Analyzing Current Sales and Gross Profit

Analyzing Current Sales and Gross Profit

Your sales and gross profit forecast begins with analysis of current performance. Sales are usually divided into various categories. Each category is examined individually to determine expected sales for the coming year. Time spent Analyzing Current Sales and Gross Profit will help you manage your business and allow you to be proactive in changes to your business model.

 

Selecting Sales Categories

The selection of categories will depend upon the nature of your business. For example, a food broker selling to a large number of relatively small accounts might be interested primarily in analyzing sales by product. The owner of a single retail store might choose to analyze sales by selling department, while the owner of a retail chain would probably be interested in analyzing sales by outlet. An insurance broker with several agents might categorize sales by agent. An individual wholesaler might consider sales by sales territory.

 

Factors Affecting Sales

After categories have been selected and current sales divided among them, the various factors that can affect sales in each category must be considered. These factors could be either internal or external. Internal factors are those that you can influence. External factors are those that affect the market served by your business, but are generally beyond your control.

 Internal Factors

The following are typical internal factors that could influence your sales forecast:

  • Promotional plans
  • Expansion plans
  • Capacity restrictions
  • New product introductions
  • Product cancellations
  • Sales force changes
  • Pricing policy
  • Profit expectations
  • Market expansion to new customers or territories

 External Factors

Among the external factors that must be considered are the following:

  • ¬†Business trends
  • Government policies
  • Inflation
  • Changes in population characteristics
  • Economic fortunes of customers
  • Changes in buying habits
  • Competitive pressures

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