Sales Forecast Report: How to Create One and What Should You Include?

Author's avatar Reporting UPDATED May 21, 2022 PUBLISHED May 23, 2022 14 minutes read

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    Peter Caputa

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    Being optimistic about the future of your company is great and it can have a big influence on the morale of both your employees and high-level executives.

    However, simply being optimistic just doesn’t cut it – you need rock-hard data to prove that you will meet the sales quotas and that the business will generate a sufficient amount of revenue. 

    While none of us are fortune-tellers who can predict the future, we can use sales forecasting reports to create rough estimates of what it will look like.

    Sales forecast reports are documents that display how many products/services your company is most likely to sell in a specific period.

    By creating these reports, the leaders in your company will have an easier time making everyday decisions and setting up revenue-impacting factors.

    In this guide, we are going to explain exactly what sales forecast reports are, how you can create them, and show you some of the main things you should include when writing them.

    HubSpot CRM – Sales Analytics Overview Template

    What Is a Sales Forecast Report?

    A sales forecast report is a detailed document that showcases all the important data you acquired through regular sales forecasting and displays an estimate for future company sales. It is most commonly shared with the company leadership and board members.

    In essence, it forecasts the number of sales that the sales rep, sales team, or overall business will make in the next week, month, quarter, or year. Most of the time, creating sales forecast reports requires digging into past performance data.

    Sales forecasting reports are a crucial element of every business. Not having any kind of insight into future sales makes managing the inventory and overall cash flow extremely difficult.

    The primary objective of sales forecasting reports is to make decision-making easier for high-level company members. For example, a sales manager will use this report to see how his team will close out. Or, the VP of sales can use it to organize the sales process for the upcoming period.

    Related: Sales Report Templates For Daily, Weekly Monthly, Quarterly and Yearly Statements (Sourced from 40+ Sales Pros)

    Importance of Sales Forecasts

    While sales forecasts bring numerous benefits to the table, there are two main ways they showcase their importance.

    Firstly, by coming up with an accurate sales forecast and knowing roughly how much you are going to make in a certain time frame, you can invest in additional staff, buy more inventory, and reduce the number of delays. Of course, this is if your forecasts show that you will be making a profit and exceeding your sales target.

    Second, in case the forecast shows that you won’t meet your sales objectives, you can quickly start working on remediation plans. For instance, you can try drawing more leads and generating additional revenue in specific accounts.

    In essence, you will have the bigger picture of how your company is going to perform in the following period and then make decisions based on that data.

    Related: The Ultimate Guide to Sales Analysis Reports: How to Write a Sales Analysis Report in 6 Steps

    Sales Forecasting Methods

    There are a few different methods that companies use to forecast sales, depending on the aspect they want to focus on the most.

    Here are some of the most common.

    Opportunity Stage Forecasting

    This method focuses on all the different stages within a sales process and helps you make estimates on how likely a deal is to close, based on how far it is in the pipeline.

    Opportunity stage forecasting is calculated by multiplying the potential value of each deal by the closing probability.

    Once you do this for each deal currently in the pipeline, you add up the total to acquire the overall projection.

    While this forecasting method is fairly simple, sales teams have been avoiding it in the past few years due to frequently inaccurate results.

    These inaccurate results often occur because the age of opportunity isn’t included in the method. To put it simply, if the close dates are the same, a two-month-old deal will be treated in the same manner as a deal that’s a few days old.

    PRO TIP: Do you know which sources fuel your sales pipeline? In this episode of Data Snacks, we’ll show you how to set up and track your HubSpot Marketing data in order to decide which sources are worth the further investment.

    Length of Sales Cycle Forecasting Method

    Companies use this method to make forecasts on the time frame in which opportunities are most likely to close. Unlike the first method, this one accounts for the age of individual opportunities.

    This method primarily focuses on objective data rather than the feedback you get from your sales representatives.

    For example, if a sales rep books a demo with a potential customer, they will probably tell you that they are close to converting them. However, since the rep probably started talking to the prospect a few days earlier, the results will show that they are still unlikely to buy.

