Creating Sales Forecasts

This article was written by Tim Berry of Entrepreneur.com Tinm is the "Business Plans" coach at Entrepreneur.com and president of Palo Alto Software Inc., which produces the industry's leading business planning software, Business Plan Pro, as well as other popular planning applications for businesses.

If you're like most entrepreneurs, you hate to make forecasts for your business plan. People don't like forecasting because predicting the future greatly enhances their chances of being wrong. So what can you do?

The answer is educated guessing. Like the weather forecaster, you get all the data you can, think about it, absorb it and, eventually, make an educated guess.

A lot of very expensive market forecasting, in fact, is based on the educated guess. And though it's hard to forecast, it's even harder to run a business without forecasting. Here are some tips for making that guess as accurate as possible.

Trust your expertise. Are you an industry expert? Do you have an industry expert on your team? If so, trust yourself or your expert. Don't assume somebody with an MBA or CPA, or somebody whose guess costs you a few thousand dollars, is necessarily better. The savvy industry veteran usually knows more than a new market researcher can find out. When I was a professional market researcher years ago, I found there's rarely an information source as good as somebody who knows the industry.

If you aren't an expert, find one. The title says it all. You should have at least one expert on your team, either as an employee, partner, investor, board member, advisor or consultant. Forecasting for business plan purposes is hard enough without trying to do it blind.

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