Sales forecast template: Free guide, methods & examples

A sales forecast predicts future sales revenue using past business data. You can use sales forecasting to assess your financial projections and change your business plan if necessary. Learn how a sales forecast template can help you set goals, budget, and refine your sales cycle.

A strong sales team is the key to success for most companies. They say a good salesperson can sell sand at the beach, but whether you're selling products in the Caribbean or Antarctica, it all comes down to strategy. When you're unsure if your current strategy is working, a sales forecast can help.

A sales forecast projects future business revenue based on historical data. You can use sales forecasting to preview your financial projections. Based on how promising those projections are, you can make tweaks and adjustments to your business plan if necessary.

What is a sales forecast?

A sales forecast is a projection of future sales revenue based on historical business data, market conditions, and sales pipeline activity. It helps businesses anticipate performance and make informed decisions about resource allocation.

A sales forecast can predict:

• Unit sales: The number of products you expect to sell in a given period

• New customers: How many new clients or accounts will you acquire

• Recurring revenue: Memberships, subscriptions, or renewals you'll close

These projections guide project planning and help you determine how much to invest in new products and services.

Why is sales forecasting important?

Sales forecasting helps you keep a finger on your business's pulse. It sets the ground rules for a variety of business operations, including your sales strategy and project planning. Once you calculate your sales projections, you can use the results to assess your business health, predict cash flow, and adjust your plans accordingly.

An effective sales forecasting plan:

• Predicts demand: Knowing how many units you may sell gives you a head start on production.

• Aligns merchandising efforts: Sales forecasting can help you adjust your retail merchandising strategy by anticipating demand and ensuring the right products are featured at the right time.

• Helps you make smart investments: If you have future goals of expanding your business with new locations or products, knowing when you'll have the income to do so is important.

• Contributes to goal setting: Your sales forecast can help you set goals beyond investments, such as outshining competitors or hiring new team members.

• Guides spending: Your sales forecast may be the wake-up call you need to set a budget and use cost control to reduce expenses.

• Improves the sales process: You can change your current sales process based on the sales projections you're unhappy with.

• Highlights financial problems: Your sales forecast template will open your eyes to problem areas you may not have noticed otherwise.

• Helps with resource management: Do you have the resources you need to fill orders if the sales forecast is accurate? Your sales forecast can guide how you allocate and manage resources to hit targets.

When you have an accurate prediction of your future sales, you can use your projections to adjust your current sales process. Leveraging inventory management software can help you implement these adjustments more effectively.

Free sales forecast templates

A sales forecast template saves time and helps you consistently organize projections. Templates give you a structured starting point you can customize to your business needs.

When choosing a template, consider your forecasting method, product complexity, and projection timeframe. Start with a basic template and add complexity as your process matures.

Sales forecasting methods

Sales forecasting is an important part of strategic business planning because it helps teams predict future sales and make informed decisions. Because businesses vary in size, industry, and market dynamics, no single forecasting method suits all.

Choosing the right method involves:

• Analyzing your business size and industry

• Assessing the available data and tools

• Understanding your sales cycle's complexity

A few telltale signs that you've picked the correct approach include:

• Improved accuracy in sales target predictions

• Enhanced understanding of market trends

• Better alignment with your business goals

Opportunity stage forecasting

Opportunity-stage forecasting assesses the likelihood of sales closure based on pipeline stages. It's ideal for businesses using CRM systems like Salesforce with a clearly defined sales process.

For example, a software company might use this method by examining the number of prospects in each stage of their funnel, from initial contact to final negotiation.

Pipeline forecasting method

The pipeline forecasting method focuses on the volume and quality of leads at each stage of the pipeline. It's useful for businesses that rely on forecasting tools and dashboards for decision-making.

A real estate agency could use it by examining the number of properties listed, negotiation stages, and forecasted closings in the pipeline.

Length of sales cycle forecasting

Small businesses often prefer the length of the sales cycle forecasting. It's straightforward and involves analyzing past sales cycles to predict future ones. This method is effective for businesses with consistent sales cycle lengths.

A furniture manufacturer might use this method by analyzing the average time from initial customer contact to sale closure over the past year.

Intuitive forecasting

Intuitive forecasting relies on the expertise and intuition of sales managers and their teams. It's less about spreadsheets and more about market research and understanding customer behavior. This method is often used with other, more data-driven approaches.

A boutique fashion store might use this method, relying on the owner's deep understanding of fashion trends and customer preferences.

Historical forecasting

Historical forecasting uses past performance data to predict future sales. This method is advantageous for businesses with ample historical sales data. It's less effective for new markets or rapidly changing industries.

An established book retailer could use historical data from previous years, considering seasonal trends and past marketing campaigns, to forecast next quarter's sales.

Multivariable analysis forecasting

Multivariable analysis forecasting is a sophisticated method ideal for larger sales organizations. It analyzes factors like market trends, economic conditions, and marketing efforts to provide a holistic view of potential sales outcomes.

An automotive company could analyze economic conditions, competitor activity, and past sales data to forecast future car sales.