    Although, you can set up different deal types and their average sales cycle length. For instance, a standard lead takes a few months to buy, referrals take a few weeks, and trade show leads might need up to a year.

    For the most precise results, you should carefully monitor the number of prospects currently in the pipeline and the time at which they entered.

    Intuitive Forecasting Method

    As the name suggests, intuitive forecasting refers to when sales representatives use their intuition to create a forecast.

    When asked about the likelihood of closing, they reply with something like, “I am certain that they will purchase within one week, and the deal will be worth $500.”

    You might think that this method delivers the most inaccurate results, but since the sales reps are the ones most familiar with the customer, they might be able to create the most adequate forecasts.

    Of course, this is only if they aren’t overly optimistic and boosting their numbers on purpose.

    One of the main downsides is that there isn’t really any appropriate way to verify the projection. You would have to go over the calls, attend the meetings, or read the conversation with the customer.

    However, in case your company is relatively new and you don’t have a lot of historical data to analyze, the intuitive forecasting method can be pretty useful.

    Historical Forecasting Method

    Historical sales forecasting involves analyzing historical data that had a similar matching time period as your current data, and predicting that the results will overlap.

    While this method can sometimes provide accurate forecasts, there are several issues with it.

    For starters, seasonality isn’t considered. Next, the method looks at buyer demand as a constant variable. This is why as soon as something unpredicted occurs, you end up with contaminated results.

    While historical data can be extremely valuable, it shouldn’t be the foundation of your forecast.

    Multivariable Analysis Forecasting Method

    One of the most popular forecasting methods nowadays, multivariable analysis forecasting takes predictive analysis into consideration and uses several important factors as a benchmark.

    These factors include individual sales rep performance, closing probability based on opportunity type, and the averages sales cycle length.

    This method undoubtedly generates the most accurate forecasts, but it can be quite costly, especially for companies with smaller budgets.

    Pipeline Forecasting Method

    The pipeline sales forecasting method examines each opportunity within the sales pipeline and calculates how likely it is to close based on several variables (e.g. sales rep’s win rate and opportunity value).

    Although this method does provide accurate results, it can be extremely time-consuming, especially if your company doesn’t incorporate a unique program to manage the calculations.

    It is also very dependent on your ability to gather valuable data. In case any numbers get mixed up or the data isn’t sufficient, you will end up with contaminated results.

    Sales Forecasting Benefits

    Nowadays, it’s very hard to find companies that don’t include sales forecasts in their business. This speaks a lot of volume on sales forecasting benefits.

    Sales forecasts are primarily used to explain the story behind the financial aspect of your business.

    While there are plenty of reasons to incorporate sales forecasts in your company, we will go over some of the key benefits.

    Helps in Setting Goals

    Firstly, sales forecasts are extremely useful when it comes to setting goals in your company.

    This is because they can provide you with information such as the number of customers you will have in the following period, the amount of revenue you are going to generate, and how much each customer will spend. Of course, this will all be displayed in rough estimates.

    With this type of data, sales executives will have an easier time setting goals for the following period and understanding the overall financial situation.

    Provide Investors with Information

    If your sales forecast is solid, then it could become a great asset when it comes to reassuring investors that your business is on the right track.

    You can use the forecast to showcase your recent performances and that your sales team has met specific milestones. In general, it’s best to make your sales forecast as detailed as possible so the investors can see that your company is both organized and up-to-date with the latest data. 

    Related: Reporting to Investors: 6 Best Practices to Help Increase Funding

    Better Budgeting Decisions

    Sales forecasts can also be used to create better budgeting decisions.

    You can use it as a spending guide to see how much money you should allocate to marketing to attract new customers and see what the operational costs will be.

    This helps you make your business a lot more profitable since you will be able to focus on cutting expenses and driving profit.

    How to Create a Sales Forecast

    Each company creates its sales forecast in a different way, using different methods.

    However, there are some universal practices that overlap with these creation methods. These include:

    • Creating a comprehensive list that includes all the products/services to be sold
    • Coming up with a rough estimate on how many of them will be sold
    • Multiplying the estimate by the unit price
    • Writing down the cost of each product/service
    • Multiplying this cost by the estimate of how many will be sold
    • Deduct the total cost from the total sales

    In companies that have a ton of items in their inventory, categorizing the unit sales and costs might be the best option.

