Organization Sales Forecast for Justification

Question: Discuss about theOrganization Sales Forecast for Justification. Answer: Introduction Sales forecast of any organization is done to assess the possible accomplishment of objectives set by any upcoming organization related sales of that organization. This forecast is made to understand the basic features of selling the products chosen by the company. A practical sales forecast can make the company able to understand deployment of its working capital which is being derived through the calculation of balancing current assets over current liabilities. It is always found that projected sales is guiding the organization towards its procurement, sales and marketing infrastructure and the respective strategy fixation related to sales of the said company. It is ideally accepted that sales forecast should be realistic keeping in mind the capacity of company so far its financial ability is concerned. A small upcoming company needs this instrument to evaluate its need of capital for procurement materials for production and subsequent sales. Hence a proper sales forecast can guide the company towards its future journey in more sustainable manner. (Berry) A realistic sale forecast needs to cover all SKUs to be sold by the company. It should consider the cost of sales and other costs including variable and fixed costs. In case of determination of sales forecast, a company should analyze its ability to sale all SKUs presented by the company for sale. The sale may be from own counter, or from distribution channel, but the basic criterion of this aspect is to understand the ability of the company to afford the costs related to sales operation along with other relevant costs allied to this operation. (Rath, 2016) The basic needs of preparation of sales forecast demand realistic view towards selection of products, the fixation of price, the way the company wants to present them through its marketing strategy, and with the strategy of recovering the money from the debtors. It is mandatory for any business plan to project a good sales forecast which can guide the management to act as per the need of the company. Critical analysis of SKUs with its nature and the expected response from the target audience are the main features for making a sales forecast. Sales Forecast of XX Herbal products are attached as spreadsheet. The basic considerations of this forecast are depending upon following criteria:- The rate of service for naturopathy is considered as $110 for new members and $ 80 for existing members. The anticipated numbers of clients in the form of new and old are mentioned in the column No.s/Growth %. The sales of health foods and caf foods are being anticipated with a base figure of 70,000 and 60,000 respectively for the month of June 2001. The company Is aspiring 175% growth in health foods and 120% growth in caf foods business to ensure its sustainability. The company has projected naturopathy service to have clients of around 160 by end of the F Y 2001-02. P L A/c Projection with Justification Profit and Loss a/c is the financial statement which can feature the financial position of the company for any specific financial period by considering the revenue generated and the respective expenses made for this revenue generation. While starting a new business, the entrepreneur should make a projected P L A/c to understand where he can reach after the specified period. It is often found that good entrepreneur makes this statement for financial period of longer tenure to assess and understand the viability of this business so far return is concerned. (Score, 2016) To make any projection of anticipated P L, the entrepreneur should consider realistic revenue projection, along with cost of sales and other cost factors keeping in mind the effect of inflation trend for future as per statistics provided by the country statistical board. It is also to be considered that the balance of incoming and outgoing funds is to be maintained which is done through projected cash flow statement. The main assumptions related to P L A/c projection of any organization are relevant expenses in the nature of fixed and variable costs. It is mostly found that unrealistic p L projection may lead the new entrepreneur to confusion as, if the real life figures do not match with projected presentation, the entrepreneur has to find some other strategies to prove the viability of the project with the objective of making the project sustainable. (ANZ) The Projected P L of XX Herbal Products are made as per the considerations mentioned below which is features in the business plan: The company has service in the form of naturopathy and products in the forms of health foods and caf foods to offer to their clients. Cost of sales for health foods are anticipated as 45 % of revenue and for caf foods @35% of revenue of respective segment. There is no cost of sales for naturopathy as it is a service. Salary had been estimated as $ 5000 for 9 employees. In September, one employee is projected to be absorbed for health food division. The projection also features addition of one employee more in December and 2 more in Jan till end of the financial year to manage the operation of the company Other different expenses are projected head-wise as per anticipation. Incentives to staff are being anticipated on quarterly basis as per accomplishment of corporate objectives set for them individually and collectively as well. Rent was projected as $ 1,000 which is subject to projected enhancement in January 2002. Expenses under head Utilities will cover different charges like electricity, water and cleaning charges. Insurance is being estimated for covering the fixed assets of the company. Depreciation is being projected for fixed assets of the company. References: ANZ. (n.d.). ANZ Small Business Hub. (ANZ, Producer) Retrieved 11 16, 2016, from The Small Busienss Hub: https://thesbhub.com.au/tools-and-templates/how-to-forecast-profit-and-loss Berry, T. (n.d.). BPlans Starting a business made easy. Retrieved 11 16, 2016, from BPlans-How to Forecast Sales: https://articles.bplans.com/how-to-forecast-sales/ Rath, T. (2016, 09 20). Sales Forecasting for Your Business Plan: Know Your Numbers. Retrieved 11 16, 2016, from The Balance: https://www.thebalance.com/sales-forecasting-for-business-plan-2951566 Score. (2016, 06 14). 12-Month Profit and Loss Projection. Retrieved 11 16, 2016, from Score: https://www.score.org/resource/12-month-profit-and-loss-projection