How to calculate sales forecast

Sales forecasts determine how much you expect to do in sales for a given time frame. For example, let's say you expect to sell 100 units in Q1 of fiscal year 2026. To calculate sales forecasts, you'll use past data to predict future trends.

When you're first creating a forecast, it's important to establish benchmarks that show how much you normally sell of any given product and how many people buy it. Compare historical sales data against sales quotas, i.e., how much you sold vs. how much you expected to sell. This analysis can help you set a baseline for what you expect to achieve every week, month, quarter, and so on.

For many companies, this means establishing a formula. The exact inputs will vary based on your products or services, but generally, you can use the following:

Sales forecast = Number of products you expect to sell x The value of each product

For example, if you sell SaaS products, your sales forecast might look something like this:

SaaS FY24 Sales forecast = Number of expected subscribers x Subscription price

The sales forecasting process is an educated guess. You'll use the information you already have to create a data-driven forecasting model, and accuracy depends on your sales team's input.

Sales teams use facts like prospects, market conditions, and pipeline data, but they also rely on field experience. As a result, sales leaders typically achieve better forecasting accuracy than newer team members.

Sales forecast vs. sales goal

Your sales forecast is based on historical data and current market conditions. Your sales goals, however, might not align directly with your forecast.

This happens for several reasons: you may want to create stretch goals that push your team beyond past performance, or set ambitious targets that boost investor confidence.

How to create a sales forecast

There are different sales forecasting methods, and some are simpler than others. Follow the steps below to gain a basic understanding of how to create a sales forecast template you can customize to your preferred method.

1. Track your business data

Without details from your past sales, you won't have anything to base your predictions on. If you don't have past sales data, you can begin tracking sales now to build a sales forecast. The data you'll need to track includes:

• Number of units sold per month

• Revenue of each product by month

• Number of units returned or canceled (so you can get an accurate sales calculation)

Other items you can track to make your predictions more accurate include:

• Growth percentage

• Number of sales representatives

• Average sales cycle length

There are different ways to use these data points when forecasting sales. If you want to calculate your sales run rate, which is your projected revenue for the next year, use your revenue from the past month and multiply it by 12. Then adjust this number based on other relevant data points, such as seasonality.

Tip: The best way to track historical data is to use customer relationship management (CRM) software. When you have a CRM strategy in place, you can easily pull data into your sales forecast template and make quick projections.

2. Set your metrics

Before you perform the calculations in your sales forecast template, you need to decide what you're measuring. The basic questions you should ask are:

What is the product or service you're selling and forecasting for? Answering this question helps you decide what exactly you're evaluating. For example, you can investigate future trends for a long-standing product or predict future sales for a new product.

How far in the future do you want to make projections? You can decide to make projections for as little as 6 months or as far as 5 years in the future. The complexity of your sales forecast is up to you.

How much will you sell each product for, and how do you measure your products? Set your product's metrics, whether they be units, hours, memberships, or something else. That way, you can calculate revenue on a price-per-unit basis.

How long is your sales cycle? Your sales cycle, also called a sales funnel, is the time it takes you to make an average sale from start to finish. Sales cycles are often monthly, quarterly, or yearly. Steps in the sales cycle typically include:

• Lead generation

• Lead qualification

• Initial contact

• Making an offer

• Negotiation

• Closing the deal

Tip: You can still project customer growth relative to revenue, even if your company is in its early phases. If you don't have enough historical data, you can use data from a company in your market that's similar to yours.

3. Choose a forecasting method

Two common approaches can help you get started:

• Top-down method: Starts with the total market size and works down

• Bottom-up method: Starts with your business data and expands out using estimation methods

• Top-down method: Start with the total addressable market (TAM), then estimate the percentage your business can capture. For example, if the TAM is $1 billion and you capture 3%, your projected annual sales would be $30 million.

• Bottom-up method: Estimate the total units your company will sell in a sales cycle, then multiply by your average cost per unit. You can add variables such as sales rep count, department expenses, or website views to provide more specific projections.

You'll need to choose one method to fill in your sales forecast template, but you can also try both methods to compare results.

Tip: The best forecasting method depends on what type of business you're running. The top-down method works well for companies with stable revenue or new businesses with limited data. Bottom-up forecasting may be better for seasonal businesses or startups making budget and staffing decisions.

4. Calculate your sales forecast

You've already learned a basic way to calculate revenue using the top-down method. Below, you'll see another way to estimate your projected sales revenue on an annual scale.

• Divide your sales revenue for the year so far by the number of months so far to calculate your average monthly sales rate.

• Multiply your average monthly sales rate by the number of months left in the year to calculate your projected sales revenue for the rest of the year.

• Add your total sales revenue so far to your projected sales revenue for the rest of the year to calculate your annual sales forecast.

A more generalized way to estimate your future sales revenue for the year is to multiply your total sales revenue from the previous year.

