5 modern Sales Forecasting Strategies for Startup Companies

How many leads do you need in the next quarter to hit your business revenue target?

How much revenue will the new product achieve?

or

Will you meet the revenue target this year?

 

Everyone involves a business has to come across such questions. But why is it always about sales, revenue, demand, and forecast?

As sales are the aid of any business. Maintaining a general thought of what to expect in the future will help in making the right decisions. And so, the answer to all these questions lies in Sales Forecasting.

 

Using sales forecasting, you can quickly get an idea about how much revenue your business will generate at a particular time. It provides insights and enables you to decide the next step towards achieving your target goals. This may sound simple, but it isn't. Sales revenue forecast provides a boosting power to your demand plans. With accurate sales projections, you get the most accurate sales prediction of what a particular sales team, salespeople, or organization employees will sell in a given time frame (daily, weekly, monthly, or yearly), which will ultimately help you to analyze the picture of your business future. But, predicting your future sales for a particular duration can be quite challenging due to some critical factors that come into the picture. Regardless of how confident you are about the sales forecasts; you cannot be 100% right.

Moving further, let us delve into more detail and understand the 5 modern sales forecasting strategies for a startup company and which one is right for your company.

Even if you have the data with you, there are various forms you can consider to look at your sales and come up with a forecast. All these steps depend on the outcomes and the information you have collected. To make this more convincing, let us break this down into a few different modern sales forecasting strategies, defining the situations that can be beneficial for sales forecasting and budgeting.

 

Historical Data

Business forecasting uses historical data to predict the company's future execution. Historical data includes your company's financial reports, client invoices, and information you believe has relative predictive value to your company's future success. It uses the historical sales data and determines sales predictions that will presume your future growth. For example: if you sold $10,000 last year in July, this model assumes you will sell at least $10,000 next year in July. Count in your sales projection and sales forecasting process; you will get a better picture to see. And also, if you grow an average of 5% every year, you can predict $10,750 in your future sales. It is similar to observing the weather and getting ready accordingly, assuming that it will remain the same. Hence, historical is basically used as a benchmark.

 

Regression Analysis

Regression analysis can be applied to any area, field, or domain of your business. Usually, regression analysis recognizes the relationship based on independent and dependent variables. For example, the dependent variable can be your company’s salesperson, and the independent variable can be the interest rates.

Startups, Businesses, and governments use regression analysis as a sales forecasting tool and find it the best way to forecast sales. Governments and businesses use regression analysis as a predictive tool for forecasting purposes. It also estimates the stability, correlation, and strength between the independent and the dependent variables.

 

Multivariable analysis

This technique is the most advanced forecasting method. It uses predictive analytics and includes individual proxy performance, average sales cycle length, and the probability of closing established on opportunity class. The multivariable analysis approach takes the best parts of all these forecasting methods and arranges them concurrently into one complex, analytics-driven process. Here, precise data is necessary because if the reps fail to track the deal progress and actions, your results will get worse.

 

Analyzing test-market predictions

This method is perfect if you introduce your new product or service and get an idea about what revenue you will achieve in the coming future. It includes doing a limited launch of your product and analyzing the reaction. So, if you are on the way to launching your new product, this is an excellent way to study the market through real sales. And choosing this method will help you with excellent forecasting revenue outcomes.

 

Lead-driven projections

The lead-driven method depends on comprehending your lead's relationship with your company and what they are based on. The essential part here is that while analyzing the lead source and assigning a value to it, consider the previous similar leads as the source. And if you have no exact data on your historical data or lead authorities, you will have difficulty creating the most accurate forecast using this method.

So, if you have just started your company or are on the way to expand your business then recognizing the value of sales forecasting for your future business will enhance it in a better way. As many of these methods rely on historic data towards accurate sales forecasting results. Sales predictions will help you keep your startup alive and know you have the aids to go after great leads.