What is a sales forecast? A sales forecast is an educated prediction on future sales and sales revenue. The sales forecast is based on a variety of data including past sales results, statistical analysis, local market conditions, economic conditions, and your market share. It is important not to overestimate or even underestimate a sales forecast because that could affect the budget of different departments within a company as all aspects of a business are interconnected.

There are three categories of sales forecasts:

1. Short-term sales forecast: These could be monthly or quarterly and usually affect decisions about short-term staffing, staff bonuses, and commissions.
2. Mid-term sales forecast: These are normally from six months to two years and affect entire company budgets, sales force hiring and compensation, and marketing.
3. Long-term sales forecast: These affect decisions on creating and developing new products or services.

A sales forecast is not easy to prepare. A lot of factors go into developing a sales forecast and a prediction into the future can never be totally accurate. However, an educated estimation process could be a used to make a good prediction, to a degree, and helps to ensure the future success of a business.