaining sales time for your annual estimate. In this example, it would be $40,000 per year * 9 months.
This tells you that $360,000 is the expected sales volume at the end of the year if you make no changes to your business. A sales ratio formula to help you estimate your expected sales:
Formula for Sales Velocity: Expected Sales = Sales Rate (Actual Sales / Time Sold So Far) x # of sales cycles.
This is one of the easiest ways to predict future growth, but it is not the most accurate. This formula does not take into account seasonality, competition, market changes or business growth or decline.
Why You Should Be Using A Sales Forecast Template & Software
Look at sales over the past 12-24 months, paying particular attention to sticks and dips. For example, if your business sells clothing to consumers, you may see big sales around Black Friday and Cyber Monday and summer sales.
According to Adobe, consumers spent $9 billion on Black Friday. Not a long average day.
If seasonality or trends affect your sales, calculate average monthly interest rates during peak or trough periods. For example, if your sales typically increase 30% in November, calculate this trend by adjusting sales percentages.
If you don’t have historical or seasonal data on your business, don’t sweat it. Skip this step.
The Sales Forecast Template For Sales Managers (free Excel)
Changes in overall market growth, consumer behavior and emerging trends can have a significant impact on sales.
For example, if you sell to the natural health market, and the industry is expected to grow by 23%, this may benefit your growth rate.
It’s really invasive. This is possible with a great ending system, but everything has to be good. On the other hand, the 10% growth forecast may be too low.
Consider market trends and your competitors, then factor these calculations into your sales forecast. It provides a more accurate picture of the future.
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Are you launching a new product? How have products been marketed before? Are you selling to a new customer base? How often do you expect these new markets to be added to your client portfolio?
For more advanced trends and metrics to consider (or if you don’t have historical data), there are more advanced sales forecasting methods.
The right sales forecasting model gives your sales team access to the most important sales metrics and KPIs. The challenge is that not all businesses are the same.
Sales companies may have to track hundreds of products and dozens of different suppliers, while a SaaS company may only offer three plans, but the sales cycle is much longer.
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Finding the right model for your business needs is essential. Otherwise, you’ll be lost in a sea of useless data.
Different sales goals and revenue goals are based on different data. For example, if you want to forecast sales over the next two years, you’ll need a sales forecast model that covers a longer period of time.
For example, suppose an e-commerce company wants to increase monthly sales by 10% and increase customer lifetime value. In this case, they need a different model than a small business trying to increase sales to a specific customer group. Side note: Check out our picks for the best CRMs for small businesses this year.
Next, set realistic revenue goals based on overall market growth. If your business is expanding by 25%, 10% growth may be too low, but 50% may be too high.
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The type of your business is one of the most important factors when choosing the right sales forecasting model. Size, industry, age and growth rate will affect which model is right for you.
Also, consider how much your sales will fluctuate. For example, an e-commerce store may have ten to 15 fluctuations per year, so they need a model that can handle their data. On the other hand, the small fly fishing business only has two ups and downs, in and out of season.
By looking at the following sales forecasting models, find one that fits your business model and can handle fluctuations in sales.
You’ll need to adjust your sales forecast based on your historical data, key metrics you need to track, and your confidence in the data. Goals and KPIs also affect the forecasting methods you use.
Ways To Make Your Revenue Forecast More Accurate
As you look at the sales forecasting models in the next section, make sure they are appropriate for the analysis method you are using.
We’ve already talked about how historical data affects sales forecasting, but it’s an important factor in choosing the right sales forecasting model.
Before choosing a model, review your previous specifications and historical data. How much data do you have? If you have several years of data, consider long-term forecasting models.
What data do you want to include about your business type and forecasting methods? Make sure the template you choose includes fields relevant to your business.
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Finally, spend a few hours researching current market conditions and considering how they affect your sales forecast. For example, if your business is growing rapidly, you can choose a forecasting model that will be updated in the near future.
On the other hand, if a major competitor is acquired by another company, this can make growth difficult and may lower your growth prospects.
Look at the models below to find the model that best suits your current market conditions.
We started it with a list of 8 different types. The truth is, not every sales team needs a super-complicated sales forecasting model. Some, like small businesses, want to track just a few metrics.
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To make your life easier, we’ve rounded up all the free sales forecast templates we can find (in Excel format) and created our own.
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