Sales Forecasting is a method used to predict future sales of a product over a specific period based on past performances, competition, consumer spending patterns, market trends and economic changes. It is instrumental in the prediction of the company’s dollar sales and planning for future growth.   Sales Forecasting can assist Guillermo Furniture to develop a budget, allocate resources, monitor competition and the product environment.   The first step when completing an accurate sales forecast for Guillermo is conducting extensive research of the consumers’ buying power and economic situation in Sonora, New Mexico.   Sales Forecasting involves not only the collection of data about the market, but also the application of a manager’s judgment   and interpretation of the data collected to make decisions that can have a positive or negative impact on the business, according to Gordon Bolt.
Guillermo can use Sales Forecasting to estimate the expected units of furniture to be sold and to determine what the costs of resources (materials, labor, equipment and capital) will be. Forecasting can identify consumers buying patterns, allowing Guillermo to offer discounts and promotions in an effort to increase sales.   Additional workers can be employed during peak selling periods and laid off in slow periods.   Financing for equipment and technologies will also be needed to expand the business. The use of sales forecasting can demonstrate to lenders how much revenue the business can expect to make based on past performances, thereby enhancing the chances of lender approval for loans.  
Sale Forecasting carries risks, Guillermo can over-forecast where the company does not sell as much as it predicted or under-forecast where the company sells more than it predicted.   In a manufacturing environment such as the furniture store, the forecast will be used to determine how much raw materials to purchase and how much products can be produced.   When sales are under-forecast Guillermo...