Example: Let's say your company sells a software application for $300 per unit and you sold 500 units from January to March. Your sales revenue so far is $150,000 ($300 per unit x 500 units sold). You're three months into the calendar year, so your average monthly sales rate is $50,000 ($150,000 / 3 months). That means your projected sales revenue for the rest of the year is $450,000 ($50,000 x 9 months).

5. Adjust for external factors

A sales forecast predicts future revenue by making assumptions about your growth rate based on past success. But your past success is only one component of your growth rate. There are external factors outside of your control that can affect sales growth, and you should consider them for accurate projections.

Some external factors you can adjust your calculations around include:

• Inflation rate: The rate at which prices increase over a specific period, usually fluctuating with a country's overall economic state. Factor in inflation to ensure you're not projecting a higher or lower sales volume than the economy will permit.

• The competition: Is your market becoming more competitive over time? Assess whether your market share will shrink because of rising competition in the coming year(s).

• Market changes: The market can shift as people change their behavior. These changes are hard to predict, so you must stay on top of market news.

• Industry changes occur when new products and technologies enter the market, making other products obsolete. One instance of this is the invention of AI technology.

• Legislation: Changes in legislation can affect the way companies sell their products. For example, vaping was a multi-million dollar industry until laws banned the sale of vape products to people under the age of 21.

• Seasonality: Many industries experience it, as human behavior changes with the seasons. Retail stores may see a surge in sales around Christmas.

Tip: You can create a comprehensive sales plan to set goals for team members. Consider assigning each external factor to your team members so they can keep track of the essential information.

Sales forecast template

Below is an example of a software company's six-month sales forecast template for two products: a software application and a software accessory.

In this template, the company:

• Used past sales data to fill in each month

• Projected a 10% monthly increase (5% inflation + 5% market share gain)

• Kept the price per unit the same as the previous year

Placing both products on the same chart showed that the lower-cost accessory generates more revenue. This insight can guide future product development decisions.

Sales forecast examples

Sales forecasting is not a one-size-fits-all process. It varies significantly across industries and business sizes. Understanding this through practical examples can help businesses identify the most suitable forecasting method for their unique needs.

Sales forecasting example 1: E-commerce

In the e-commerce sector, where trends can shift rapidly, intuitive forecasting is often useful for making quick, informed decisions.

Scenario: An e-commerce retailer specializing in fashion accessories is planning for the upcoming festive season.

• Trend analysis phase: The retail management team spends the first week analyzing customer feedback and current social media fashion trends, using intuitive forecasting to predict which products will be popular.

• Inventory planning phase: Based on these insights, the next three weeks are dedicated to selecting and ordering inventory, with a focus on products expected to be in high demand.

• Sales monitoring and adjustment: As the holiday season approaches, the team closely monitors early sales data and is ready to adjust its inventory and marketing strategies based on real-time sales performance.

This approach allows the e-commerce retailer to stay agile, adapting quickly to market trends and customer preferences.

Sales forecasting example 2: Software development

For a software development company, especially one working with B2B clients, opportunity stage forecasting can help predict sales and manage the sales pipeline effectively.

Scenario: A software development company is launching a new project management tool.

• Lead generation and qualification phase: In the initial month, the sales team focuses on generating leads, qualifying them, and categorizing potential clients based on their progress through the sales pipeline.

• Proposal and negotiation phase: For the next two months, the team works on creating tailored proposals for high-potential leads and enters negotiation stages, using opportunity-stage forecasting to predict the likelihood of deal closure.

• Closure and review: In the final phase, the team aims to close deals, review the accuracy of their initial forecasts, and refine their approach based on the outcomes.

Opportunity-stage forecasting enables the software company to efficiently manage its sales pipeline and focus resources on the most promising leads.

When to move beyond spreadsheets

Spreadsheet templates are a great starting point, but they have limitations. As your business grows, manual processes can create bottlenecks and introduce errors.

Consider upgrading when you experience:

• Data entry errors: Manual input can lead to typos, transposed digits, or formula mistakes that throw off your entire forecast.

• Version control issues: When multiple team members update the same spreadsheet, it's easy to lose track of which version is the current one.

• Limited collaboration: Spreadsheets make it difficult for sales teams to update their pipeline data in real time.

• Scaling challenges: As your product line or sales team grows, spreadsheets become unwieldy and hard to maintain.

• Lack of integration: Spreadsheets don't automatically pull data from your CRM, making it harder to keep forecasts aligned with your actual pipeline.

Work management platforms and CRM tools can automate much of the forecasting process, pulling real-time data from your sales pipeline. These tools also make it easier to share forecasts across teams and keep everyone aligned on revenue expectations.

Turn your sales forecast into action

A sales forecast is only one part of the larger sales picture. As your team acquires leads and closes deals, you can track progress through your sales pipeline.

With the right tools, you can connect your forecast to daily work, ensuring projections translate into actionable tasks. When your forecast lives alongside project plans, everyone stays aligned on hitting targets.

Ready to bring clarity to your sales process? Get started with a work management platform that helps your team turn forecasts into results.

Frequently asked questions about sales forecasting