You’ve worked through the numbers and still, somehow, your sales forecast doesn’t show growth. We’ll look at the reasons why this might be happening. Then, we’ll offer a list of tips on how to forecast sales to show growth.
What Is Growth in Sales?
Ultimately, you want to demonstrate growing revenues and profits each year. (You’ll also want to demonstrate a well-planned cash flow). You do this by producing financial statements that predict year-on-year growth.
Why Investors Need to See a Sales Forecast That Shows Growth
Investors might love the idea of your business, but they’ll only ever invest if you can demonstrate good returns on their investment. Investors want reassurance that they can get their money back. The company needs to grow in value, in order for the investor to enjoy the returns when either someone new buys the company or the company goes public.
What Happens When Your Sales Forecast Doesn’t Show Growth?
So what’s happening that’s causing your forecasts to fall short of the growth you’d like to see?
There are two key questions to explore when encountering a poor growth forecast.
1. Are You Being Ambitious Enough? 🦸
Do you have big goals, or are your predictions for profits a little low? Make sure you give yourself a chance when doing your financial forecasts. Sure, there’s no point in fabricating your numbers to something completely unattainable, but equally, you can set reasonably high targets for your profits.
2. Are Your Goals Strategic? 🔀
Do you have a fixed point in a longer-term (for example in 3 or 5 years) where you plan to be? Is this point arbitrary, or does it arrive at the end of an extensively thought-through plan? What happens beyond this marker? What makes this an important milestone? Sometimes the profits never materialize because your business plan is hastily re-investing assumed income on the next step of your journey.
You Need a Long-term Strategy for Good Sales Growth
As a founder, you need to have a plan to play the long game. In other words, you need to be able to look ahead in 3 to 5 years from now and be clear about your strategy. There’s absolutely no point in picking a number or having a lofty goal, without thinking your plans through. To build an effective long-term view of your business, you must have smaller steps built into your plan. If you don’t have an incremental view of how to grow your business, you will struggle to quantify your goals and explain the practical steps that will get you there.
A healthy business should always be growing in some way or another.
How to Build Your Long-term Strategy for Growth
If you’ve fiddled with your numbers and still are hitting poor profits margins or volumes with little growth, don’t panic, there’s still hope. You can reset your business strategy to ensure your sales forecasts show growth by going back to basics with price and volume.
- What are you selling?
- How much are you charging for it?
- How much are planning to sell?
Think about our earlier points on your ambitions for the business.
- Do you need to increase prices?
- Perhaps you’re not being bullish enough on the volumes you plan to produce.
- Can you increase production?
Build Flexible Financial Forecasts to Find Your Optimum Growth Strategy
As you try to work out your optimum business strategy, you’ll need a forecast where you can easily adjust your numbers. If you don’t have a forecast where you can toggle these variables, you won’t be able to test all your possible outcomes. Business plans, financial forecasts and cash flow forecasts are not rigid, yet our strategies to build these tools typically are. So, we created Numberslides. It’s a clever software, available online where you can add your numbers, adjust your variables and find and fix any problems in your sales forecast.
Numberslides can help you build credible financial projections and sales forecasts that show sustainable and achievable growth. Plus, you can understand your projections and share them with future investors too.