    Sales Forecasting for New Businesses

    Sales forecasting tends to be a bit more difficult for newer businesses since there isn’t any historical data to rely on.

    This means that you will have to use the intuitive forecasting method and rely on your sales representatives to feed you accurate data regarding the likelihood of converting opportunities.

    Additionally, you can focus on researching your target market and audience, analyzing the trading area, and comparing your products with the ones from your competition.

    Once you pile up enough data that can be used for comparison, you can move on to other techniques such as the multivariable analysis forecasting method and historical forecast method.

    Sales Forecasting for Existing Businesses

    Established businesses have an easier time creating sales forecasts since there is already enough historical data about their past sales.

    Combine this data with the latest trends economic and industry trends, and you will have a great starting foundation to predict future sales.

    A good practice is to even ask previous customers whether they would be interested in buying more products in the future and using that information as well.

    What Should Be Included in a Sales Forecast Report?

    Depending on the time frame of your sales forecast report, you will be focusing on different factors.

    Let’s go over some of the most common elements that should be included in pretty much any type of sales forecast report.

    Target Audience Research

    Including target audience research in your report is essential for staying on top of their latest trends. Since these are all potential customers, you should be able to quickly find out whether there were any changes in their buying habits.

    For instance, if most of your target audience seems interested in buying products with a specific feature, you will be able to generate more sales by adding that feature to the product.

    Historical Data

    Using historical data as a benchmark for your sales forecast can be extremely valuable.

    For example, you can check out how profitable a product similar to your current one was in the past and how well it attracted new customers.

    Related: Sales Metrics Reporting: Track These 16 Sales KPIs and Metrics to Improve the Performance of Your Sales Team

    Competitor Analysis

    A detailed competitor analysis can help you make accurate forecasts since you will see how they are affecting your main selling areas and overall revenue.

    Start by comparing their products to your own and utilize the market share numbers to see how big of an impact they will most likely have.

    The market share numbers are valuable since they display the percentage of the market that buy your products and your competitors.

    For instance, if there is a $100,000 market and your market share is 20%, you can include an average of $20,000 in sales in the forecast.

    How to Forecast Sales Using HubSpot CRM & Databox

    Nowadays, most companies rely on different CRM software to simplify and improve their sales forecasting process.

    One of the most popular CRM options is undoubtedly HubSpot.

    HubSpot does a great job of tracking sales data and offers all kinds of different insights into your sales performance, but it can sometimes be a bit complex to utilize that massive amount of data and create a sales forecast.

    To simplify the process, you can integrate your HubSpot account with Databox and make sales forecast reporting faster and more efficient.

    Databox allows you to visualize your sales forecast, duplicate it, and then use it for comparison against your overall sales goals. 

    While this may sound a bit overwhelming, don’t worry – here is a video that will show you the exact steps you should follow.

    Make Sense of Your Sales Performance and Productivity Data from HubSpot CRM

    There is no doubt that integrating CRM software such as HubSpot in your company can help you track your overall sales performance and gather an abundance of productivity data.

    However, making sense of this large chunk of data and information isn’t exactly the easiest task, and even the biggest companies can sometimes use a helping hand.

    This is where Databox steps in.

    By using Databox, you will gain access to pre-built customizable dashboards that will not only help you analyze the productivity and sales data in your pipeline, but also improve your sales forecast reporting.

    The best thing about it? You won’t have to lift a finger.  Our team will be the one handling the setup process and get you through all the nitty-gritty details, but you can learn more about it here.

    Additionally, our comprehensive dashboards also include a variety of visualization tools that you can use to transform the dry numbers into beautiful graphs and charts.

    Want to impress your stakeholders with some amazing sales forecast reports? Sign up here for a free trial and let us help.

    HubSpot CRM – Sales Analytics Overview Template
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    Filip Stojanovic

    Filip Stojanovic is a content writer who studies Business and Political Sciences. Also, I am a huge tennis enthusiast. Although my dream is to win a Grand Slam, working as a content writer is also interesting.

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