Why Revenue Forecasting is Important

Revenue Forecasting is very important in order to see the future growth and expansion of the company related to the revenue and expenses of the firm. With the help of revenue forecasting a firm can make important decisions regarding the operations and staffing of the business. While it is not easy to imply completely accurate revenue forecasting but you can follow certain steps to make things work properly. In order to forecast revenues accurately always start with your expenses instead for revenues

How to Conduct Revenue Forecasting

The expenses of the fixed cost can be categorized as Rent, communication costs, bills, accounting cost, legal and insurance cost, inventory maintenance cost, staff salaries, marketing and advertising, technology implementation cost and postage. The next step is to calculate variable expanses that may include materials and supplies, packaging costs, customer services costs and direct sales. While forecasting a firm must double the cost of advertising and marketing as they always leap up beyond expectations. Make the cost assigned to legal and insurance issues triple as par estimated as these costs are almost unable to forecast.

Approaches of Sales Forecasting

During the process of forecasting sales make sure to forecast using both the aggressive and conservative approach. In conservative approach you can assume that there is a low point price along with two marketing channels and no sale staff or a new product that you are going to launch in the market. On the other hand in aggressive approach you can assume high price of the product along with three or four marketing channels and having a support sales staff along with having a complete portfolio of products.

 

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